It’s a quandary still waiting for a solution: how do we keep up with the growing global demand for food—which, according to the Food and Agriculture Organization, will require a 60% increase in production by 2050—while at the same time reducing the one-third of all greenhouse gases that agriculture and food systems emit?

It’s a heavy lift that starts with the need for massive investment. The UN estimates the cost of the transformation to sustainable agricultural practices to be $1.3 trillion a year.

Farmers are ready to do their part—so long as they are fairly compensated. New BCG research among over 1,000 US farmers shows that more than three-quarters have a positive attitude toward what the US Department of Agriculture calls “climate-smart agriculture.” Yet, despite this willingness and a general consensus on what sustainable practices look like, farmers lack a clear path forward, mainly because they do not have access to the necessary capital.

A big part of the problem is measurement—more specifically, the lack of a practical system for measuring, monitoring, reporting, and verification (MMRV) of sustainable agricultural practices. In our research, more than 75 experts across the entire agrifood value chain agreed that current measurement practices do not provide sufficient transparency and credibility to enable investments, such as insurance and loans, that incentivize farmers to make the transition to new farming practices. Without better measurement, private investment will not play; and without access to increased private funding, farmers are stuck in the mud.

Food Systems for the Future and BCG have put together a plan to close the measurement gap and, by so doing, jump-start adoption of more climate-smart agricultural practices across the US. Our approach emphasizes practicality, simplicity, and near-term action. It relies on public-private cooperation that in many cases replicates proven models. And it provides a pathway to progress on the toughest problems by defining the realistic steps necessary to advance climate-smart agriculture.

The Measurement Bottleneck for Investors

Billions of dollars in potential financing are sitting on the sidelines because of the inability to measure the impact of various insets (efforts to reduce carbon within one’s supply chain) and offsets (carbon credits from outside the supply chain that compensate producers for lower CO₂ emissions, for example). Ironically, potential investors have fewer doubts about the effectiveness of sustainable practices than they do about how changes in practice are tracked and modeled. MMRV has become a critical bottleneck.

The challenge starts with the conflict between quality and scalability of measurement systems. Quality, or the degree to which claims of sustainable outcomes are grounded in evidence, drives the underlying value of a practice, such as planting cover crops. Scalability, or the ease with which the MMRV system can be readily implemented across farms nationwide, is critical to attracting investment and driving adoption. This conflict becomes a conundrum when investors (both financial and corporate) try to assess the prospective returns of both sustainability insets and offsets. Too much focus on quality makes the cost of a credit greater than the credit’s climate value, resulting in minimal adoption. At the same time, emphasizing scalability at the expense of quality can cause markets to lose trust in the credits, particularly among corporate buyers.

This conundrum is exacerbated by current MMRV methods and technologies that both are costly and lack scalability. There is no consensus on common standards or methodologies, which leads to reluctance from companies and investors to commit.

Public-Private Solutions

We have identified five public-private solutions involving policy, technology, and finance that together have the potential to both overcome the impediments to better MMRV and unlock billions of dollars in mostly private-sector incentives for farmers, including preferred lending, discounted insurance, subsidies, and premiums. These measures include the following:

• Define guardrails for quality. Stakeholders are yearning for a common language that brings consistency, transparency, and comparability to MMRV.
• Create a data wallet for farmers. In the same way that patients in the healthcare system have control over their personal data—deciding who can access it and how it is used, and ensuring it is protected—a data wallet would empower farmers to secure and manage their data, selectively sharing it with other stakeholders.
• Build an open source agriculture and climate-data inventory. Not only is data for training measurement models is expensive, but the disparate ways in which this data is obtained is also a key source of uncertainty and opacity in an already confusing market for climate-smart agriculture.
• Launch a marketplace for climate-smart programs. Farmers and companies alike find current programs confusing and difficult to navigate, resulting in many of them often choosing not to participate at all.
• Incentivize climate-smart transitions. Both the public and private sectors can embed financial rewards, such as better loan terms, into current insurance and farm financing programs. One place to start is incentivizing actual measurement, which would give the private sector the kind of key that could help unlock funding.

These solutions, which are detailed in our full report, are characterized by simplicity and flexibility rather than being a one-size-fits-all scheme. They will allow farmers to move toward climate-smart practices in ways that make sense for their operations and then simply measure the degree of change and be rewarded on a flexible scale. We have rooted our recommendations in the principle of “good enough” in order to provide sufficient measurement accuracy to give the private sector the confidence it needs to invest, but not more precision or measurement burden than is necessary to achieve this goal.

The need is urgent, and the potential benefits of MMRV for farmers are substantial. The private and public sectors can and should collaborate to make this vision a reality, as they have done in previous successful partnerships, providing crucial support for farmers and transforming agriculture into a cornerstone of climate resilience.