The Inflation Reduction Act’s “Climate-Smart Agriculture” Investments Aren’t Very Smart

How To Spend $20 Billion To Actually Reduce Agricultural Emissions

With Congress finally starting to make progress on reauthorizing the long delayed Farm Bill, a showdown over funding for so-called “Climate-Smart Agriculture” is brewing. Environmentalists are set on protecting Inflation Reduction Act funding for USDA conservation programs that would incentivize things like the use of cover crops and regenerative farming practices. Republicans want to shift the funding into the Farm Bill and broaden eligibility to include traditional conservation program activities.

Representative Glenn “GT” Thompson (R-PA), who is chairman of the House Committee on Agriculture, recently proposed taking the money back and instead putting it into the next Farm Bill as additional funding for conventional agricultural producers. A recent report from Senate Republicans made the same case: extend the “climate-smart” agricultural funding to all conservation activities, effectively diluting the funding into broad support for agricultural producers.

Environmental NGOs have, predictably, balked. A sign-on letter from UCS—with support from the who’s-who of the climate and environmental movement—tried to make the case that IRA conservation funding, as currently conceived, is both an economic and climate win for farmers. The Environmental Working Group, National Sustainable Agriculture Coalition, EarthJustice, and others, have also sought to protect the IRA “climate-smart” agriculture fund status quo.

From a climate perspective, though, neither proposal makes any sense. The almost $20 billion set aside by the IRA to fund USDA conservation programs to incentivize “climate-smart” farming might encourage adoption of some practices with climate and productivity benefits, but the majority of what counts as “climate-smart” does little for the climate. Instead of legitimately reducing emissions from agriculture, or even increasing productivity, the IRA agricultural funding is set to fund the adoption of practices that have the potential to increase costs for farmers, reduce yields, and raise global emissions from agriculture.

Shifting the entirety of IRA’s funding to oversubscribed conservation programs, as Republicans have proposed, could have some productivity benefit—and thus some climate benefits too. Investment in conservation programs at USDA is a popular way to incentivize the use of agricultural practices that farmers want to adopt. It is also a sound investment in rural economies. But, it is not, by itself, a climate policy.

At the end of the day, neither proposal for the IRA funding will have much impact on greenhouse gas emissions from the agriculture sector.

There is a strong case for reallocating the IRA investment towards more effective programs. If Congress is going to do so, both farmers and the environment will be far better served by redirecting IRA agriculture funding toward innovation, R&D, deployment of new technologies, and industrial policy measures for agriculture than either continuing to spend that money on the dubious practices it is presently committed too or shifting it back into existing conservation programs.

IRA Agricultural Funding Has Never Been Climate-Smart

In theory, there is nothing wrong with giving more money to the USDA’s conservation programs. They play an important role in U.S. agriculture, yet are chronically underfunded. Among other programs, the Environmental Quality Incentives Program, the Conservation Reserve Program, and the Conservation Stewardship Program provide cost-sharing for adopting certain practices, incentivize water and on-farm conservation practices, and pay farmers to take land out of production—and let native flora and fauna grow—when agricultural prices are low. Across the board, these programs are oversubscribed and are all more or less beneficial for a healthy and abundant agricultural sector.

In other words, it could make sense to provide funds to these programs to incentivize climate-smart practices. But here’s the problem: The way USDA defines “climate-smart” agricultural practices is neither smart nor particularly focused on the climate.

For example, the Natural Resource Conservation Service (NRCS)—which oversees USDA’s conservation programs—provided a breakdown of what it counted as “climate-smart” in 2023, and added to that list in 2024. The list includes a number of on-farm conservation practices such as alley cropping, silvopasture, and other agroforestry practices; pasture and rangeland management practices including various forms of prescribed grazing; “soil health” practices such as cover cropping and reduced or no-till farming; and nutrient management practices to reduce nitrogen and other nutrient run-off.

With some exceptions, these practices are better classified as “environmental”—that is, focused on local conservation—rather than “climate-smart”—that is, focused on carbon emissions. These practices do have benefits in terms of local conservation, improved soil organic matter, regional water quality, and so on. However, they largely do not mitigate carbon emissions from agriculture.

For example, on-farm conservation practices can reduce the emissions produced at a specific farm by removing land from agricultural production or reducing yields by other means. This could mean a decline in absolute emissions on one farm, but not necessarily regionally or locally. This is because reduced efficiency and productivity in one place tends to increase crop prices and incentivizes agricultural production elsewhere, sometimes in places that had not previously been farmed.

The actual mechanisms here are nuanced. The use of narrow wind-breaks—an on-farm conservation practice in which strips of land between farm plots is given over to trees and/or shrubs—can increase yields enough to mitigate the carbon emissions from indirect land-use change. There are other benefits to wind-breaks, such as reducing soil erosion, and potentially adding other on-farm revenue from fruiting trees, or timber sales. But, most of the time, wider windbreaks do not increase yields enough to account for the land taken out of production, meaning a net increase in farm land and, subsequently, a net increase in agricultural emissions.

Practices sold as promoting “soil health” are even murkier. Cover cropping and reduced- or no-till farming—the poster children of soil carbon sequestration—can increase the amount of carbon held in agricultural soils rather than released into the atmosphere. They also increase soil organic matter, helping to keep both soil and crops healthy. But they often do so at the expense of yields and at high cost for farmers. When these practices do decrease yields, their adoption can lead to land-use change elsewhere. Further, while these practices can increase soil carbon levels alongside soil health co-benefits, the permanence of that newly sequestered soil carbon—how long it remains in the soil before it returns to the atmosphere—is uncertain. Whether these “soil health” practices can be called “climate-smart” is yet to be seen.

