California agency assesses climate impact of four major agricultural programs

Four major programs created to incentivize reductions in agricultural greenhouse gas (GHG) emissions in California are succeeding in that goal – but a report from the California Legislative Analyst’s Office (LAO) that details shortcomings in each program likely will spur future program changes

California agriculture occupies over 25 million acres, accounting for over 11 percent of total US agricultural value. The California Air Resources Board (CARB) estimates that California massive agricultural sector emits 32 million metric tons of CO2 equivalent, making it the state’s fifth largest source of GHG emissions.

The new in-depth report from LAO evaluates the programs’ carbon reduction and sequestration efforts, reaching three broad conclusions and then setting out recommendations for each program. First, each program succeeded in reducing GHG emissions in California. Second, the initial estimates of each program’s benefit overstated the reductions for reasons unique to the respective program. Finally, the report concludes that additional research is needed to determine each program’s actual GHG reduction benefit.

The programs and the findings

The four programs addressed in the LAO’s report – the Dairy Digester Research and Development Program, the Alternative Manure Management Program, the Healthy Soils Program, and the State Water Efficiency and Enhancement Program – were designed to encourage the adoption of technology and practices to reduce GHG emissions and sequester carbon.

The Dairy Digester Research and Development Program (DDRDP) offers grants to dairy operations to install “digesters,” large tanks or impermeable lagoon covers that capture methane release from organic matter like livestock manure. Livestock are an enormous source of agricultural methane emissions: 96 percent of all 2019 agricultural methane emissions statewide came from dairy and other livestock. Bacteria inside the digestors decompose the organic matter into useful outputs, preventing the methane from escaping. The DDRDP provides grants that cover up to 50 percent of digester installation costs.

The report concluded that the DDRDP led to significant GHG reductions.  However, it also found that CARB’s methodology for evaluating the program’s benefits was flawed. CARB tabulated the total GHG benefit of all partially funded projects, but ignored the role that other state, federal, and private funding played in acquiring the digestors.

The Alternative Manure Management Program (AMMP) awards grants to dairy operations that are unable to install digestors. The grants, typically awarded to smaller farms, fund equipment and practices that reduce methane emissions from “dry form” manure. CARB concluded that, although this program produced smaller GHG reductions in avoided methane compared to other programs, the AMMP is particularly cost effective. The report’s main critique of the AMMP was that the program did not do enough to ensure that its projects employed the correct operational procedures necessary to achieve GHG reductions. Current estimates based on the program’s effectiveness assume that the projects use the equipment correctly.

The Healthy Soils Program (HSP) provides grants to expand soil health practices that sequester carbon and reduce GHGs. This is done primarily through (1) incentive projects, which offer up to $100,000 to farmers and ranchers to implement HSP practices, like composting, cover cropping, and mulching and (2) demonstration projects, which offer up to $250,000 to multi-partner collaborations that implement HSPs, with the added requirement that grantees collect carbon sequestration data and/or encourage other farmers and ranchers to adopt HSPs.

The LAO found that HSP practices led to significant carbon reductions in soil and produced sizable economic advantages. But the report found a lack of empirical research validating the program’s claimed environmental value. The report also cited the small number of demonstration projects, which, it said, suggests the program has failed to increase the statewide adoption of healthy soil practices.

The State Water Efficiency and Enhancement Program (SWEEP) offers grants to agricultural operations to install irrigation and pumping systems that reduce water use and GHG emissions. The projects employ a variety of activities to achieve their intended GHG and water reductions. SWEEP data collection allows for easier evaluation, and the report concludes that SWEEP projects are meeting their targeted reductions.

The recommendations

The LAO’s critiques for each program were accompanied by recommendations to remedy each shortcoming. Each is listed below, and they imply a commitment to follow-up that may have ramifications for farmers and agricultural producers who use the programs to maximize profits rather than improve the environment.

• DDRDP: The LAO report’s top recommendation is for more robust monitoring and oversight to ensure the declared GHG reduction benefits are actually achieved. The report calls for CARB to update its methodology to account for other sources of funding. It also suggests that the state legislature fund research asking whether the DDRDP may be inadvertently incentivizing the construction of larger, higher polluting dairy farms.
• AMMP: The LAO report’s top recommendation calls for more robust monitoring and oversight to ensure that the declared GHG reduction benefits are actually achieved.
• HSP: The LAO concludes that determining whether the current program actually increases HSP implementation statewide will require additional data and recommends new appropriations to track long-term HSP adoption by grantees.
• SWEEP: Despite a positive conclusion, the LAO recommends follow-up studies to ensure that the program does not inadvertently incentivize larger farms or more water-intensive crops.

Each of these programs was designed to incentivize farmers and other agricultural producers to adopt low-carbon and GHG reducing techniques. The report’s tone indicates that some practices, like expanded farm size or less sustainable crop plantings, run afoul of the goals of the programs and should be disincentivized after the future research is conducted.

What’s next?

California has consistently acted as a national leader in carbon reduction policy, and CARB or the state’s legislature will likely respond to the programs’ shortcomings. Recipients and potential recipients should consult with counsel to fully understand how they can take advantage of these programs in a way that is fruitful in the long term without requiring potential backtracking.

For additional information on this and related subjects, or assistance with the preparation and submission of a public comment, contact the authors or your usual DLA Piper relationship lawyer through DLAPiperCommodities@dlapiper.com.