Using carbon offsets to fund agricultural conservation practices in a working-lands setting

The nitrogen cascade concept indicates that agriculture serves as a significant link between emissions of the potent greenhouse gas (GHG) nitrous oxide and losses of nitrate to surface waters. Conservation practices have the potential to exploit this link, as their implementation is found to reduce fluxes of GHGs and nonpoint source (NPS) water pollution. Several studies have recognized this link and have documented the potential to improve environmental quality through the use of programs which retire land, the funding for which can be offset by the sale of carbon credits. However, the ability to use land for both agricultural production and environmental conservation is important. As such, this study examines the intensely-farmed Wildcat Creek Watershed in West-Central Indiana to evaluate the potential for implementing agricultural conservation practices to reduce NPS water pollutants and fluxes of GHGs in a working-lands setting. The extent to which carbon pricing can affect practice implementation costs and the optimal distribution of these practices throughout the watershed is also explored. Results from this study indicate that carbon offsets can sharply reduce conservation practice implementation costs and therefore have the potential to reduce greater amounts of NPS pollution for a given cost of implementation. However, the extent to which various practices can be used to abate NPS pollutants and GHGs is heavily dependent on the implementation period considered. Further, this study found that fertilizer management, which is relatively difficult to enforce in practice, significantly influenced the optimal allocation of practices. This study provides a novel framework for analyzing the impacts of conservation practices that may prove useful in formulating innovative policy tools aimed at improving environmental quality in multiple environmental media. The findings of this study indicate that the potential exists to use carbon offsets to improve water quality and reduce GHG fluxes in a working-lands setting