Carbon Markets and Payments for Ecosystem Service (PES)

Climate Farm Demo analysed carbon markets and Payments for Ecosystem Services (PES) as potential rewarding mechanisms for climate-smart farming. Carbon markets provide opportunities to receive payments for verified emission reductions or carbon removals, while PES schemes can reward farmers for environmental benefits such as improved water quality, soil health and biodiversity.

Examples include France’s Label Bas-Carbone, which certifies emission reductions and carbon sequestration projects, and Austria’s HUMUS+, which rewards farmers for verified soil carbon increases. Other approaches include French water-agency PES schemes that support environmental services in priority agricultural areas.

These mechanisms have different payment conditions. Carbon schemes generally require a baseline, monitoring and verification, while PES schemes may reward specific management practices, measurable environmental outcomes or both.

Before participating, farmers should assess potential payments against implementation, monitoring and verification costs. They should also check contract duration, payment conditions, carbon ownership, permanence requirements and financial responsibilities if expected results are not achieved.

The EU Carbon Removals and Carbon Farming Certification Framework (CRCF), established under Regulation (EU) 2024/3012, provides voluntary EU-wide certification rules. However, certification does not automatically guarantee payment or a buyer. Farmers and advisors should therefore compare available schemes and carefully review contractual obligations before committing.