Nov 10 2021

Comments to the United States Department of Agriculture on climate-smart commodity markets

Danny Cullenward +Sadie Frank +Jeremy Freeman 
Danny Cullenward
Sadie Frank
Jeremy Freeman

The United States Department of Agriculture (USDA) recently published a request for information on the design of a new program to support the emerging market for “climate-smart commodities.” Specifically, the USDA proposes to create a Climate-Smart Agriculture and Forestry (CSAF) Partnership Program under the Commodity Credit Corporation, an intermediary run by the USDA that would provide public funding to participating projects.

Our comments to the USDA focused on the connection between the CSAF Partnership Program and markets for carbon offsets. We recommended that the USDA strictly separate public funding from offset projects. We agree that the case for supporting climate-friendly practices is clear, but mixing public funding with carbon offset projects risks double-counting the climate benefits those projects achieve — a problem already documented in other USDA-supported conservation programs. Combining public funding with offset eligibility diverts funds away from land managers and ultimately acts to subsidize the price buyers pay for offset credits.

Instead, the USDA program should pay for climate-smart commodities directly, with funded projects legally committed to the activities for which they earn CSAF payments. Such a program would eliminate the unintended consequence of providing public subsidies for potentially low-quality, non-additional private offset credits. It would also better target public funds at the people and companies doing the work, instead of benefiting those with specialized knowledge about transacting in opaque offset markets.

The USDA’s request for information is part of much broader domestic policy efforts aimed at aligning the forestry and agriculture sectors with the Biden Administration's climate goals. The CSAF Partnership Program also could set a critical precedent for implementing legislation currently under debate in Congress. For example, provisions in the Build Back Better Act would channel billions of dollars to the agricultural sector and could create the groundwork for sound land management practices and the expansion of climate-friendly commodity markets. Getting the details right is necessary to support climate policy goals and avoid problems during implementation.

We thank USDA for the opportunity to comment on the proposed CSAF program and look forward to further engagement on this topic.

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