Institutionalizing Soil Health Land Valuation in Michigan

Why Our Work is Needed

Delta Institute spent several years engaging landowners, land managers, and farmers to implement conservation practices in (initially) Southeastern Michigan and then throughout the State, on working lands to improve environmental outcomes. Specifically, we seek to improve water quality in the Great Lakes Basin through the reduction of nutrient loading and runoff on farms throughout Michigan by creating economic incentives for the adoption of soil health management systems by integrating soil health indicators when calculating farmland property value.

Our learnings built from upon previous conservation efforts in Southeast Michigan that assessed current conditions and provided a roadmap of recommendations (please see below), while utilizing learnings and deliverables from similar projects Delta has undertaken in other Midwestern geographies.

Our First Stage of Work: Current Conditions and Roadmap Recommendations in Southeast Michigan

To better understand the socioeconomic, environmental, and political dynamics that impact the success of these agricultural conservation programs, the project team at Delta Institute has compiled and summarized data on producer demographics, land use, cropping area, tenure status, conservation practices, and conservation program participation and outcomes. Our assessment also provides preliminary analysis of the data trends presented herein with a focus on four target counties located in Southeast Michigan. These counties, Hillsdale, Lenawee, Washtenaw, and Monroe, span the boundaries of eight subbasins, four of which drain directly into the western basin of Lake Erie. Note that St. Joseph/Tiffin is part of the Maumee River Watershed.

We’ve also completed an assessment of potential mechanisms to increase adoption of conservation practices in Southeast Michigan that increase the sustainability of agricultural operations and improve water quality. Specifically, the project team investigated the applicability and feasibility of the mechanisms described below for implementation in Hillsdale, Lenawee, Monroe, and Washtenaw counties. Additionally, the assessment highlights successful case studies of similarly structured programs in Midwest states and describes their basic programmatic frameworks to illustrate how the various mechanisms might be implemented in Southeast Michigan.

Location

Project Materials and Resources

The resources below include the Current Conditions Assessment and Recommendations Roadmap that have been developed by the project team during the first phase of our land stewardship efforts in Southeast Michigan:

Stage Two: Why Our Work is Needed

Farmers face steep hurdles to successfully transition to conservation-focused, climate-resilient agriculture. Value propositions, ranging from improved drought/flooding resilience, greenhouse gas instruments, land appraisal and rent value increases, and other benefits from improving soil health through the adoption of conservation practices, are unclear to many farmers. Products and services are needed that integrate these practices seamlessly into a farmer’s business and operations decisions, with clear-cut financial mechanisms that make the case for soil health-focused practices that then have direct impacts on soil and water.

Currently, soil health and soil health management practices are not factored into the land value appraisal process and therefore are often ignored by landowners seeking to increase the value of their agricultural land when making management decisions, or when deciding who to hire as farm operators. There is little incentive to invest resources in practices that increase soil health; thus, incorporating soil health into the valuation process can serve as a critical pathway to transition to management practices that increase soil health—particularly soil health management systems—if such practices lead to increased land value.     

There is a direct connection between the adoption of soil health management practices and the reduction of fertilizers, E.coli, and agricultural runoff into water bodies, thus creating clear-cut value additions for water quality improvements when soil health practices are enacted. Indeed, one of the many documented benefits of increasing soil health is increasing water-holding capacity of farmland—without impacting crop growth—and decreasing nutrient runoff into the Great Lakes and, namely, Lake Erie.

As the importance of land management in addressing climate change becomes more apparent, the Midwestern agricultural community needs to assess and value soil health for sale valuation, loan and investment underwriting, and—quite notably—carbon sequestration and documented water and soil quality improvements. Delta proposes designing a framework for soil health land valuation based on sound science that creates lasting conservation incentives to increase farmers’ resilience to climate change, achieve measurable improvements in soil and water health, and provide economic benefits for landowners.

Our Second Stage of Work: Incorporating Soil Health into Michigan’s Agricultural Land Valuation

Delta is working towards institutionalizing soil health land valuation in the Michigan land appraisal process to create additional economic driver(s) to incentivize landowners to adopt soil health management systems. By creating real value to land and benefit for increasing soil health, landowners and operation managers will have more incentive to implement soil health management system practices that improve soil, increase conservation, and reduce nutrient loading into local waterways and Lake Erie, as well as the Great Lakes more broadly. Delta and its partners have developed two interventions for factoring soil health into the land appraisal process based upon previous investigation of the land valuation process from peer reviewed literature, reports and discussions concerning appraisal practices, and consultation with an advisory group made up of landowners, appraisers, and economists. Delta seeks to refine these interventions and test them. Delta plans to create an educational curriculum for Michigan appraisers and farmers to learn about the importance of soil health, including the social, economic, and environmental benefits and provide appraisers with the necessary resources to enable them to conduct proper soil health testing procedures and facilitate soil health testing in Michigan.

The project team created a memorandum prepared for farmland brokers, appraisers, and conservationists that identifies two interventions to incorporate soil conservation practices into farmland appraisal in southeast Michigan, with the potential to scale throughout the entire state. These concepts were also supported by research reports created by our partners at Michigan State University (please see below report), including a farmer survey to understand how or whether soil health affects Michigan agriculture land values and conducted research about soil health and land value. The team and our partners collected and analyzed data and developed a framework for considering interventions for soil health into the land valuation process.

Delta Institute developed an outreach strategy and implementation plan that engaged stakeholders involved in the Michigan land valuation process. We developed our list of appraisers, agronomic service producers, and agrobusinesses in the late Winter/early spring of 2021, and began informal outreach in the Spring/Summer of 2021 to maximize our efforts while being mindful of the ag production schedule. We conducted stakeholder engagement and collected data to prototype four Delta staff proposed intervention concepts. After receiving feedback from the stakeholder group and the MSU reports, two interventions strategies were refined and developed and proposed in our final deliverable.  

Project Materials and Resources

The resources below include the Current Conditions Assessment and Recommendations Roadmap that have been developed by the project team during the first phase of our land stewardship efforts in Southeast Michigan:

Partners

Delta Institute partnered with Michigan State University, the Michigan Environmental Council, the Michigan Association of Conservation Districts, and many other local and regional partners who provided their talent, expertise, and feedback to help inform these assessments and recommendations.

We are grateful to the Fred A. and Barbara M. Erb Family Foundation for generously supporting both stages of our work to uncover and explore the link between soil health and land valuation in Southeast Michigan.