Funding the Transition to Regenerative Agriculture

Farmers and ranchers are eager to transition to regenerative agricultural practices.

Policymakers (especially at the state level) are eager to support the transition, by funding grant + technical assistance programs.

Investors are eager to fund the transition. The perennial question is “how can we invest?”

We’ve spent the last 3 years investigating how these groups can come together to widely implement regenerative agriculture.  

Below is a summary of what we’ve learned – and based on those learnings, where we’ll be focusing our energy in the future.

*Note: We are not farmers, ranchers, investors or policymakers.  We are nerds.

This is far from a scientific study or white paper, but rather our direct experience – if your experience differs from ours, we’d love to hear from you (hello@nerdsforearth.com).


At the end of the day, agriculture is know how + labor + time.  

Selecting the right cover crop seed, producing compost, installing pipe for various water uses – these jobs-to-be-done require human expertise, labor and/or expensive equipment.  

There is no magic wand to avoid these labor + capital expenditures.  And no way to avoid that these investments will vary widely across climates, soil types, farmers and markets.  

The work must be done, and it must be done farm-by-farm, ranch-by-ranch.

This type of investment also requires patience.  We will not see the full return from these investments for at least a few years, if not longer.

We’ve identified 4 major methods of funding this transition – below we’ll outline the pros, cons, and ideal next steps for each lane:

1. Grants : Federal, state and philanthropic

2. Carbon offsets: credits and corporate “insets”

3. Market development: label standards and value-add infrastructure

4. Traditional financing: leases, mortgages and revolving loans

Let’s dive in.

Grant funding 

Grants can come from a few sources, the usual ones being the federal government, state governments, or philanthropic donors.

It’s important to be aware that, if you’re investing in the transition to regenerative agriculture, you *will* benefit from making political investments in addition to your financial investments. 

This is because market access in agriculture is driven by R&D and technical assistance (TA). 

These are largely provided by the public sector (ex: ag extension services, the USDA’s NRCS, and resource conservation districts) – and like many public sector organizations, they are persistently underfunded.

The best investors will help elect policymakers who support these R&D + TA organizations, and will push legislatively to have these programs funded adequately.

Federal conservation grants

The USDA EQIP Program is administered by NRCS, and provides direct cost-share assistance for producers to implement practices like cover cropping, conservation tillage, and riparian restoration (see the full list of funded practices here).

The program also crucially funds technical assistance, so that producers have training accessible should they need it.

In fiscal year 2017, the program spent a total of $1.7 billion, with about 24% of that going to technical assistance ($405 million), and the other 76% going to direct financial assistance. 

Pros: Money goes directly to the ground, with producers receiving reimbursements based on a percentage of their expenses.  

Cons: Due to “outrageously punitive” budget sequestration starting in 2013, hiring freezes in the federal gov’t has left NRCS short-staffed to implement the program.  

This is a cost share program, meaning farmers must still spend significant cash out-of-pocket (40-60% of the practice cost).  This makes critical practices, like compost application and cover cropping, still quite expensive to implement.  

Next steps: We believe that expanding the USDA’s conservation funding programs (and funding for the staff and partnerships needed to get that money on the ground) is one of our best possible public investments.  

State grants & tax credits

Many states either have passed or will pass some form of Healthy Soils legislation, which almost always includes direct grant funding to ag producers for implementation.

California’s Healthy Soils Program, for example, is funded by the state’s Greenhouse Gas Reduction Fund, and will provide upfront grant funding of $28 million in FY2019. 

Pros: State funds often match federal grant dollars, helping farmers get closer to fully covering the cost of transitioning to new practices. 

State programs also help to build interest in R&D and TA programs, many of which are administered at the state level.

Cons: As these some of these programs are relatively new, applications can be laborious and each state will take time to work through its own bureaucratic processes as they get up and running.   

Next steps: We look forward to seeing more states pass healthy soils legislation in the coming years, and seeing states with existing programs grow their commitments. Read the NASDA report for more policy specifics.

Philanthropic grants

Only 2% of all philanthropic funds go to the environment. However, the subset of those funds dedicated to regenerative agriculture has gone up significantly in the last few years.

Building off the success of 11th Hour, Jena King, Rathmann Family Foundation and many other family donors, larger philanthropic initiatives (from Earth’s Call to One Earth to the Regenerative Agriculture Foundation and Sustainable Agriculture & Food Systems Funders) are all placing photosynthetic carbon drawdown in their core giving when it comes to climate change.

