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For a farmer in the Edmonton area, selling carbon credits brings in about $1.50 per acre a year.Larry MacDougal

The image tells it all: Pull up the website for Agri-Trend Aggregation Inc., which sells carbon credits for Alberta farmers, and you'll find a picture of a golden grain field with an ATM stuck in the middle of it.

If that wasn't clear enough, the site encourages farmers to sell carbon credits, and "take advantage of a new source of revenue." It offers "carbon coaches" to help and is run by a former vice-president at PricewaterhouseCoopers.

Farm carbon credits, called "tillage credits," have grown to become the single-largest source of carbon offsets in Alberta's trading scheme, which has been in effect since mid-2007. There is little doubt that they are popular among farmers. They reward those who adopt so-called "no-till" agriculture – which creates less land disturbance, and therefore less carbon emissions – and many are already doing so.

Indeed, Humphrey Banack estimates that 75 to 80 per cent of land in Alberta now uses no-till practices. Mr. Banack is president of the Wild Rose Agricultural Producers, which calls itself "Alberta's largest producer-funded general farm organization."

For a farmer in the Edmonton area, selling carbon credits brings in about $1.50 per acre a year. For Mr. Banack, with 4,000 acres, that's about $6,000 a year. It's a small amount compared to the $180 to $200 per acre cost of planting and harvesting land, and works out to about 0.5 per cent of the gross revenue from a piece of land.

But in some ways, it's free money. The past decade has seen an explosion in no-till farming, largely because it provides substantial benefits concerning soil erosion. In other words, farmers aren't likely to switch agricultural practices for carbon benefits alone.

That creates questions about whether tillage credits should be allow. Indeed, allowing tough-to-verify carbon credits can create serious problems.

"If you're allowing offsets into the system that don't meet these verification constraints, then you have what economists would call a 'market for lemons,' " cautioned Andrew Leach, an associate professor at the Alberta School of Business. The offset market gets stuffed with such easy credits, and when "somebody is trying to do real verifiable emissions reduction, they can't compete in the market," he said.

Still, Mr. Banack argued that the system provides plenty of safeguards against any potential problems in verifying the switch to no-till. He says that for farmers in the Edmonton area, making the switch can save up to 0.4 tonnes of carbon per acre a year. But farmers can only receive credit for 0.16 tonnes – in dryer zones, in southern Alberta, it's 0.07 tonnes.

And those numbers are based on allowing farmers to disturb up to 38 per cent of the land, which can happen during seeding. But many farmers don't disturb more than 25 per cent – some, using the newest equipment, disturb only 10 or 15 per cent.

Taken together, those margins of error provide substantial protection against verification errors – or against anyone trying to game the system, he said.

"We have a safety factor built into the process that I think can cover up any type of miscalculation," he said.

But even those involved in aggregating tillage credits – Alberta has some nine tillage middleman companies – acknowledge that verification of carbon offsets under existing rules can be tough.

"I do get why the Alberta Auditor-General is saying it's really hard to prove this. And I would say that he's right," said Bill Dorgan, president of Agri-Trend. Parts of the industry are less than vigilant, he said. Mr. Dorgan does his transactions at the farm, where things can be verified. Others do it on the phone, he said.

And tillage credits are sold for 10 years, so poorly-verified credits will persist long after any fixes are made to the rules.

But, Mr. Dorgan said, the science behind tillage credits is sound, and "we do everything that we can do to substantiate the data set that the farmer provides to us."

That includes checking land titles, using crop insurance records to verify which crops were planted where and physically inspecting farm machinery to make sure it meets the standards. Alberta has allowed farmers to sell credits for no-till practices dating back to 2002, and verifying that historical activity is tough, Mr. Dorgan acknowledged. But those historical credits won't be allowed in new rules that are expected to take effect next year.

And tillage credits haven't been a gold rush – fewer than 10 per cent of agricultural acres have sold such credits, he estimated. And, he added, the small amounts of revenue make it unlikely farmers are working to game the system, given the limited upside.

"Do you think these multimillion-dollar farm enterprises are going to screw around and break the law" for $1.50 an acre? he asked.

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