How Donald Trump or Kamala Harris should spend a billion dollars at USDA
For nearly a century, the Commodity Credit Corporation (CCC) has served as a bipartisan tool, used by both parties to enact critical agriculture policy in creative ways. As we look to the next administration, the CCC could catalyze billions of new dollars for conservation efforts—without action from a likely-gridlocked Congress. By creating a National Outcomes Bank, the next administration could use existing CCC authorities to buy and sell environmental improvements, increasing the efficiency of conservation and boosting private investment.
But first, what is the CCC?
The year is 1922. As war devastated Europe, American farmers produced record crops of wheat and other commodities to feed the world and enjoyed record prices. But as farmers in France and across continental Europe have returned to their fields, the price of grain has cratered. It would stay that way for over a decade.
Enter one of America’s first (and greatest) agricultural economists, Henry Agard Wallace, with a bold plan to drive up prices by having the government purchase excess supply and sell it off later to stabilize the price level. He called this concept, the “ever-normal granary” and tied it to similar concepts that have existed since at least ancient Egypt.
The mechanism to do this was (and is) the Commodity Credit Corporation (CCC). Originally chartered as an actual corporation, the CCC holds Congressionally-appropriated funds and uses them to fund particular USDA outlays. While most of the programs funded by CCC dollars are strictly Congressionally authorized, the Secretary of Agriculture also has ultimate authority over how to use CCC funds to achieve its mission:
“of stabilizing, supporting, and protecting farm income and prices, of assisting in the maintenance of balanced and adequate supplies of agricultural commodities…and of facilitating the orderly distribution of agricultural commodities…”
So, what does this have to do with the year 2024? These 1933 (and 1937) authorities still exist in almost the exact same form. President Trump used them to purchase commodities during the 2018 trade war with China. But today the commodities the federal government should purchase have changed.
When the next president takes office in 2025, he or she could utilize these same authorities that rescued farmers in the 1930s to strengthen and diversify farm income, while improving our waterways and climate. They should create a National Outcomes Bank.
“What is a National Outcomes Bank?” you ask.
Let’s back up and first define an “outcome” and in this case, we’ll constrain ourselves to “environmental outcomes”. It’s simply any quantified and verifiable unit of improvement to natural resources. Maryland in 2022 became the first state to define the term in statute, and the Senate Farm Bill framework would add a (likely) similar statutory definition for a synonymous term “conservation benefit”. The example that most people think of is a ton of carbon dioxide sequestered, but governments at all levels and private industry are buying various environmental outcomes, like a pound of nitrogen prevented from entering the Chesapeake Bay, a million kilocalories of sunlight not heating a river, or an acre-foot of reduced consumptive water use. Mainly, what I want you to understand is that this concept of an environmental outcome allows us to shift the mindset of restoration and conservation from a service to a good, a commodity.
Once we see restoration as producing goods, our economic system is well-equipped to drive down the price of those goods, just like we’ve seen over time with TVs. As I like to say “If you tell a farmer where to go rather than the route to travel, he’ll probably find a better way to get there.”
USDA itself is already the end buyer of some of these environmental outcomes–in a roundabout way–through the Regional Conservation Partnership Program, as I’ve described in a set of case studies. States also are beginning to purchase environmental outcomes directly–with over $100 million obligated in the Chesapeake Bay watershed alone.
A National Outcomes Bank is simple: USDA buys environmental outcomes from farmers and then resells them to private and government buyers. Just like with other agricultural commodities, the Secretary of Agriculture would direct the CCC to purchase quantified and verifiable units of environmental improvement that the bank would hold until it located a buyer.
Using its existing outreach infrastructure, USDA would execute contracts directly with farmers or with existing aggregators like farmer co-ops. The simplest solution would be to just direct additional funds to EQIP or CSP payments, quantify the outcomes generated from those practices, and then count them on a ledger held by the National Outcomes Bank. But a more sophisticated system could work like any number of state examples, including Wisconsin’s Water Quality Clearinghouse or Vermont’s Pay for Phosphorus Program, in which farmers or technical service providers they employ would describe projects farmers want to complete and ascribe a price to completing them that USDA could pay to fund the projects and purchase the outcomes. USDA could also look to other examples it has funded via RCPPs, like in Brown County, Texas or in Maryland, for the specifics of how to execute contracts for outcomes in a way that’s appealing to farmers. I’d suggest that USDA initially take an all-of-the-above approach and see what leads to generation of the most cost-effective, high-quality outcomes.
Companies could buy outcomes from the CCC similarly to how other government agencies currently buy agricultural commodities from the CCC or to how some companies are buying “carbon credits” right now from aggregators. The Bank would have experienced staff who could set prices based on existing markets and negotiate with would-be buyers.
