The carbon market—where entities trade carbon credits representing a certain amount of reduced or sequestered greenhouse gas emissions—has the potential to offer new revenue streams for marginal farmers in India. Marginal farmers, who typically own less than one hectare of land, face numerous constraints including limited access to capital, inputs, and technology. Integrating them into carbon markets can provide financial incentives for adopting climate-friendly farming practices that enhance soil carbon storage, reduce emissions, and improve the resilience of their agricultural systems.

Key Opportunities and Pathways

Challenges and Considerations

• High Transaction Costs: Developing carbon projects involves technical assessments, regular MRV, and certification fees, which may be prohibitive for small landholdings without aggregation.
• Long-Term Commitments: Many carbon projects require ensuring that carbon stocks are maintained over time. Marginal farmers dealing with income volatility and changing weather patterns might find it challenging to commit to long-term land-use changes.
• Price Volatility and Uncertain Demand: Carbon credit prices can fluctuate, and without stable long-term buyers, the potential income might be unreliable. This uncertainty can deter marginal farmers who need consistent, predictable returns.

Outlook The scope of carbon markets for marginal farmers in India is still emerging but shows promise. As interest in nature-based solutions grows and standards for agricultural carbon credits mature, marginal farmers can become vital contributors to climate mitigation efforts. With proper institutional support, capacity building, aggregation strategies, and favorable policies, these farmers can secure new income streams while adopting climate-resilient practices that benefit their farms, communities, and the environment at large.