Pasture management solutions present similar tradeoffs. The cause célèbre of so-called “regenerative” ranching, practices like rotational grazing and multi-paddock systems can increase carbon sequestration in animal agricultural soils. But they also come with massive reductions in efficiency compared to feedlot and other confined feeding systems. And once again, reduced efficiency means increased emissions intensity of agricultural products and indirect land-use change elsewhere.

Herein lies the fundamental problem with IRA agricultural funding. As it stands, “climate-smart” agriculture is a misnomer. Some practices under that label can reduce emissions, but many, if not most, are more likely to have little to no impact on emissions. In the worst scenarios, where “climate-smart” practices decrease yields, they can even increase global agricultural emissions through indirect land-use change, in exchange for short-term local benefits. We simply do not have the technologies, practices, or techniques to fundamentally reduce the emissions from American agriculture, at least not yet.

Rethinking Agricultural Policy for the Future

So far, the Republican position on IRA agricultural funding appears more sensible than the environmentalists’. If the climate benefits of IRA agricultural investment are for not, perhaps it is better to extend that funding to support agricultural conservation, broadly, and not just “climate-smart” practices.

But dropping the “climate-smart” guardrails on the IRA’s conservation investments moves no needles either. It will not improve climate mitigation in U.S. agriculture. It will not help bring food prices down. It will not dramatically increase agricultural productivity, or profitability. It will be just another drop in the ocean of subsidies agricultural producers in the United States have received.

To be sure, those subsidies are not the worst thing. Since 1933 and the passage of the Agricultural Adjustment Act, American farmers have been the recipients of massive government outlays. That money has protected U.S. farmers from the vagaries of global markets. Combined with investments in innovation through the USDA, American farms have been able to increase agricultural productivity, reduce food prices, limit agricultural expansion, reduce global food insecurity, and, in recent years, lower the emissions intensity of agricultural products.

Yet in recent decades, the fundamental technologies of 20th century agriculture like synthetic fertilizers, pesticides, transgenic crops, and tractors have grown stagnant, and public investment in agricultural research and development has declined. Subsidies and promises about progress and conservation have become emptier. Conventional agricultural interests talk about sustainability (and at times, conservation), but their interests are clearly, and rationally, tied to profitability. Farming is, after all, a business. In fact, to the extent they do talk about climate change, they tend to focus on practices, technologies, and programs aimed at lining farmers’ pockets. Among others, they like voluntary incentive programs and low-risk financing for adopting practices—like “regenerative” agriculture—that allow them to upsell products but do not actually reduce emissions.

The United States is left with an agricultural sector stuck in the past. One that right now lacks a legitimate path toward reducing emissions or increasing productivity to match the growing demand for food from both the American and global populations.

This is not to say that American agriculture has completely stagnated. Agricultural productivity has continued its century-long upward trend, but the rate has slowed since the 1970s. This slowdown stems from a number of factors, including but not limited to: processes of farm consolidation and concentration, and their associated benefits from economies of scale, have slowed down since 2007; the radical technological shifts in farming of the early twentieth century like tractors and fertilizers have not been repeated; and, the long-term decline in the growth rate agricultural R&D and innovation investment has meant less consistent growth rates for productivity.

While there have undoubtedly been beneficial technologies introduced into American agriculture over the past half-century. Precision farming technologies, the plethora of biotechnology and gene edited products, and, more recently, microbial fertilizers, have all seen positive results and hold continued potential for productivity growth. It is also true that in many cases—and particularly outside of the US, in developing economies—the incredible agricultural developments of the 20th century have yet to be adopted evenly.

Increasing agricultural productivity growth while reducing emissions from food production will require R&D investment and innovation. It will require technological progress matched with support to deploy those technologies.

Although there is bipartisan support for agricultural R&D investment—and something of a consensus around R&D as a powerful mechanism to push long-term decarbonization—federal investment has been dwindling for over two decades. That pattern looks set to continue; despite potential bipartisan support and the legitimate climate benefits, it is unlikely that 2024 will see increases to agricultural R&D investment. That is a shame.

Currently, the conservation programs funded by the IRA are one of the few means by which USDA can fund the deployment of technologies and new practices. US agriculture also needs programs that can help build the industries capable of modernizing, and subsequently decarbonizing, agriculture. That means taking a page out of the Department of Energy’s playbook and supporting new technologies from ideation to commercialization, and beyond.

Invest in the Future of Agriculture

American agriculture produces around 10% of all U.S. emissions. It pollutes waterways. Kills animals. Releases toxic air pollution. Rewards big businesses. Uses fossil fuels. It is responsible for countless “sins” in the minds of its many critics.

It also provides safe and affordable food to hundreds of millions of Americans and many more millions of people around the world. It is not possible to decarbonize U.S. agricultural production or systematically address agriculture’s other “sins” with the technology we have today. To completely remove these externalities of agriculture would mean getting rid of agriculture altogether.

Legitimate agricultural decarbonization policy must, then, focus on innovation, technological development, and the scaling up of industries to produce technologies that can mitigate carbon on a global scale. To direct such a gargantuan task, the United States needs a real industrial policy for agricultural decarbonization and abundance. One that can build the technological industries needed to increase agricultural productivity, reduce emissions, and keep food cheap for the millions of people who rely on American farms and food production.

Reallocating the $20 billion in agricultural funding appropriated in the IRA to more effective programs represents a real chance for a legitimate investment in the future of agriculture. As Democrats look wearily towards the possible future of a Republican White House—and what that might mean for the funding from the Biden administration’s legislative wins—it is doubly important that those funds are used as effectively as possible. Leaving those funds to simply finance existing “climate-smart” or conservation practices shirks the responsibility of the federal government and the USDA to provide the means for American agricultural producers to grow more food, on less land, with fewer emissions.