Canadian Farmers are Innovating to Integrate the Value of Nature in Their Businesses, RBC Report

Recently, RBC Thought Leadership published a report on the case for embedding nature’s value into national economic plans. The report features two case studies showcasing how Canadian farmers are integrating environmental conservation and sustainability practices into their business models. (Values are in Canadian dollars unless specified.)

You can read the report in full here: Unearthing Value: How nature can play a critical role in pro-growth agendas

From invisible to indispensable: Nature’s battle to be recognized in the economy

Building, consuming, and exporting more to boost GDP inevitably strains the forests, soils, and waters that make all growth possible. But pro-growth agendas also present a generational opportunity – to treat nature not as a cost to manage but as an asset to build, value, and leverage.

More than $78 trillion of the global economy – roughly half of total GDP – is highly to moderately dependent on nature. Yet, national GDPs count nature only after it is extracted – fish, grain, timber – while mostly ignoring ecosystem services from nature. This includes carbon storage in agricultural soils, water filtration in healthy peatlands, and cultural and biodiversity benefits of intact forests. Valued at more than $200 trillion, ecosystem services remain largely invisible in economic accounts, leaving both a major source of growth and a growing source of risk unrecognized.

Securing finance for nature continues to be a challenge. The vast majority is coming from governments, as industry has largely steered clear due, in part, to uncertainty around investment returns. Global public and private nature finance amounts to roughly $270 billion per year. To close the nature finance gap by 2030 more than $580 billion is required annually. That climbs to about $940 billion a year by 2050.

A marriage between nature and pro-growth policy agendas provides an unprecedented opportunity to leverage nature as an investable asset. Building natural capital wealth provides a pathway to reboot nature-based sectors, including agriculture and forestry, and boost nature’s role in the built economy, including green infrastructure in housing developments. Investing in nature also mitigates economic losses, including the $3.3 trillion at risk, globally, if ecosystem services such as wild pollination or marine fisheries collapse due to over extraction.

Canada has a set pro-growth agenda, offering a policy and economic model for nature integration. Roughly 7% of Canada’s GDP is from a nature-based sector – agriculture, mining, forestry and fisheries. Collectively, these sectors’ GDP growth has been 0.3% slower than the rest of the economy over the past quarter century. Now, it’s time to streamline nature governance, improve accessibility for companies and governments by applying disruptive technologies like AI, and integrate it into pro-growth policy.

Precision profits: Digital agriculture as a driving force for economic and environmental efficiency

With sights on carbon credits, Prince Edward Island farmers learned that the efficiencies they gained from practices that reduce GHG emissions were indeed the real economic opportunity.

A desire to incentivize farmers for their climate action was the impetus for P.E.I. Federation of Agriculture (PEIFA) in building soil carbon and GHG emissions measurement infrastructure required to connect farmers to carbon markets, while maintaining ownership of their data.

Farmers can be leaders in advancing climate solutions. Responsible management of inputs like nitrogen fertilizer that are essential tools in growing healthy crops and yields is a key part of farmers’ role in driving climate action. Potato production represents most of the agricultural land use on P.E.I., roughly 86,500 acres, and potatoes are a nutrient dense crop to grow, presenting an opportunity to explore how efficiencies in fertilizer use can be incentivized through carbon credits that reward reductions of net GHG emissions.

A mix of government funding and provincial leadership spearheaded by the P.E.I. Federation of Agriculture, and the launch of the offset protocol for improved agricultural land management on VERRA’s voluntary offset carbon registry, together, created the right conditions for the federation’s Agriculture Internet of Things (AgIoT) to come to life. AgIoT is a farmer-owned, scalable, data-agnostic, and real-time monitoring platform.

Money, project leadership, and a protocol that outlines the standard on how to enhance soil carbon and reduce GHG emissions are all necessary pieces to producing carbon credits. But, for nature-based projects, like this, arguably the hardest part is the data collection. This is why AgIoT, a technology solution for farmers by farmers, was created.

To access carbon markets, projects need baseline measurements, from which farmers adopt best management practices like precision nitrogen application or cover crops to show progress. The P.E.I. Federation of Agriculture developed the ‘P.E.I. Low Carbon Cropping Initiative’ with 4,800 acres now enrolled, forming an offset market-compliant project with the goal of registering the project on a carbon market. At the start of the project, the federation and its farmers had an ‘Aha moment’: farms did not have the existing capacity to collect data at a level required for accessing carbon markets. As a result, they set out to automate farmers’ engagement with AgIoT as much as possible.