Pros: These monies are available almost everywhere, virtually risk free – and, if properly coordinated, can support the development of successful businesses.

Cons: Philanthropic grant flows can be influenced by the flavor of the moment, meaning budgets are more variable than public budgets year-to-year.

Next Steps: We’re hopeful that these new to regen ag philanthropic funders will make investments in the human, political and hard infrastructure necessary to roll out regenerative agriculture nationwide.

Carbon Offsets

Most industrial activity emits CO2, and a regenerative farm may sequester CO2 in the soil.  

So if an oil producer pays a farmer for their sequestered carbon, by buying a carbon credit/offset, they can reach “carbon neutrality.”  

Investors and philanthropists are currently betting heavily on the ability of these markets to fund the transition to climate-beneficial agriculture.

It’s great in theory, but as usual, the devil is in the details.  Let’s take a look at the pros and cons of two types of carbon offsets:

Carbon Credits

A carbon credit transaction roughly resembles the scenario above.  

The basic workflow for a farmer / rancher / forester to issue + sell carbon credits is as follows (thanks to the Climate Trust for helpful background):

  1. Before any credits can be issued, first a “protocol” for measuring the carbon offset must be selected (or developed, if one does not exist).  Currently there is a dearth of standardized protocols for soil carbon sequestration offsets.
  2. Submit a project plan to a carbon registry, which must accept it and register it.
  3. Implement the carbon-sequestering practices (cover cropping, etc).
  4. Once the practice has successfully sequestered carbon (after 1 year or more), hire a 3rd-party verification consultant to certify the amount of sequestration for which credits should be issued.
  5. The producer must then *sell* the carbon credits that they’ve been issued, if they have not managed to pre-sell them.  There are two types of carbon credit markets: voluntary (where polluters opt-in) and mandatory (where gov’t forces polluters to purchase offsets).
  6. Repeat.

Pros: Selling credits represent a potentially new revenue stream for ag producers and is ideologically palatable to producers who vote red and blue. 

Cons: There are a number of structural challenges that make carbon credits in their original form not suitable as a primary  funding source for producers.

  1. The timing of cashflows does not provide the producer with actual cash up front to implement the practice.  They must implement the practice, wait a year or more for carbon to build in the soil, pay for verification, and then sell the credit.  To make it to that point, the producer either needs to have their own capital to spend upfront, or have access to a separate funding source for implementation.
  2. The cost of protocol development + verification is prohibitive for smaller producers.  Unlike forestry credits, which have a relatively well-developed set of measurement protocols, soil carbon sequestration credits do not yet have a widely accepted standardized protocols.  That lack of standardization means increased expense to the producer. Oklahoma and British Columbia have overcome this by assigning set emissions sequestration rates to specific practices.
  3. Marketing of credits can be challenging – because there is no mandatory market at the moment for soil carbon sequestration credits, the price of credits and volume of credits purchased are both volatile.  The total tons sold on voluntary markets around the globe amount to less than 10Mts in 2017.
  4. Disaggregation: because the tons of CO2 sequestered in soil is relatively small ( compared to a forest), for a carbon credit project to be worthwhile it must be executed across a large amount of acreage.  This introduces verification challenges, as more acreage likely means more soil types to measure + verify. 
  5. Colonialism: Another big Con here is the point that indigenous and environmental justice communities have been making for the past decade. The “offset” allows polluters to continue to pollute in folks backyards and continues the negative legacy of colonialism. 

Next steps: We are not recommending at this time that producers look to carbon credit markets to fund their transition to regenerative practices, nor are we recommending that investors fund producers through this pathway.  

However, if the carbon credit was sold up-front, before the producer had implemented the practice, then they would be a useful funding source for implementation (ex: the model that Ecosystem Service Marketplace is working on). Nori is also offering a potentially interesting model that reduces transaction costs and supplies up front capital.

Next Steps: The proof will be in the pudding. 

Carbon Insetting

Many companies have made commitments to carbon neutrality. 

And instead of going through the circuitous route of carbon offsets, more and more companies are opting to invest in sequestration directly within their own supply chains.

