Climate finance projects, such as agroforestry, can contribute to carbon sequestration in India. However, India’s participation in carbon finance markets is limited due to global carbon standards that don’t align with local practices, affecting farmers’ potential income from carbon credits.
Key Words:
- Agroforestry is an integrated land-use management system that combines agriculture (crops) and forestry practices(like growing trees) to create more diverse, productive, and sustainable farming environments. It involves the deliberate planting and management of trees alongside crops and/or livestock in a way that benefits both the agricultural and forestry components.
- Afforestation: The establishment of a forest or stand of trees in an area where there was previously no tree cover.
- Reforestation: The replanting of trees in a deforested area to restore the forest ecosystem that was previously present.
- Revegetation: The process of planting and nurturing vegetation, such as grasses and shrubs, in an area to restore its ecological balance. This may include trees, shrubs, and other plants.
- Carbon Sinks: These can be created by growing more trees and establishing more forests, which absorb carbon dioxide from the atmosphere.
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Climate Finance Projects
Climate finance projects are designed to sequester carbon from the atmosphere, helping to mitigate the impacts of climate change. One effective method for carbon sequestration is the growth of forests, which absorb significant amounts of carbon dioxide. Participants in these projects can receive various incentives for their efforts.
- These incentives can be direct, such as financial sponsorship from organisations like the World Bank. However, there are instances where companies with emission limits fail to reduce their emissions effectively. Instead of lowering their carbon output, they may inadvertently increase it, leading them to purchase carbon credits from the market to offset their excess emissions.
- For instance, if an individual or organisation establishes a forest that absorbs carbon, the amount of carbon sequestered will determine the number of carbon credits awarded. For example, if a forest absorbs one ton of carbon dioxide, the owner could receive a carbon credit valued at around 1 crore (10 million) INR. Companies seeking to meet their emission reduction obligations can then purchase these credits from individuals or entities that have successfully created carbon sinks. This creates a market for carbon credits, incentivizing sustainable practices and environmental stewardship.
Role of Agroforestry in carbon sequestration
- Agroforestry has great potential in India. It can grow from 28.4 million hectares of land today to 53 million hectares by 2050. Right now, agroforestry makes up 8.65% of India’s total land area and contributes 19.3% of the country’s carbon stocks.
- To boost agroforestry, we can use climate finance projects focused on Afforestation, Reforestation, and Revegetation (ARR). This effort supports India’s promise under the Paris Climate Change Agreement, which aims to increase forest and tree cover to create an additional sink of 2.5 to 3 billion metric tons of carbon dioxide equivalent by 2030. Therefore, promoting agroforestry is important for reaching this goal.
Factors Limiting India’s Participation in Carbon Finance Markets
- Issues with Global Carbon Finance Standards: There is a lack of Indian-centric standards as India’s agroforestry practices often fail to qualify under current global carbon finance standards, which limits participation in carbon credit programs. In carbon finance, the concept of “common practice” is critical in determining project eligibility for carbon credits. Incentives are provided only to projects that demonstrate unique and innovative practices. Common practices, such as growing trees alongside crops, are not incentivized because they are considered standard and would likely occur even without financial support.
- According to global standards experts, trees are already grown by Indian farmers as part of their agricultural systems, meaning that even without incentives, these trees would still be cultivated, as no extra practice is being carried out for cultivation, thus not eligible for credits.
- Land Sizes: Current global carbon standards, such as Verra’s Verified Carbon Standard (VCS) and the Gold Standard, primarily reflect large-scale agricultural practices seen in regions like Latin America and the U.S., where extensive tree plantations are set up specifically for carbon credit eligibility. In these regions, trees are often planted in designated areas to qualify for carbon credits.
- In contrast, India’s agricultural landscape is characterised by small and fragmented landholdings, with 86.1% of farmers classified as small and marginal, owning less than two hectares of land. This disparity makes it challenging for Indian practices to align with global standards.
- Scattered Agroforestry Practices: Many Indian farmers engage in non-systematic, scattered agroforestry, which may not meet the additionality criteria set by current carbon standards. This complicates the assessment of carbon credits, as the difficulty in tracking and quantifying these scattered practices further undermines their eligibility for participation in carbon finance programs.
As a result, numerous Indian farmers are excluded from participating in Afforestation, Reforestation, and Revegetation (ARR) carbon finance projects, denying them potential income from carbon credits.
The Benefits of Incentivizing Agroforestry for Indian Farmers
If Indian farmers receive incentives for agroforestry, it would create a win-win situation for all stakeholders involved. With eligibility for carbon credits, farmers would be motivated to enhance tree growth, leading to a more robust agroforestry system.
- Increased Income: Not only would this initiative increase farmers’ income, but it would also provide them with an additional source of revenue through carbon credits. As they cultivate trees alongside their crops, farmers would benefit financially from both agricultural and forestry products.
- Environmental Benefits: Agroforestry contributes to various environmental advantages, including:
- Reduced Soil Erosion: The presence of trees helps anchor the soil, reducing the risk of erosion.
- Improved Soil Productivity: Trees can enhance soil fertility and structure, leading to better crop yields.
- Addressing Dependence on Monsoons: Currently, many farmers in India are highly dependent on monsoons for their crop production. Even for normal crop production, chemicals are increasingly used in farming practices for better yield which is contributing to soil degradation. By integrating trees into their farming systems, farmers can mitigate these issues. Even if crops are adversely affected by poor monsoon conditions, they would still have alternative income from the trees.
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Conclusion
Climate finance platforms should reconsider their stance on Indian agroforestry and avoid categorising it as a common practice. By recognizing the potential of Indian agroforestry, the global community can benefit as well, resulting in the establishment of more carbon sinks and contributing to global environmental goals.
September 30, 2024