AgIoT automates data collection and processing, with the goal of reducing the burden on farmers to manage and maintain their data. In-field sensors provide real-time data collection that automatically uploads to the cloud and is accessible to the user through the AgIoT dashboard. AgIoT’s soil carbon and GHG algorithms are estimating agriculture carbon in soils and GHG emissions with real farmer data to determine impacts on net GHG emissions AgIoT platform.

In 2024, a semi-automated software version of AgIoT algorithms was used to model pilot farms participating in the Low Carbon Cropping Initiative. It analyzed crop history submissions, recent soil cores, and a process-based model for GHG emissions and soil carbon estimation. The results from the pilot farms showed that the farms’ GHG emissions reduction are between 50 kilograms and 150 kilograms of carbon dioxide equivalent per hectare. The piloted practices including precision nitrogen fertilizer management also showed that farmers could save $50 to $120 per hectare on inputs. A direct result of optimizing a production system to drive positive economic and environmental outcomes.

“If these modelled efficiencies were applied to the 86,500 acres of annual potato production, it could result in reducing the equivalent of 1,750 to 5,250 tonnes of carbon dioxide per year. That’s just from improving farmers’ data resolution to inform greater efficiencies.”

Carbon markets for nature-based projects is not for the faint at heart. It’s costly. It’s time consuming. And it’s complicated to measure, monitor, report and verify net GHG reductions from biological systems over time because there are many variables to consider that are out of a human’s control. But when you have the right mix of technical skills on the ground to build and apply data solutions like AgIoT, pursing carbon credits can be a pathway to unlock new innovations and efficiencies for farmers.

A farm operation that can collect the necessary data for accessing carbon markets will have a tremendous opportunity to improve decision making and profitability, which is more valuable than the actual carbon credit.

Optimizing returns: Farmers advancing impact & profitability through water stewardship

Farmers are transforming their role in conservation through water stewardship action on their farms. Farmers in southern Manitoba are demonstrating how their practices produce positive environmental outcomes in their watershed and benefit their bottom line.

Lake Winnipeg, the 10^th largest freshwater lake in the world, has deteriorated over the past 50 years due to runoff of nutrients from agriculture, urban developments, and municipal and industrial waste. This has resulted in algae blooms, hinders industrial water use, and restricts recreational enjoyment of the lake. This is costly to the Canadian economy and businesses that rely on the stability in water quality and quantity, notably farmers in the Lake Winnipeg basin.

A collective of Prairie-based organizations, agri-businesses, and four farms covering more than 45,000 acres came together to design a project to demonstrate how water stewardship practices are good for business. An applied research project is helping this collective understand how water stewardship plans and implementation helps create value for farmers, empowering them to tell data-driven stories about their contribution to positive environmental outcomes.

While funding was not the reason farmers joined the collective—it was curiosity in what the impacts of water stewardship would have on their farms and communicating those impacts—companies in the collective are working with participating farmers to test incentive models, including a mix of carbon credits and practice incentive payments. Nutrien, a Canadian fertilizer company, is working with two of the participating farms through their Sustainable Nitrogen Outcomes program. The program generates an outcomes-based payment from GHG emission reductions produced through farmers’ improved management of nitrogen fertilizers.

The farmers are implementing practices from their water stewardship plans and working with a research team to value the return on investment for profit, productivity and the environment. Water stewardship practices were categorized and assessed under two strategies. The first involves practices specifically deployed on croplands, which includes changes in tillage, adoption of precision agriculture technologies, and crop rotations. The second focuses on the enhancement of non-cultivated natural lands on the farm property, such as restoration of marginal farmland, or enhancements to wetlands, hedgerows, and green spaces. Assessed outcomes from practices adopted in 2023 and 2024 by the four farms, include improved air quality, better soil health, and enhanced biodiversity, which were organized based on public and private good.

Farmers generated, on average, $6,900 per acre of value for the public through ecosystem services such as pollination habitat, soil health, and water regulation. The value returned to farmers, based on carbon market values in the region, was $33 per acre.

There is also a social impact. Water stewardship awareness amongst the farming community has seen tremendous uptake and interest through knowledge sharing events and farm tours. This project is also inspiring similar landscape-based efforts, driven by water stewardship, in other regions. 

Governments play a key role in a farmers’ ecosystem of support, providing funding, extension, and standardization. However, government timelines and priorities are not always aligned with those of farmers and companies. Nonetheless, not ensuring government was part of the collective in an active role became a barrier to scaling its impact. Their absence also resulted in missed opportunities in aligning farmers’ water stewardship plans with government programming. The collective is actively working to engage government and capitalize on opportunities from collaboration.