Companies like Clif Bar, Organic Valley, and The North Face have all spent CSR / marketing budgets to help their producers: 1) cut emissions, 2) put in place carbon farm plans, and 3) install on-site composting operations. 

Pros: This is a great option for producers since, unlike offsets, inset monies can be used for upfront capital needs and generally do not entail the extensive involvement of 3rd parties. 

Cons: Right now the amounts of funds flowing are limited to pilot projects. 

Next Steps: We hope to see these kinds of internal investments replicated across supply chains, and backed with levels of funding needed to contribute significantly to systemic shift. 

Market Development

Good old fashioned capitalism has a role to play here.

Boutique markets for local produce, and new labeling standards like Regenerative Organic Certified and Climate Beneficial, may fetch prices that can help producers invest in their soils. 

Meanwhile, the mainstream Organic market continues to grow, hitting a record high of $52.2 billion in sales in 2018. 

Pros: The higher market price for Organic and specialty standards can be leveraged to help support the transition.  Public interest in these markets is growing.

Cons: After 25yrs, less than 2% of agricultural land in the US is certified organic, and the lengthy and expensive certification process is a barrier to wide-spread adoption.

*Kashi launched a program to support “transitional products” that’s been helpful but not widely scaled. 

Next Steps: The best farmers + investors will be aggressive with making sure their climate-beneficial products are recognized as such by consumers.  

A few regenerative ag pioneers, including Colorado-based Mad Agriculture, are looking to form investment funds that combine these funding pillars (market development, grants, non-profit technical assistance).  We’ll be watching those!

Manufacturing, Processing and Distribution Infrastructure

A route that we’re curious about, but haven’t seen a ton of movement in, is financing value-added infrastructure for an ag region. 

For example, a wool mill in Northern California – a region that produces many tons of wool, 99% of which must now be sent to China or across the country for processing.

Or a meat processing plants in the intermountain West, where ranchers and smaller-scale producers are left with very few processing-facility options. 

As we saw with the Fair Trade movement, the addition of processing infrastructure at the regional level allows producers to deliver higher-value goods to market.

Traditional financing

Most farm businesses have their cash tied up in real assets: mostly land + equipment.

This creates a good opportunity for classic business financing, since there are assets to loan against. 

This can take the form of a lease or mortgage.

They may also be interested in a revolving term loan (much like a credit card), in order to implement practices, buy equipment, and generally operate their business. The USDA has a Farm Loan Discovery Tool that can help farmers find government and private loans right for them. 

Private investors like Iroquois Valley Farms execute this exact strategy for the transition to organic – offering 3 different financing structures:

1. An evergreen lease geared for generational impact. Farmers get an option to purchase after 5 – 7 years. We will hold the land indefinitely. 

2. An intermediate term mortgage product typically with a beginning interest only period. Mostly these are refinances, with cash out. 

3. An operating line of credit for existing 0 farmers utilizing one of the above products. 

-DAVID MILLER, CEO, IROQUOIS VALLEY FARMS

Financing agreements are also a great opportunity for the investor + producer to come to terms on a regenerative management plan, and agree on any incentives for hitting soil health goals.

Ultimately, if the producer boosts soil health, over time that accrues increased land value to the investor – so that benefit should be reflected in the terms of any financing.

Pros: A well-understood financing mechanism that’s tied to real business results.  Keeps farmers on the land should they choose to remain. Can lock in + properly fund the transition to regenerative practices.

Cons: Capital intensive, requires raising a fund or otherwise having consistent access to capital.  Like any financing method, requires technical assistance and/or recruitment of regenerative-trained producers to be successful.  Requires significant patience.

Next steps: We look forward to seeing a number of different investors stepping into this strategy in the coming years.  We wouldn’t be surprised to see them helping producers vertically integrate, by also funding processing infrastructure + online marketing activities.  

A note to investors

We believe the most successful investors in this space will invest systemically as well as locally.  They will be patient, as well as bold in scope.

That means investing in electing policymakers who support this transition, and investing in the science to support those policymakers.

That means investing philanthropically in technical assistance programs + education.  

That means investing in local value-added production infrastructure, like meat processing plants and wool mills.

Investing locally in individual farms + ranches is of course critical.  

But without broader systemic investments, there will persist both a cap on your investment returns, and a limit to the magnitude of the regenerative transition.

