Civil society groups are squaring off against the World Bank at the U.N. climate conference in Durban, South Africa, to stop a carbon market from being set up for emissions sequestered in soil.

The bank formally introduced its proposal for an agriculture-based carbon market at the 17th Conference of the Parties, or COP 17, this morning.

Agriculture will be heavily affected by climate change, and most climate models predict that African agriculture will be especially hard hit.

The World Bank and other groups have been trying to assign carbon credits to farmers who plant crops in a way that minimizes emissions. "Climate-smart" agriculture seeks to mitigate the effects of global warming by sequestering carbon in the soil while increasing soil health and productivity.

The work program allows farmers to earn credits for their efforts, which they would sell to the World Bank. The bank would then sell the credits on existing voluntary carbon markets. Money earned through the markets would help finance non-governmental organizations working with farmers to teach the techniques of climate-smart agriculture.

Getting agriculture included in the language of the U.N. Framework Convention on Climate Change (UNFCCC) is important because mandatory compliance markets such as the European Union's Emissions Trading System (ETS) would also trade the credits. The voluntary markets are just 0.2 percent the size of compliance markets.

An analogous market-based program for forestry, called Reducing Emissions from Deforestation and Forest Degradation (REDD+), has already been set up.

"The World Bank and many others in the development community would like to see agriculture, including climate-smart agriculture, embedded in the UNFCCC climate discussions because of the important contribution it makes to adaptation and mitigation," said Isabel Hagbrink, spokeswoman for the Carbon Finance Unit of the World Bank.

The World Bank, the U.N. Food and Agriculture Organization, the U.N. World Food Programme, the International Food Policy Research Institute and others urged negotiators to include agriculture in an open letter published last week. The groups specifically asked for support for the climate-smart work program as a way to increase money flows in smallholder agriculture.

"As a percentage of total investment, agriculture has dropped from 22 percent in 1980 to approximately 6 percent today," the letter states. "In absolute terms, this constitutes a drop to roughly half of the funding allocated thirty years ago."

But civil society groups have come out against the work program, which they say is a way for developed nations to place funding for smallholder agriculture at the mercy of unpredictable carbon markets, rather than fund agricultural initiatives directly through the United Nations' Adaptation Fund.

The Institute for Agriculture & Trade Policy, ActionAid International, the Gaia Foundation, the African Biodiversity Network and more than 100 civil society groups sent a letter to African ministers asking them to reject the work program.

"Climate negotiators should insist that developed countries honor their commitments to provide adequate, new and reliable climate finance -- above all public finance -- to enable farmers to make a transition to sustainable agriculture, rather than pinning their hopes onto the chimera of carbon markets," states a report put out by the U.S.-based Institute for Agriculture & Trade Policy.

Complementary policies

The World Bank said carbon markets are an added funding stream for farmers that would not compromise funding for adaptation projects by donors or governments.

"It is important to look at adaptation funds and carbon markets as complementary. The two are not mutually exclusive," said Hagbrink of the World Bank.

Scientists said a wide range of instruments, including direct support for agriculture and market-based approaches, are needed to address the challenge of adapting agriculture to climate change.

"It would even be more dangerous to reduce the effort to carbon markets, especially given their poor performance in the last year," said Calestous Juma, an agricultural expert and professor at the John F. Kennedy School of Government at Harvard University.

"The focus should be on saving the world's delicate agricultural systems, not on shaky carbon markets."

Shaky carbon markets

Carbon markets were set up to help Annex 1 nations in the Kyoto Protocol meet their emissions obligations. The United Nations accredits Clean Development Mechanism (CDM) projects and assigns them credits to be traded on carbon markets. Polluting industries buy these credits to meet their carbon offset goals.

Carbon markets have come under criticism in recent years as some CDM projects have been shown to be fraudulent, while other projects have had major design flaws. In January, cyber thieves stole €30 million in allowances from the E.U. Emissions Trading System. Trade based on the U.N.-backed credits plunged to €5.90 ($8) last week, which is half the price credits traded at in June. Fears that the Kyoto Protocol will be discontinued after Durban have also left the market jittery.

Since the UNFCCC's Adaptation Fund is supported by a 2 percent levy on CDM credits, its value is also falling through the floor, said Steve Suppan of the Institute for Agriculture & Trade Policy.

Tying an additional program to a shaky carbon market under the assumption that farmers stand to gain would be mistaken, he said.

The Organisation for Economic Co-operation and Development (OECD) has estimated that the price of carbon needs to be at least $50 before nations have an incentive to reduce emissions. This price is unlikely to be reached unless the United States and other nations put a cap on emissions.

"The U.S. and the Annex 1 countries want to have new market mechanism, but they want trade without the cap," said Suppan.

The World Bank said today that it has not lost confidence in carbon markets. "The decision by the World Bank to launch post-2012 carbon initiatives is indicative of the institution's commitment to support market-based instruments to fight climate change," it said in a statement.

Kenya pilot

The World Bank and other non-governmental organizations have championed climate-smart agriculture, which is based on principles such as zero-till farming, crop residue management and agro-forestry that keeps carbon sequestered underground.

The World Bank pilot, called the Kenya Agricultural Carbon Project in the Niyanaza and Western provinces of Kenya, is meant to create a market incentive for farmers to practice such techniques. The World Bank aims to enroll 60,000 farmers farming 45,000 hectares in Kenya.

The bank estimates that the project will sequester 1.2 million metric tons of carbon dioxide equivalents, according to a preliminary analysis.

Such agriculture and forestry work programs will use funds from a new tranche of the bank's $90.4 million BioCarbon Fund for transaction costs, the bank announced this morning at COP 17.

"By focusing on forestry and agriculture, the projects will develop new opportunities in crucial sectors because the farm economy predominates and is the single-largest source of income, jobs, and livelihoods in the poorest countries including in Africa," the World Bank said in a statement.

Civil groups have expressed concern that farmers will receive only $23.83 over the 20-year lifespan of the contracts, while nearly $1.05 million would flow to non-governmental organizations to promote the farming methods. The World Bank said much of the income for farmers would come from increased yields from practicing climate-smart agriculture.

Methodological concerns

Civil society groups have said it could be more difficult to quantify carbon sequestration in soil on a global scale. Science is not yet advanced enough to estimate how much carbon lies underground, with different types of soil having different capacities to sequester carbon.

While satellites can take photos to get a sense of farmland, the resolution is often not enough to penetrate the dense tree canopies in tropical nations to get an look at the soil underneath.

But the World Bank said that work programs would have to be audited independently to identify the carbon sequestration potential of each project, rather than on a global scale. The methodology used in Kenya is very specific to that nation and has been verified by an independent audit, said the bank.

Steve Suppan of IATF also disagreed with having agricultural interventions added onto UNFCCC when other sectors, such as transportation, do not get special mention.

"From a technical viewpoint, obviously the techniques [of agro-ecology] are something we support," said Suppan. But getting funding for these projects through the UNFCCC and carbon markets would be the wrong way to get funding to help smallholder farmers adapt to climate change, he said.

"The lion's share of the cause of greenhouse gas emissions lies within industrial agriculture, and also in the packaging and transportation costs of food distribution."