The Future of California’s Climate-Smart Farming Programs

In 2019, as California’s historic drought hit its peak, the well on Lilian Thaoxaochay’s 20-acre family farm, GT Florists and Herbs in Fresno County, looked close to drying up. With rows of Armenian cucumbers, budding dahlias, and blooming jujube trees at risk, the only fix, it seemed, was to dig the well deeper—at a cost of $20,000. “It almost tanked us,” Thaoxaochay recalls of the crisis that threatened her family’s livelihood.

Then came a reprieve: the State Water Efficiency and Enhancement Program (SWEEP), a state initiative to help farms adapt to California’s increasingly erratic climate. Using the $58,000 grant, the Thaoxaochays switched their farm from full-flood irrigation to a drip system fed through trenched water lines and monitored by moisture sensors.

As part of the upgrade, they also installed a flow meter to help comply with California’s Sustainable Groundwater Management Act (SGMA), which requires farms to track groundwater use. The changes slashed not just water use, but also the energy costs of running the pump, leaving the farm far better equipped for the next drought—which arrived just three years later.

The farm also secured a $23,000 grant through the state’s Healthy Soils Program (HSP), an initiative that helps growers integrate composting, cover cropping, and reduced tillage—practices that enhance soil health and increase its capacity to retain water and sequester carbon. In addition to boosting field productivity, the changes helped cut the farm’s reliance on synthetic fertilizers.

“It was the lifeline we needed,” says Thaoxaochay of the two programs. “We’ve been completely resilient since,” she adds, unlike many small farms that have been forced to seek emergency state relief due to erratic weather conditions.

In recent months, U.S. farmers have watched climate-related support wobble under political pressure. The Trump administration froze more than $1 billion in USDA funding for programs aimed at climate resilience and social equity, then reissued several with political strings including scrubbing references to climate change and DEI (diversity, equity, and inclusion). A federal judge has since ordered reinstatement of the funds, but the episode has only deepened the fragility of national climate policy, casting a long shadow over efforts to help farmers brace for a future of worsening droughts, floods, and wildfires.

While California farmers aren’t immune to the fallout, the Golden State offers a level of support not found in much of the country. In addition to SWEEP and HSP, the California Department of Food and Agriculture (CDFA) oversees a suite of several climate-smart agricultural programs that cut emissions and build on-farm resilience. These include the Alternative Manure Management Program, which funds systems that dry manure into compost rather than flushing it into methane-emitting lagoons; the Biologically Integrated Farming Systems Program, to promote low-input, plant-based farming methods; and the Sustainable Agricultural Lands Conservation Program (SALCP), to fund conservation easements that permanently protect farmland, preserving them as carbon sinks. (See “California’s Climate-Smart Farming Programs,” below, for details.)

Lilian Thaoxaochay said a recent drought “almost tanked” her family’s farm. A California initiative, funded by the state’s Cap-and-Trade program, helped them switch to a drip system. (Photo courtesy of GT Florists & Herbs)

All these initiatives are funded through California’s Cap-and-Trade Program, which channels billions of dollars towards reducing greenhouse gas emissions and spurring economic growth.

Enacted in 2006 and implemented in 2013, Cap-and-Trade requires major polluters like oil refineries and manufacturing facilities to buy “allowances” at quarterly auctions to offset their carbon output. The proceeds flow into the Greenhouse Gas Reduction Fund (GGRF), which pays for the state’s climate-smart agricultural programs—along with more than 80 other climate initiatives across transportation, housing, and energy. Together, these investments support California’s goal of achieving net-zero emissions by 2045, positioning California as a national model for integrated, climate-resilient policy.

Eleven Northeastern states also cap power-sector emissions through the Regional Greenhouse Gas Initiative. Yet California Cap-and-Trade is the only program that directly accounts for emissions from agriculture, the leading global source of atmospheric methane and responsible for 8 percent of California’s carbon emissions.

Despite these significant emissions, the climate-smart agricultural programs designed to reduce them receive just 5 percent of Greenhouse Gas Reduction Fund (GGRF) allocations. That imbalance, says Brian Shobe, policy director at the California Climate & Agriculture Network (CalCAN), overlooks agriculture’s outsized potential to sequester carbon and build climate resistance: Healthy fields, pastures, and orchards enhance biodiversity, improve water retention, and help buffer farms against extreme weather.

With federal funding cuts hitting California’s farmers—and Trump’s recent executive order seeking to nullify state cap-and-trade systems—advocates are pushing for more than just a renewal of Cap-and-Trade’s existing allocations. As the program moves toward reauthorization in 2030, a coalition of agricultural and environmental groups, including CalCAN, has started urging lawmakers to lock in 15 percent of GGRF revenues for agricultural climate programs. And, in mid April, Governor Gavin Newsom, Senate President pro Tempore Mike McGuire, and Assembly Speaker Robert Rivas pledged to extend the program, framing it as a chance to “demonstrate real climate leadership” on the national stage.

Stable funding, says Shobe, would let more farms and ranches adopt long-term climate solutions instead of scrambling for inconsistent, one-off grants tied to fluctuating auction revenues. It would also fortify the state’s broader climate strategy, he adds, and help stabilize the food system against climate-driven shocks that drive up grocery prices.

But agriculture isn’t the only sector competing for those funds. With no automatic appropriations for most climate programs, about 40 percent of Cap-and-Trade revenue is up for grabs each year, prompting fierce competition among advocates for housing, transit, energy, and agriculture.

“There’s an annual food fight over limited climate dollars,” says Zack Deutsch-Grosse, policy director at Transform, a nonprofit focused on sustainable, equitable transit and land use. “It pits climate advocates against one another as they seek [stable] appropriations for their programs.”