Economic Feasibility Study of Agricultural Coops as Catalysts in GHG Markets

Domestically and globally, governments have established greenhouse gas (GHG) emissions management measures, including regulatory and voluntary regimes, with opportunities for market-based trading of GHG emissions reduction units (ERUs). Previous research has revealed that numerous on-farm activities can significantly reduce GHG emissions. Therefore, farm owners could provide the emerging markets with tradable GHG ERUs. To enter into the GHG market and acquire positive financial returns from these activities, farm owners would need to reduce the marketing costs associated with GHG trading, e.g. monitoring and verification of carbon reductions, bargaining of emissions reduction contracts. In more conventional farm commodity markets, agricultural cooperatives (CO-OPs) are used to reduce the cost of marketing, processing, and distribution of raw-food products. A reasonable assumption is that GHG commodities could be also offered by CO-OPs. Thus, to assist with opportunities for rural economies to benefit from investments in and trading of ERUs, this project seeks to better understand the feasibility of using established CO-OPs to cultivate and market GHG ERUs. This research effort will develop information on the costs of marketing GHG ERUs, the financial and administrative infrastructure required to market GHG ERUs, and the potential financial benefit to farm owners of entering the GHG market.