Introduction

Carbon credit projects are increasingly being recognised as an essential mechanism for aligning economic growth with climate goals. A carbon credit represents a certified reduction or removal of greenhouse gases equivalent to one tonne of CO₂.

Globally, nearly 175–180 million credits are retired annually, with a significant portion arising from renewable energy and nature-based solutions. In the context of developing economies like India, agriculture holds immense potential—both as a mitigation sector and as a livelihood base for over 43% of the workforce.

However, despite this potential, agriculture-based carbon credit projects face structural, institutional, and equity challenges. Strengthening these projects is crucial to achieving net-zero ambitions under the commitments of the Paris Agreement and ensuring just climate transitions.

1. Structural and Institutional Barriers

a) Weak Farmer Engagement and Capacity Constraints

• Over 85% of Indian farmers are smallholders, lacking technical knowledge about carbon crediting, verification requirements, and revenue models.
• Many projects fail due to poor follow-up and inadequate extension services, especially among marginalised communities.
• Example: Under agriculture projects listed with Verra, only a fraction have successfully registered and none have issued credits, reflecting limited community capacity.

b) Absence of Robust Monitoring, Reporting and Verification (MRV) Systems

• Accurate soil carbon measurement remains technically and financially challenging at scale.
• Lack of harmonised MRV standards results in delays and credibility issues.
• Example: The suspension of Northern Rangelands Trust credits in Kenya due to flawed soil carbon accounting highlights global MRV challenges.

c) Fragmented Landholdings and Unclear Land Tenure

• India’s average landholding size (less than 1.1 ha) complicates aggregation and verification of emission reductions.
• Customary and common land use further complicates ownership and benefit distribution.
• Example: NABARD’s climate initiatives show the importance of land consolidation for viable credit projects.

2. Equity, Rights, and Governance Issues

a) Inadequate Recognition of Land and Community Rights

• Projects often extend to village commons and forest fringes without formalising Free, Prior and Informed Consent (FPIC).
• This creates risks of displacement and restricted access to resources like grazing lands and fuelwood.
• Example: The Lake Turkana Wind Power case in Kenya illustrates how neglecting land rights can disrupt livelihoods.

b) Power Asymmetries and Opaque Benefit-Sharing

• Developers and intermediaries often control information and revenues, while farmers receive minimal or delayed benefits.
• Lack of transparency under India’s Carbon Credit Trading Scheme weakens accountability.
• Marginalised caste farmers are often bypassed in agricultural carbon projects.

c) Centralised Top-Down Implementation

• Many projects are designed without community leadership, leading to poor local ownership.
• Contrast: Kenya’s decentralised conservancies show potential but also reveal risks when governance is opaque.
• India must embed FPIC and governance safeguards to prevent similar pitfalls.

3. Measures to Enhance Inclusivity and Effectiveness

1. Institutional and Technical Strengthening

• Farmer Capacity Building: Launch targeted extension services via Krishi Vigyan Kendras and integrate carbon literacy into the National Mission on Sustainable Agriculture. Empower FPOs to aggregate smallholders.
• Develop India-Specific MRV Protocols: Use remote sensing and ISRO’s satellite-based soil carbon mapping to create low-cost monitoring systems.
• Tenure Clarity and Land Aggregation: Use the Digital India Land Records Modernization Programme to formalise rights and promote group certification models.

2. Governance Reforms and Social Safeguards

• Mandatory FPIC and Land Rights Protection: Align carbon projects with Forest Rights Act, 2006 and PESA Act to secure consent and tenure.
• Transparent and Equitable Benefit-Sharing: Mandate disclosure of revenue agreements and minimum community benefit thresholds.
• Decentralised and Participatory Governance: Ensure local monitoring, elected representation, and grievance redressal systems through Panchayati Raj Institutions.

3. Market Development and Policy Integration

• Strengthen Domestic Carbon Market: Introduce agriculture-specific crediting methodologies under CCTS, including biochar and agroforestry.
• Ensure Price Stability and Financial Access: Set floor prices and offer upfront cost support via NABARD’s green finance facilities.
• Integrate with National Climate Strategies: Align crediting with India’s Low Emissions Development Strategy and major rural schemes like PMKSY and MGNREGA.

Conclusion:

Agriculture-based carbon credit projects offer a transformative pathway for India to meet its climate goals while supporting rural livelihoods. However, without addressing structural, governance, and market-level challenges, these projects risk reinforcing inequities and failing to deliver tangible benefits.

A balanced regulatory approach—lightweight yet rights-protective—is required. Ensuring transparency, FPIC, fair benefit-sharing, and strong MRV frameworks can empower smallholders and make these projects inclusive. Embedding carbon crediting into national agricultural programs and incentivising farmer-led cooperatives can turn India’s agricultural landscape into a cornerstone of climate justice and sustainable development.