New Literature Review Explores Barriers to Agriculture’s Inclusion in Carbon Markets

The mitigation potential of the agricultural sector is estimated to be 10 to 14 percent of total greenhouse gas emissions.  However, as a new IFPRI discussion paper explores, market mechanisms to control GHG emissions continue to largely exclude agriculture—including smallholder farmers in countries like Ghana, Morocco, Mozambique, and Vietnam.

This exclusion is attributable to the high level of uncertainty surrounding agricultural mitigation and the transaction costs associated with smallholder agriculture, which manages most of the agricultural carbon. Key uncertainties include the amount of carbon that can be sequestered by agricultural soils, the reduction in emissions obtainable from the agricultural sector, and the length of time that carbon can be stored in the soil. Other challenges stem from the costs of monitoring, reporting, and verifying changes in soil carbon and emissions and the cost of aggregating and organizing farmers.

This discussion paper provides an overview of the literature on the climate change mitigation potential of agriculture. It focuses on the regulatory and voluntary frameworks under which such a contribution could be rewarded and the economic literature that focuses on agriculture’s participation in climate change mitigation efforts.

Though the focus of this paper is an assessment of the main challenges faced by smallholder farmers in accessing such markets, it suggests that these barriers are not insurmountable and that investors interested in “charismatic carbon,”—carbon credits with clear poverty reduction, food security and nutrition, and environmental sustainability benefits—should be possible to find.

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