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In an election year with many uncertainties, Congress finally passed all 12 Fiscal Year 2024 funding bills, allowing for the continued operation of vital programs that touch the lives of 355 million people across the nation. With this important policy agreement behind us, now is the time for Congress to reauthorize the Farm Bill and provide critical support to our 21 million family forest owners, who are responsible for stewarding nearly 40% of our country's forestland.
This community’s lands are increasingly affected by extreme weather, wildfires, pests, and diseases that threaten forest health and the ecosystem services that forests provide. Many private forest owners are doing what they can to fight these threats using climate-smart forestry practices that create healthier, more resilient, carbon-rich forests. Yet the high cost of sustainable management poses a major challenge, especially considering one out of three family forest owners have an annual household income of less than $50,000.
For the Farm Bill to make the greatest impact on rural landowners, it must create the enabling conditions that leverage private finance to provide these forest stewards the tools they need to care for their woods. Currently, the most viable private market to catapult rural conservation investment is the voluntary carbon market.
The voluntary carbon market is an indispensable financial tool to support small private landowners in caring for their forests. It puts the power of private dollars in the hands of rural America by opening access to forest management projects that store more carbon in our forests, create more jobs in rural communities, improve forest health, and provide an additional revenue stream for landowners. The payments that enable landowners to implement these practices come from companies and other entities that purchase carbon credits from project developers to meet their own sustainability goals.
But additional financing is still necessary to cover the upfront cost of implementing such projects, especially for family forest owners who lack the technical and financial support to successfully do so. Meanwhile, companies also struggle with the risk associated with investing in such a new commodity market. With all emerging markets, both public and private funding mechanisms are key to ensure equitable and widespread access for all Americans.
The Rural Forest Markets Act (RFMA) provides a federal loan guarantee—at no cost to the taxpayer—to remove economic barriers and allow small forest owners who want to participate in carbon markets to earn additional income while improving forest health. The bill, introduced in both the House and Senate, also helps reduce private investor risk and grow the market for voluntary carbon credits. In fact, research from the U.S. Department of Agriculture (USDA) shows an explosive increase in private sector interest in carbon markets, particularly in the forestry sector. This is encouraging, but private investors are not yet “buying in” at the pace that’s needed to scale the support that family landowners want and need. Better financial and risk management tools are needed.
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Removing barriers to entry in emerging markets is not a new phenomenon for the federal government. USDA already has a suite of loan and bond guarantee mechanisms in place for many agricultural markets, both nationally and internationally. For example, USDA’s biofuels loan guarantee program provides loan guarantees of up to $250 million to assist in the development, construction, and retrofitting of new and emerging technologies in biofuels, renewable chemicals, and biobased products. USDA’s Farm Service Agency offers loans to help farmers and ranchers get the financing they need to start, expand, or maintain a family farm. Family forest owners, on the other hand, are often left out of similar opportunities currently utilized by farmers.
RFMA has the potential to leverage up to $46 billion in private-sector funding to recruit, enroll, incentivize, and steward family lands. An additional $20 billion of private sector funding would go directly to rural landowners in the form of cash payments or payments to cover forest management practices. This would create an immense opportunity for millions of family forest owners to turn their land stewardship activities into financial support that will ensure they can see their family forests passed down to the next generation.
Our rural landowners need support to break through these market barriers. It’s time for Congress to create the tools that rural America needs to access the financial and technical support to effectively engage in the voluntary carbon market, just as they have provided support to other agricultural markets. Congress should pass the RFMA within the next Farm Bill reauthorization and create the enabling conditions that will unlock the financial potential for all our country’s rural landowners. RFMA is a win-win-win for America - a win for landowners, a win for rural economies, and a win for our forests.
Lesley Jantarasami is Managing Director of the Energy Program at the Bipartisan Policy Center, and Maya Solomon is Senior Director of Policy and Advocacy at the American Forest Foundation.