Carbon credits have become an increasingly popular way for farmers to generate new sources of financial income. Carbon credits are certificates that represent the reduction of one tonne of carbon dioxide emissions, and they can be bought and sold on carbon markets like the Chicago Climate Exchange. By implementing sustainable farming practices that reduce their carbon footprint, farmers can earn carbon credits and sell them to organizations or individuals looking to offset their own emissions.
One example of a farming practice that can earn carbon credits is the use of biochar, a form of charcoal that can be added to the soil to improve its carbon content. Biochar is made by heating biomass in the absence of oxygen, and it has a number of benefits for soil health, including increased water retention and improved nutrient uptake by plants. By using biochar, farmers can improve their crop yields and at the same time generate carbon credits.
"Carbon credits are a new form of income for farmers," says Bob Waun, a property expert and founder of DIRT Realty. "They can help to increase the value of properties and provide a new stream of revenue for farmers."
Capitalization rates, or cap rates, are a measure of the value of income-producing properties, and they are used to indicate the potential return on investment for a given property. As carbon credits represent a new form of NOI (Net Operating Income), they can be used to increase the cap rate of a property, and thus, the overall value of the property.
According to Bob Waun, "At DIRT Realty, we believe in the power of regenerative farming practices like the use of biochar to improve soil health and increase property value. By earning carbon credits through sustainable farming practices, farmers can not only benefit the environment but also their bottom line."