Soils & Policy #2 : Direct Incentive Payments

Policies have been on the books in the United States for decades that help conserve soil and prevent erosion, often sequestering soil carbon in the process. In this series, we’re breaking down policy areas that have helped sequester soil carbon. These articles have been adapted from “Grounding United States policies and programs in soil carbon science: strengths, limitations, and opportunities” by Danielle Gelardi, Daniel Rath, and Chad Kruger in  Frontiers in Sustainable Food Systems. Check out the first article on soil health initiatives here.

What are direct incentive payments?

The short answer: Direct incentives are cash payments to growers for changing their management practices.

• Incentive payments come in the form of grants, reimbursements, or cost share programs. Money is typically paid to growers to switch to conservation practices such as cover cropping, reduced tillage, or hedgerow installation.
• The Natural Resources Conservation Service (NRCS) provides some of the most popular incentive payments in the US. Their Environmental Quality Incentives Program (EQIP) has paid growers over $15 billion since 1996.
• Increasingly, incentive payments are provided by local sources like state departments of agriculture or conservation districts.
• They can also be provided by corporate sources that want to improve sustainability along their supply chain.

Incentive payments make it easier and more affordable for growers to experiment with new practices. For incentive payments to lead to lasting change, they should be paired with technical assistance, other market-based economic opportunities, and informed by research.

Strengths

Incentive payments lower the barriers-to-entry for growers to implement conservation practices. This financial support also reduces risk and can mitigate financial losses during transition periods.

Why it matters: Farmers are under increased pressure to provide services in addition to food production, including cleaning up the air and water, sequestering carbon, and mitigating climate change. While the benefits will be experienced by everyone, it is the farmer who is required to pay the bill. Direct incentive payments redistribute the cost of conservation from the individual grower to the public.

Limitations

Start-up costs are not the only barrier to adopting conservation practices. Even after a payment has been made, challenges remain. This can lead to growers reverting to “business as usual” once the grant period is complete.

• Other challenges for growers can include:
  • Not knowing how to use the practice (for example, knowing when to plant the cover crop, how to terminate it, and what species mix to plant);
  • Not having access to the required equipment (for example, no-till drills);
  • Restrictions from crop insurance or landlords; and
  • Pressure from neighbors to maintain “business as usual” (for example, having neat fallow fields rather than fields full of mixed cover crops).

There is not enough incentive money for everyone who needs it.

• Only 30% of applicants for NRCS EQIP receive funding. Sadly, payments are not equally made to farmers across regions, farm size, and demographic groups.
• Incentive programs frequently exclude early adopters. This is because payments are typically given to growers to implement a new practice rather than to sustain one.
• While practices like cover cropping and compost amendment are eligible for funding in many programs, other new or experimental practices are not. This can prevent innovation and the development of new knowledge.
• Even when incentive money is available, a lack of technical expertise from regional farm advisors can limit the update of conservation practices.

Most US incentive programs pay growers to implement practices, not to deliver outcomes. Because soils are so dynamic and variable, practices do not always lead to intended outcomes like increased soil carbon or cleaner air and water. Furthermore, monitoring and verification technology is not yet sufficiently advanced for the large-scale and accurate tracking of outcomes like soil carbon sequestration or greenhouse gas monitoring.

Opportunities

Direct incentive payments are important and necessary. However, policymakers should simultaneously invest in technical assistance, research, and economic development.

• All incentive payments should come with educational support.
  • Technical assistance is typically provided by conservation districts, university extension offices, and crop consultants. These entities could be recruited, trained, and equipped to provide increased levels of support for conservation practice adoption.
  • Technical assistance is especially important from local experts with knowledge of the unique climate and cropping systems in a particular region.
• Incentive programs should partner with research agencies and scientists who can measure whether conservation practices are having the desired effect. Ideally, science should inform policy, which should support practice, which should improve science.
• To ensure that conservation practices continue after payments are complete, other economic opportunities should be developed.
  • These can include climate-smart agricultural finance tools, like revolving loans, tax credits, or insurance premium reductions.
  • They can also include branding initiatives for growers to label their products as “climate-smart” or “sustainable.”
• Funding should be increasingly directed towards emerging and experimental practices, as is done through grants from SARE, CIG, and AFRI. This could reward innovative growers and improve the current state of knowledge.

In short, direct incentive payments are essential for growers trying new practices. They are also a responsible and equitable investment in the future. However, incentive payments alone won’t change the tide. A diverse policy approach can address non-financial barriers and extend support for conservation efforts beyond short-term funding cycles.

Photo by Lance Cheung, USDA.