REPORT ON FARM TECHNO-ECONOMIC MODEL INCLUDING CARBON FARMING PRACTICES

Mediterranean agriculture faces a dual challenge: sustaining productivity under increasingly fragile soil and climatic conditions, while contributing to the European Union’s climate neutrality targets. Carbon farming offers a pathway to reconcile these objectives by enhancing soil organic carbon (SOC), improving ecosystem services, and creating opportunities for farmers to participate in the voluntary carbon market. Yet, its adoption requires robust evidence of both environmental effectiveness and economic feasibility. This report presents the development of a techno-economic model that explicitly integrates carbon farming practices into farm-level financial analysis. It represents Deliverable 1.5.1 of the Carbon Farming MED project, which seeks to accelerate the deployment of carbon farming systems across Mediterranean landscapes. A critical review of existing modelling frameworks, ranging from partial budgeting and partial equilibrium models to whole-farm simulations, Life Cycle Costing (LCC), and Net Present Value (NPV) approaches, highlighted significant limitations in accounting for the costs and revenues unique to carbon farming. These include certification, monitoring, reporting, verification (MRV), and the “lumpy” cashflows associated with carbon credit issuance. The project therefore adopted a combined approach integrating Life Cycle Costing (LCC), Cost-Benefit Analysis/Net Present Value (CBA/NPV), and Techno-Economic Assessment (TEA), which offers a more comprehensive evaluation of long-term profitability, co-benefits, and policy relevance—while also capturing environmental outcomes and broader sustainability impacts alongside economic performance The adapted model integrates three revenue streams (agricultural production, market-based premiums, and public support) alongside a detailed accounting of capital expenditure (CAPEX), operating expenditure (OPEX), and carbon-crediting costs. It was tested on a vineyard case study in the Empordà region (Spain), comparing three scenarios: conventional viticulture (CV), carbon farming without additional revenues (CF), and carbon farming with additional revenues from carbon credits and public support (CF+CC).