Innovative Financing Supports Regenerative Agriculture

A new project will directly pay farmers for the ecosystem services they provide, such as cleaner water, healthier soils and increased biodiversity.

The financing will support farmers who engage in regenerative agriculture practices -- like minimizing tillage, growing cover crops and integrating livestock. Those practices offer many benefits for farmers and ecosystems, but financing them can be a challenge for farmers.

Researchers with the Cornell Atkinson Center for Sustainability are addressing those challenges by developing innovative financing strategies in collaboration with farmers, businesses, nonprofits and government agencies.

"The full suite of ecosystem benefits are in play for the work farmers are doing: soil health, water quality and biodiversity. Regenerative agriculture can play a role in supporting improvement in all of these areas," said Alan Martinez, senior manager for strategic partnerships at Cornell Atkinson, and a co-principal investigator on the grant. "These strategies can also help farmers mitigate the effects of climate change and continue to steward their land for generations to come."

John Tobin-de la Puente, professor of practice in the Dyson School of Applied Economics and Management, leads the conservation finance working group at Cornell Atkinson and is also a co-principal investigator on the project.

Martinez and Tobin have recently partnered with the New York State Corn and Soybean Growers Association to co-create and pilot some of their financial tools with individual farms. The Great Lakes Protection Fund will provide an initial investment to pay farmers to implement regenerative practices and produce environmental outcomes. The Soil and Water Outcomes Fund will design and build the technology platform for verifying adoption and measuring outcomes like biodiversity and habitat protection, water quality improvement, carbon sequestration and soil health.

Once those outcomes are verified, the fund could sell regenerative agriculture credits to corporations, governments, nonprofit organizations or individuals who have made sustainability commitments to replenish the fund. Many food and beverage companies, such as General Mills and PepsiCo, have made such commitments. The program could also benefit government efforts such as the sustainability initiatives laid out by New York state's Climate Act.

"Government shouldn't have to do this alone. We are looking for ways to involve the private and the philanthropic sectors to make the financing for environmental outcomes self-sustaining," Martinez said. "From the farmers, to suppliers, to intermediaries -- the whole value chain has to be part of the solution in order for us to create something that is systemically impactful."

The project will help incentivize farmers to implement profitable and effective sustainable practices, said Mark Humbert, who sits on the board of directors for the New York State Corn and Soybean Growers Association and operates Humbert Farms in Rose, NY.

"The Cornell Atkinson team is flexible in their approach and thorough in their strategy," Humbert said. "The project will provide data and recommendations related to all facets of sustainability and regenerative agriculture that will assist me, as a farmer and steward of the land, to be a valuable contributor to the preservation of these resources and our family's agricultural legacy for my children and grandchildren."

The project is an expansion of a $1.2 million grant awarded to Cornell Atkinson in 2020 by the Great Lakes Protection Fund to assess and create new tools to finance regenerative agriculture in the Great Lakes watershed. The initial proposal focused on reducing phosphorus fertilizer runoff from farms, but in two years of research and outreach with New York farmers and farming associations, in collaboration with Cornell Cooperative Extension, the goals of the project have expanded, Martinez said.

Financial tools to support regenerative agriculture can take many forms beyond well-known carbon credits, Martinez said. The researchers are also exploring the option of providing farmers with discounts on transition loans and crop insurance for farms adopting regenerative practices.