The catastrophic mid-June floods in the US Midwest brought emotional and economic turmoil to that part of the country which we hope they are able to recover from quickly. The floods could also have a significant impact on the carbon offsets that are derived from the agricultural soils in that region.

Reduced tillage of agricultural fields increases the amount of carbon that is stored in the soils. Carbon offset credits from reduced tillage are commonly used in the Chicago Climate Exchange (CCX). 46% of the CCX’s pre-2008 portfolio was from soil carbon sequestration, and much of that is from reduced tillage practices in the US Midwest.

The June 18 2008 North America newsletter by Point Carbon had a brief article that mentioned that acres might have to be pulled out of reduced till to plant new crops to replace those destroyed by flooding. Dave Krog (CEO of carbon credit aggregator Agragate) explained: “When you have a lot of standing water in a field - especially one that has a lot of plant material on the ground, you get large accumulations of trash (corn stock) accumulated in indifferent spots. It’s really difficult to plant through some of that trash.”

The full impacts of the devastating floods on CCX carbon offsets will likely not be known for several months as farmers decide the management practices (if any) that are needed to rehabilitate their water-logged fields. While the farmers have not started to pull out of their tillage agreements yet, it seems likely that a significant number of them may do so. This illustrates the main concern with soil sequestration offsets (permanence) and the need for reliable and robust insurance mechanisms to be in place to guard against situations like this.

In the voluntary carbon market tillage-derived offsets are very much a CCX product. Reduced tillage is an almost non-existent method of generating offsets for carbon retailers that are not CCX members.