Let’s look at a few examples of how a National Outcomes Bank could help in practice:
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A small municipality in Iowa could purchase reductions of nitrogen flowing into waterways that were generated by a mix of drainage water management and riparian forest buffers. Those reductions can be counted towards a wastewater treatment plant’s permit requirements using watershed partnerships.
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Imagine a box of Cheerios in the grocery store that says it’s “net carbon neutral”. General Mills could achieve that without greenwashing by buying from the National Outcomes Bank tons of carbon sequestered equal to the emissions produced by manufacturing processes and transportation.
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Power companies that need to mitigate increased water temperature could purchase megajoules of stream temperature reduced from farmers planting streamside buffers just like they do now through CREP.
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Could the Outcomes Bank even begin dabbling in purchasing biodiversity credits from farmers?!
But wait, doesn’t this sound familiar? Didn’t USDA already do this with the Climate Smart Commodities program? Or if you’ve been reading EPIC’s blog, maybe you’re thinking “Didn’t the SUSTAINS Act give USDA the authority to accept private contributions in exchange for ecosystem services?” and “Didn’t Harry use basically the same list in that blog?”.
The National Outcomes Bank is the logical next step, based on what we’re learning about both of those programs.
A National Outcomes Bank is not in conflict with the Climate Smart Commodities program, which seems to be working well so far, but the outcomes bank could be more self-sustaining. CSC aims to jumpstart private investment by outlaying CCC funds that will not be returned. The National Outcomes Bank should have a stated goal of the percentage of purchases that should be sold within a set number of years, such as 80% resold within 3 years. Theoretically, it could be profit-generating, but more likely it would function akin to the State Revolving Funds, acting mostly as a catalyst but needing a top-up every once in a while.
The SUSTAINS Act holds huge amounts of promise, and we don’t know exactly how it will be implemented, but as I read the statute, it has a fundamental timing flaw: private money goes in, then USDA implements practices, and only then would the contributing entity get to take “custody” of those credits. A national outcomes bank flips that on its head, making buying environmental outcomes more like any other good. After all, most people wouldn’t go to the grocery store, give them cash, and then only get vegetables 6 months later after they've been grown.
Just like both of these programs intend to, a National Outcomes Bank would strengthen farmer confidence in environmental markets. For the past decade or more, there has been so much confusion in the marketplace–with numerous aggregators using differing measurement, monitoring, reporting, and verification requirements–that plenty of farmers figure it’s not worth bothering with. A more direct role for USDA, who farmers are used to dealing with, could bring far more consistency and transparency to these transactions. And social science research leads us to believe that a trusted partner like a county NRCS staffer would make a farmer more likely to participate in environmental markets.
I have no illusions that there are plenty of questions still to be answered about this concept. For instance:
How would USDA define quantification standards? In what situations is modeling acceptable and which models? When is some direct measurement of outcomes (or outputs) necessary?
In the case of permittees (like wastewater treatment plants) buying outcomes, how do EPA and USDA coordinate to ensure the outcomes are up to the standards required in permits, especially for additionality?
Could USDA complete a programmatic environmental assessment to satisfy NEPA requirements (as it does for RCPP)? Would other paperwork burdens like the National Historic Preservation Act slow down projects too much for the bank to be viable?
The House Farm Bill draft includes significant restrictions on the use of CCC funds. If that becomes law, would Congress be willing to authorize the National Outcomes Bank?
Does the Commodity Futures Trading Commission have some role in all this? The CFTC sets standards for commodity markets and recently announced guidance for carbon credits.
And probably lots more.
A National Outcomes Bank does have tremendous environmental potential. But primarily it would help farmers’ bottom line, just as the CCC is meant to do. Farmers are already providing ecosystem services like carbon sequestration and are overwhelmingly not getting paid for it. One of the biggest reasons farmers–especially historically underserved farmers–struggle to participate in these markets is a lack of aggregation. A National Outcomes Bank makes it easier for companies who want to do good to also help farmers do well.
This is not just an idea for Kamala Harris and not just an idea for Donald Trump; it is not about bleeding heart environmentalism (any more than EQIP is!) and it’s certainly not a giveaway to big agribusiness. It’s a commonsense solution to make our existing conservation infrastructure more effective, increase private investment in conservation, and support farmers' desire to leave their land and water better than they found it. The CCC has been a regular tool for both parties, and environmental markets have enjoyed bipartisan support my whole life.
Creating a National Outcomes Bank would not require legislative authorization. Given the very high chance of a divided Congress, this is precisely the kind of administrative action that could be very appealing to whichever party controls the White House–to support farmers, increase business efficiency, and revitalize ecosystems.
Questions? Suggestions? Want to learn more or collaborate? Reach out to Harry.
