How can blockchain technology transform the agricultural sector?

Farms4Climate AIR Institute organized a special session on Blockchain for Climate Action at the last Salamanca Tech Summit's Blockchain Congress, discussing the enormous potential of blockchain and other related innovative technologies in carbon markets

The integration of blockchain and other innovative technologies has the potential of significantly enhancing the traceability and verification processes in sustainable agriculture, particularly in the context of carbon capture and sequestration. This approach can not only support the EU's climate objectives but also foster greater confidence and participation in carbon trading, particularly from smaller agricultural stakeholders who might otherwise be disadvantaged in traditional market structures.

As was highlighted during the Salamanca Tech Summit's Blockchain Congress organized by AIR Institute in the special session "Farms4Climate: Workshop on Blockchain for Climate Action", blockchain can revolutionize the European Union's carbon markets, making them more transparent, efficient, and trustworthy. A key element to reduce economic and administrative challenges, particularly for small-scale farmers, is the use of smart contracts, which are decentralized computer programs running on a blockchain network. These contracts execute agreements based on prearranged conditions in an automatic and deterministic manner, and therefore improve efficiency, costs, transparency, security, and time, while reducing the need for intermediaries.

In alignment with the European Union's Carbon Removal Certification Framework, blockchain and smart contracts can significantly streamline the certification process for carbon removal. By automating data verification and execution of conditions through smart contracts, blockchain ensures that carbon credits are issued based on verified and immutable environmental data, such as those from carbon farming or long-term carbon storage. This automation also ensures that carbon credits are accurately monitored, verified, and traded, minimizing the risks of fraud and double-counting, which are prevalent in traditional carbon markets.

In turn, the input data that triggers the execution of the smart contracts can be obtained through the Internet of Things (IoT), that allows to have precise and real-time data collection to monitor various environmental and agricultural parameters such as soil moisture, nutrient levels, and crop health. This data is then securely recorded on a blockchain, ensuring that it remains immutable and transparent. The Workshop at the Salamanca Congress also discussed the importance of Oracles, services that enable blockchains to access existing off-chain data sources such as the agricultural parameters. Oracles play a crucial role in verifying and authenticating the data collected by IoT devices before it is integrated into smart contracts on the blockchain. This process ensures the integrity and accuracy of the data, which is essential for reliable carbon capture verification and the subsequent issuance of carbon credits.

Overall, the integration of Internet of Things, Oracles and Smart Contracts, using blockchain technology, could transform the agricultural sector by providing a more efficient, transparent, and credible method of verifying carbon capture efforts, making it a robust solution for supporting global efforts in carbon management and climate change mitigation. Moreover, this system is designed to be adaptable to changes in environmental conditions and market demands, thereby improving decision-making and operational efficiency in agriculture.