Adoption of carbon farming schemes: risk matters

Adoption des programmes d'agriculture carbone: les risques comptent

Roxane Photinodellis (), Elisa Bruni (), Laure Bamière (), Claire Chenu (), Bertrand Guenet (), Thomas Kätterer () and Stéphane Cara ()
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Roxane Photinodellis: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Elisa Bruni: LGENS - Laboratoire de géologie de l'ENS - INSU - CNRS - Institut national des sciences de l'Univers - CNRS - Centre National de la Recherche Scientifique - Département des Géosciences - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres
Laure Bamière: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Claire Chenu: ECOSYS - Ecologie fonctionnelle et écotoxicologie des agroécosystèmes - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Bertrand Guenet: LGENS - Laboratoire de géologie de l'ENS - INSU - CNRS - Institut national des sciences de l'Univers - CNRS - Centre National de la Recherche Scientifique - Département des Géosciences - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres
Thomas Kätterer: Department of Ecology - SLU - Swedish University of Agricultural Sciences = Sveriges lantbruksuniversitet
Stéphane Cara: UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Ensuring that carbon farming credits accurately reflect actual carbon sequestration is a major challenge. Although activity-based schemes are the most common design in voluntary carbon farming schemes, the economic literature has shown that result-based schemes are more cost-effective. However, the risk induced by result-based schemes when carbon sequestration is not known with certainty ex ante is often overlooked. We propose a stylized economic framework that integrates soil science data and models to investigate how carbon accrual uncertainty affects farmers' adoption of carbon farming schemes. This framework is illustrated with a data set combining observations from a long-term experimental site (Ultuna, Sweden), multi-model ensemble simulations of soil organic carbon dynamics, and a wide range of economic assumptions. We investigate both analytically and quantitatively the conditions under which a farmer chooses to participate in a voluntary carbon farming scheme when the quantity of carbon eventually stored is uncertain. Various carbon are explored, farming schemes differing inmonitoring costs and accuracy, with contrasting risk implications for the farmer. In particular, hybrid schemes that are based on the expected SOC accrual, but include an uncertainty discount are examined. It is shown that the incentives to participate in a result-based scheme may decrease with increasing carbon prices, and that hybrid schemes may foster adoption by farmers.

Keywords: Carbon farming scheme; Farmer's risk aversion; Carbon sequestration uncertainty; Result-based incentive; Activity-based scheme (search for similar items in EconPapers)
Date: 2026
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Published in Climate Policy, inPress, ⟨10.1080/14693062.2026.2623365⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05537930

DOI: 10.1080/14693062.2026.2623365

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