The Potential of Smallholder Agriculture in Carbon Markets

The International Food Policy Research Institute (IFPRI) has released a new paper discussing the potential for smallholder farmers to participate in carbon markets.

In just the few years since markets for greenhouse gas (GHG) emission reductions have been established, their combined value has increased to more than US$100 billion.

While agriculture accounts for an estimated 10 to 14 percent of total greenhouse gas emissions, its role as a mitigating force is receiving increasing attention.

The report notes that whilst agriculture has a large potential in climate change mitigation, it has been largely excluded from both formal and informal carbon markets.

Reasons for this exclusion include the uncertainties regarding the amount of carbon that can be sequestered by agricultural soils, how long it can be stored for and the amount of reductions in emissions from agriculture. An additional concern is the transaction costs associated with monitoring, reporting and verifying changes in soil carbon and emissions.

The IFPRI paper describes the climate change mitigation potential of agriculture, noting the current regulatory and voluntary carbon markets under which agriculture mitigation could be rewarded and provides an overview of what options could be put in place for climate change mitigation strategies.

Many studies have noted the barriers that hinder farmers’ ability to take part in climate change mitigation and sustainable land management practices, notably a lack of knowledge, credit and access to functioning markets.  In carbon markets, barriers to smallholder participation include high transaction costs, uncertain revenue flows, a lack of clarity on ownership of carbon, as well as education and governance limitations.

The paper concludes by calling for the integration of smallholder farmers into carbon markets and for transformation of climate change policy into a pro-poor development strategy.

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