According to researchers from Wageningen University & Research and the Food and Agriculture Organization of the United Nations (FAO), blockchain technology has a lot of potential to support effective climate policy in agriculture. The characteristics of blockchains - efficiency, transparency and traceability of information exchange - make the technology particularly useful in the context of climate change. At the same time, much remains to be done to implement open data exchange based on blockchains on a large scale.
Climate change is one of the greatest threats to food security, poverty reduction and sustainable development worldwide. Innovative solutions are needed to cope with the consequences of climate change. The crucial question in any possible solution is: how effective is it? “You need reliable data to demonstrate the impact of measures,” says Lan van Wassenaer, researcher at Wageningen Economic Research and one of the authors of the report. “That data is now often spread over different silos within a sector and for various reasons, parties are not eager to share their data. That makes it difficult to demonstrate the effectiveness of measures.”
Blockchain technology can make it a lot easier to measure the effectiveness of climate action, the authors say in the report. A blockchain can be seen as a shared digital ledger with data that is shared, copied and synchronized by different actors. Rules and agreements are necessary to ensure the reliability of the data in the ledger. If the technology is used on a large scale, it can develop into an important policy-supporting technology, as van Wassenaer states: “Blockchain technology can, for example, lay the foundation for a worldwide network with reliable carbon data. Another possible application is that with the help of a blockchain you can follow exactly what happens with the ‘plant-a-tree surcharge’ that you pay when you buy a plane ticket. Or think of blockchains as a way for small farmers in developing countries to apply for crowdfunding or microcredit with a token - a kind of digital voucher.”
A big advantage of blockchain technology is that data is spread over the entire network; there is no single central administrator. Built-in control mechanisms must ensure the integrity of recorded data, and as a result, the technology is seen as a unique opportunity for efficient, transparent and traceable information exchange within agricultural sectors. At the moment there are still significant hurdles that make blockchain technology as supporting technology for climate action in agro sectors more difficult, according to van Wassenaer: “From all the practical examples we describe in the report, it appears that the complexity of the technology and the scalability of the application is considered to be challenging, and it takes a lot of cooperation to get stakeholders on board and to use the technology effectively.”
Three policy options
According to van Wassenaer, governments and policymakers such as the FAO have three options for further developing blockchain technology as a technology for supporting climate action: “First, provide a clear legal framework that is in line with the Sustainable Development Goals of the United Nations. Second, encourage standardization in measurement methods and performance indicators.” And third, “Make maximum use of awareness, training and capacity development, especially among small farmers in developing countries.”
Application of blockchain in climate change adaptation and mitigation in agriculture: state of play and outlook is the full title of the research report on which Wageningen Economic Research and the FAO collaborated.