The challenge we face as farmers is to see the value accrues to the farmers who use the Best Management Practices (BMPs) that sequester carbon. To explain this let's use a 'garage' analogy. Farmers that employ BMPs such as Zero-till, direct seeding and seeding permanent cover remove and store CO2 in the soil. (in terms of our analogy farmers create carbon Storage " garages" These ag sinks ( or carbon garages ) were recognized in the Marrakech round of the Kyoto negotiations as RMUs or emission removal units and create tradable offsets. RMU offsets and ERU ( emission reduction units) offsets will be tradable in international and domestic markets. We will talk about market structures later.

Our federal government has complicated this RMU off-set market by proposing that there be two pools of offsets. One pool is BAU ( business as usual) off-sets and the other pool is tradable offsets. Let's for the sake of our analogy call the BAU off-sets red garages and the tradable off-sets green garages. The difference in the market place is that the red garages are to be owned by the Federal government and the offsets will be used to lower the Nations emissions target. The green garages are the property of farmers and have value in the Emission trading market place. Farmers will only be able to use green garages in emission markets, red garages will have no value for the farmer.

This is difficult to comprehend since both the red and green garages are created solely as a result of individual farmer's action, exist in the soil and will be maintained by those same farmers. The question farmers now need answered is "Are the garages on my farm red ones ( the property of Canada) or green ones with value to me?"

The Canadian plan at this time does not offer a clear definition of what makes a garage red or green but until told differently we can assume that the color of the garage is dependent on when the farmer adopts the BMPs that build the garages. This is to say that if you started BMPs like Zero till, direct seeding or seeded permanent cover any time before 2008 all your garages are red and the property of the Federal government. If you start the same BMPs like Zero till, direct seeding or seed permanent cover after 2008 your garages are all green. This will become extremely complicated.

In Saskatchewan with nearly half of Canada's crop land and a large adoption rate of BMPs a very large proportion of the garages will be red. It stands to reason then that farmers will want to know how to turn their garages from red to green in order to be recognized for their efforts.

If you are not presently direct seeding or are planning to seed permanent cover in the near future this Federal plan is telling you that for you to benefit from the offsets created it would be prudent not to start until 2008. What does this say about the importance of creating carbon sinks for the benefit of our environment and the Nation.

What if you already have red garages? Presumably you could burn them all down through the use of lots of tillage and then at a later date replace the valueless red garages with green ones starting in 2008. Why would we implement policy that results in perverse incentive. Whether the carbon is stored in a red or green garage is irrelevant as far as the greenhouse gas concentration in the atmosphere is concerned. The intent of Kyoto is that CO2is removed from the atmosphere stored in the soil and not released back into the atmosphere.

How should farmers approach the (tradable offset) market place? There will be domestic markets (where the color of your garage seems to matter) and an international market which will presumably will be colorblind. Perhaps farmers should ignore domestic markets and insist on participating in a market that has no bias.

The existence of red garages may effectively eliminate or at least severely impact the market for green ones. An emitter needing some place to store surplus emissions may not be willing to lease a green garage from a farmer if it could turn into a red garage. The two offset pools will certainly delay the development of any market system until the definitions of what is red and what is green are clear.

Let us now forget about color and explore market mechanisms. There have been a few offers to buy ag sink offsets, they appear to involve carbon or conservation easements. We all must recognize that sinks are a biological process and can be lost as well as created, sometimes by default and sometimes by intent. For example a forest sink could be lost by fire (default) or harvesting the trees (intent). Ag soil sinks can be destroyed by the with tillage ( don't like red garages) or any one of many factors like drought, increased summer fallow or tillage to control weeds The first example (intent) the rest (default). Selling ag sink offsets would be like farmers expected to provide a garage with a perpetual maintenance contract. Will the Federal government provide this perpetual maintenance with the red garages? Is it fair to expect farmers to both provide the red garages and then throw in their perpetual maintenance for free? Regardless of color maintaining of these garages is an issue.

Hopefully the red/green garage debate will leave the farmer with some red garages. Clearly using garages as a commodity (selling them) with a perpetual maintenance contract would require farmers to assume a reasonable risk. (Bennett-Mitchel 2000). A more reasonable approach would be to lease the garages. To explain this concept we will borrow an analogy from a paper ( Marland et al).

In this analogy a party (someone with surplus emissions) can lease a garage (hopefully painted red) to park his car. (surplus emission). At the end of the contract he can renew the lease. Or find another place to park his car. The party may have used the lease term to find a better lease agreement else where, built his own garage, or decide to park his car on the street and suffer the regulatory consequences. The party may have found another mode of transport. (reduced emission levels) and may no longer need the garage and then it would again be available for lease to another party. There is also a possibility that the garage owner (farmer) may need to use the garage himself"

Perhaps the most sensible way to approach the ag soil sink issue is from the a maintenance contract that works like a lease rather than by debating the color of the garage. Farmers should get recognition and value for maintaining the garages regardless of whether they are red or green.

The current Federal plan will act as a perverse incentive for farmers to continue current BMPs . The plan will also discourage farmers not currently practicing BMPs from adopting them. The decisions determining Ag sink creation and maintenance will be made on an individual, farm by farm basis and a plan that does not support good current practice and delays future adoption will not be in farmers or the Nations best interest.

We should all keep in mind the "Little Red Hen ' story substituting the carbon storage for the making of the bread. Farmers after all makes the decisions, buys the machinery, buys the inputs, supplies the management and does all the work that creates the carbon sink and will do the all the maintenance in the future. It is only fair that farmers receive the recognition and value for their investment and efforts in building the emission storage garages regardless of the color.