TRADE TENSIONS

Why the benefits of agroforestry carbon trade do not trickle down to farmers

- 

IN THEORY, agroforestry carbon credit projects can be a win-win solution for both the communities and environment. Though such projects are picking up in India, DTE's interaction with farmers and analysis of project documents show that farmers rarely benefit from the carbon revenue—and this has to do with the design of the voluntary carbon market as well as the lack of transparency in the agreements with poor communities.

PRICING WOES

First, in a voluntary carbon market, as the name suggests, prices are determined by an agreement between a buyer (a company looking to retire a credit) and a seller (a project developer, for instance). "The price is a question of what buyers are willing to pay and at what price project developers are willing to sell. There is no regulation of the price," Lambert Schneider, research coordinator for International Climate Policy at Oeko-Institut in Berlin, tells DTE. However, buyers are willing to pay a premium for high-quality carbon credits, such as credits generated from projects that pass the additionality check (removals from the project would not have occurred without the revenue from the sale of carbon credits), and offers co-benefits for biodiversity and local communities.