Market-Based Farmland Conservation: Carbon Trading, Nutrient Trading, and Wetland Mitigation Banking A case study with Codorun Farms

The burgeoning development of the market-based institutions of wetland mitigation,carbon trading, and nutrient trading provides farmers with economic incentives in theform of payments for credits to change land use practices. Payments are made to thefarmer based on the number of credits generated by environmental benefits gained fromchanging to and continually using best management practices and a market-baseddetermined price of those credits. Using a private client’s farm, this project explores thefeasibility of participating in these institutions based on associated federal and statepolicies, eligibility requirements, enrollment processes, and economic costs and benefits.Codorun Farms (the Farm), a family owned 400-acre farm based in York, Pennsylvania,has asked for a guide to market-based payment programs that promote conservationpractices. Codorun Farms is interested in understanding non-governmental economicincentives that can be earned in exchange for switching to and maintaining bestmanagement practices. The Farm would like to understand if it’s possible to make aprofit while at the same time accruing environmental benefits. Questions to be answeredinclude: what are the requirements for participation, is the Farm eligible, and does itmake sense for the Farm to enter into contracts with these types of programs?Preliminary conversations with Farm family members have led to an agreement toinvestigate the following programs: Wetland Mitigation Banking; Carbon Credit Tradingand Agricultural Offsets; and Nutrient Trading.Analysis shows that the Farm would benefit from participating in carbon and nutrientprograms but not wetland mitigation banking. Since the Farm is already practicing notill,it is beneficial to enroll in these two programs as the Farm will receive compensationfor operating its business as usual. However, the results of this case study demonstratethat payments from carbon trading alone will probably not be enough incentive to changetilling practices for the small farmer. Participation in nutrient trading alone provides ahigher payment and may be enough of an incentive, however the number of pilotprograms in the US is very small and thus impedes access to these payments.