Exploring Opportunities for Carbon Farming and Regenerative Farming in Europe

The transition towards regenerative agriculture confronts farmers with finance needs that are uncertain and variable in time, as they depend on the balance between private benefits for the farmers and public benefits for society. This balance in turn depends on the extent to which new practices and ecosystem services affect farm productivity. Conceptually, a J-shaped farm income curve can be expected as new investments and learning costs may initially drive farm income down, but regenerative practices are hypothesized to increase income in the medium run, following lower costs and lower yield risks. We explore this hypothesis through a systematic literature review and then explore the plethora of public, private and blended financial instruments that are available in the EU context, based on an analysis of 91 incentive schemes and 32 semi-structured interviews with 50 experts, investors and intermediaries.