State Healthy Soil Policy Map

The US State Soil Health Policy Map is a crowd-sourced policy tracker designed to support the growth of healthy soil and related policies by sharing frameworks and lessons learned. Click on a state and read below to learn more!

Legislation PassedLegislation DraftedInterestRelated PolicyNo Known Activity


As a collaborative and “living” site, this map is updated by volunteers as policy is conceived, created, and moves forward.  

Information on each state is maintained by a “State Curator” or group of curators who serve to keep the space information based, clean and functional. If you are interested in adding information to the resource list below, or to a state page, please email the state curator at <state>@healthysoilspolicy.org (ex: newmexico@healthysoilspolicy.org).

Related Resources

Media

A new website promises to help rebalance our climate — using dirt By Carbon180

“A new website is tracking soil health policy across the US, with the goal of supporting state healthy soil activities and helping enact state policy. Launched by volunteer organization Nerds for Earth and climate-focused nonprofit Soil4Climate, and with support from the Carbon Project, the site is built on crowdsourced data, with curators from each state serving to update and maintain it. With the stroke of a mouse, one can find healthy soil and agriculture policies broken down by each state, a legislative database for the 2019 session, and other related resources — policy guidance, technical guidance, agricultural markets, scientific papers, grant funding, and more.

The timing of this new resource couldn’t be better. As the conversation about climate change gains momentum, regenerative agriculture is moving into the mainstream.”

Soil4Climate Legislative Database

This project was produced by a collaboration of  Tufts University, Soil4Climate, Nerds for Earth, and The Carbon Project at People Food & Land Foundation. Initial Funding was provided by Jena King.

A Drop in the Bucket

Nerds for Earth is a volunteer organization that uses technical skills to help rebalance our climate.  Learn more about us here, and stay in touch by subscribing at the bottom of the post.

As benevolent nerds, our instinct when solving a problem is to build something new and revolutionary.  

Especially when facing a challenge as large as rebalancing our planet’s climate.

Let’s launch giant sun shades into space to reflect the Sun’s heat!

Let’s use drones to seed clouds with light-reflecting dust!  

Both may someday be useful tools to have in the toolbelt.

But they don’t address the root cause of the issue, and in no way move us closer to living in balance with our planet.  

They are over there, somewhere in The Glorious Future – not connected to our everyday lives and the systems, like agriculture, we rely upon.  

Surfing the Adjacent Possible

Please indulge this 2 x 2 problem solving matrix:

  1. Bottom-left: we have the current state of affairs – which if you’re reading this I assume you believe to be less than ideal.
  2. Top-right: we have The Glorious Future – the beautiful state of nirvana-like biological balance that anyone with a Prius probably aspires to.  The Glorious Future is usually a cruel illusion, as it can’t be reached directly from our current reality.
  3. Top-left and bottom-right: we have adjacent possibility – moves that we could directly make as individuals or societies.  Composting at home or advocating for a municipal compost program in your town would fall in this bucket.

Some would decry walking through door #3 as “incrementalism” or a “drop in the bucket.”  

But drops in the bucket are literally all we have.  

Drops in the bucket – individuals burning fossil fuels and spraying pesticides – are how we got here, and how we will move forward.  

At Nerds for Earth, we believe in finding buckets in our society that are already working well, and adding our unique drop.  You might call this surfing the adjacent possible.

Step Forward to Cool the Planet

Carbon Farmers are masters of the adjacent possible.

Using known agricultural techniques, like compost application and cover cropping, they pull carbon from the air into the soil.  

Increased soil carbon means healthier soil, higher nutrient density in food, and often increased crop yields.  Photosynthesis FTW!

It’s a non-sexy strategy that leads to sexy results.

Note: you can find the full list of carbon-beneficial land management practices on the Natural Resources Conservation Services website in case you’re curious.

I’ll let John Wick, rancher and co-founder of the Marin Carbon Project, explain Carbon Farming in detail:

Carbon Farming could go a long way towards rebalancing our climate and increasing food security.

The Marin Carbon Project estimated that if we applied compost one time to 50% of rangelands in California, we could sequester the state’s annual emissions from commercial and residential electricity use – all while increasing the amount and quality of forage production.

Many agricultural support groups (Fibershed, California Resource Conservation Districts, Mad Agriculture, and the San Diego Food System Alliance to name a few in the US) are working actively to help ranchers + farmers implement carbon-beneficial land management practices.   

