Incentivising Agroforestry Through Carbon Revenue: Augmenting Farmers’ Income in India

The present study explores and assesses the potential of carbon revenue to augment the financial returns of farmers from agroforestry plantations. Government of India aims at doubling the farmers’ income and this study can go a long way in achieving this aim. The income from carbon revenue will be over and above the market value of farm-grown wood and hence will be an additional incentive.

Under the present study, the assessment of carbon stocks for Eucalyptus and poplar plantations was done in Yamunanagar district of Haryana using stratified random sampling and standard calculation tools explained under methodology. The results of this study and data from other existing studies, covering different parts of the country, were used for estimating the carbon credits and carbon revenue for total area under agroforestry in India i.e. 28.4 MHA.

The findings suggest that agroforestry, if incentivized with carbon revenue, has a potential of increasing the income of farmers by 40-50% (upto Rs. 25,000/ha/year). It could be achieved by developing agroforestry based carbon finance projects for Voluntary Carbon Markets (VCM) and by promoting agroforestry plantations for net carbon emission neutrality of corporate using their CSR funds. The additional returns could also act as a buffer and as an alternative like minimum support price (MSP) for farmers in case of “price-crash” of agroforestry produce due to various reasons. The study indicates that there is urgent need to have a policy in India for registering agroforestry plantations under carbon finance projects thereby contributing to net neutrality of corporates, ultimately benefitting the farmers through financial incentives.