So how can we, as nerds, support their work?

Building the Adjacent Possible

Before putting pen to paper as technical volunteers, we first have to answer a couple questions:

  1. Who are we serving?
  2. What do they need?

Answering these questions is always more difficult than it appears.  It requires Listening Closely, and not projecting what we’d like to build or would be fun to build onto the situation.

Who are we serving?

Before a farmer or rancher implements carbon-beneficial practices on their property, they generally build out what’s known as a Carbon Farm Plan.  

That plan is prepared by conservation planners, who often work at the local Resource Conservation District or at a nonprofit group like the Carbon Cycle Institute.

So, for purposes of this project, we specifically decided to serve conservation planners preparing Carbon Farm Plans.

What do they need?

Part of the output from the Carbon Farm planning process is a list of recommended practices and their projected carbon sequestration benefit (calculated using the COMET Planner tool):

What we heard from Carbon Farm planners, is that they wanted help answering a couple questions about Plans they’ve produced:

  1. How much will this cost to implement, given the local variability of labor and other costs?
  2. Given that cost, which practices should be implemented first to get the highest carbon sequestration benefit from a limited budget?

This is the point at which our wheels start turning.  

By calculating the cost of implementing carbon-beneficial practices, we could help Carbon Farm Plans be implemented – a direct adjacent win for everyone involved (+Earth).  

What we Built

The end result of this process was a simple cost + return model built in Google Sheets.  Yes, that’s right – even spreadsheets have a role in rebalancing our climate.

The model relies 100% on existing public data, thanks to the NRCS (a sub-agency of the USDA created during the Dust Bowl as the “Soil Conservation Service”).

NRCS provides cost-share funding to farmers + ranchers engaging in conservation practices through a program called EQIP.  So if planting a hedgerow costs $1,000, a producer can apply for cost-share funding to cover roughly $500 of the cost.

Thankfully, to support this program, NRCS publishes state-level cost estimates for each conservation practice they fund.

So, all we had to do was download the raw cost data from their site, do an *absurd* amount of data processing (boo PDFs), and voila!  

We had a working cost + return model, where a Carbon Farm planner could enter:

  1. The practices they planned for a farm or ranch, and the acreage / amount of each
  2. The expected benefits from that practice, in terms of carbon sequestration, increased soil organic matter, water holding capacity, or yield

And out the other end comes an estimated cost of implementing each of those practices, as well as the relative ‘bang for buck’ in terms of carbon sequestration vs other practices.

Carbon Farm cost + return model
The final output of our Carbon Farm cost + return model

If you’re curious to check out the model for yourself, browse the California and Colorado versions (to make your own copy and put it into action, select File -> Make a Copy and follow the Instructions tab).

Listening Twice

Our instinct as volunteers was to build the spreadsheet model, share it with Carbon Farm Planners, then celebrate.  

But we found it wasn’t that simple.  Ensuring that something you’ve built as a volunteer actually gets used requires listening twice: before you build it, and after you’ve shared it.  

For example, we learned from a couple planners that our model had one major shortcoming:

They needed to be able to set granular component-level costs (like labor, fence, or compost) for each of their plans, as costs in a state like California can differ so widely across different regions.

If we didn’t have 1-on-1 follow-up meetings with planners, we never would’ve learned about this – and our attempt to serve would’ve ended up on the trash heap of history.

But since we did, we were able to build a process into the Sheet to modify costs locally:

Modifying local costs in the cost + return model
Modifying local costs in the Carbon Farm model

Listening Closely can avert (almost any) spreadsheet disaster.  Many thanks to everyone who generously shared their time to offer feedback on the tool. 

What’s your Adjacent Possible?

This is just one small story of one group helping farmers + ranchers help the planet.  A drop in the bucket.

Never forget, though: incrementalism depends on your frame of reference.

As nerds, data wrangling and spreadsheet modeling sure feels incremental.  A direct move up or to the right on the matrix of possibility.

But when blended with the skills of the planner, we make progress towards creating something new and real and good: The Glorious Future.

All that is to say – please do not take your technical skills for granted, just because they come naturally to you.  

When combined with the talent of the people you’re seeking to help, they can be revolutionary.  

Nerds for Earth is a volunteer organization that uses technical skills to help rebalance our climate.  To volunteer or propose a project, drop your email below.