Common Practice Standards must have India outlook #IndiaFinance

‘Agroforestry plays a significant role in environmental sustainability and economic development’ Photo: Special Arrangement

India’s vast potential in the agroforestry sector is a unique opportunity to integrate with carbon finance projects through Afforestation, Reforestation, and Revegetation (ARR) initiatives. There is a possibility to expand the area under agroforestry from the current 28.4 million hectares to 53 million hectares by 2050. Agroforestry accounts for 8.65% of India’s total land area and contributes 19.3% of the country’s carbon stocks. Thus, agroforestry plays a significant role in environmental sustainability and economic development.

Recent research suggests that if adequate policies, financial support, and incentives are implemented, the sector could contribute an additional carbon sink of over 2.5 billion tons of CO2 equivalent by 2030.

‘Common Practice’ in Carbon Standards

In the realm of carbon finance, “common practice” is a key criterion used to assess whether a project is additional — meaning, it goes beyond what is typically done in a given region. For ARR projects, this involves determining whether similar activities are commonly practised without the financial incentives provided by carbon credits. According to carbon standards such as Verra’s Verified Carbon Standard (VCS) or the Gold Standard, if an activity is deemed “common practice”, it may not qualify for carbon credits, as it is not seen as contributing additional environmental benefits beyond the norm.

However, the current definition of common practice in global carbon standards often reflects the realities of large-scale agricultural practices found in regions such as Latin America, Africa, or the United States, where landholdings are extensive and contiguous. In contrast, India is characterised by small and fragmented landholdings. Recent data indicate that 86.1% of Indian farmers are small and marginal, with landholdings of less than two hectares. These farmers often engage in agroforestry in a non-systematic, scattered manner, planting trees alongside crops or on small patches of fallow land.

While beneficial, these practices may not meet the additionality criteria set by current carbon standards because they are perceived as “common” within the Indian context. This presents a significant challenge, as it effectively excludes a large number of Indian farmers from participating in ARR carbon finance projects, thereby denying them the opportunity to earn additional income from carbon credits.

Need for India-centric approaches

Given India’s unique agricultural landscape, there is an urgent need to redefine and consider the common practice criterion to better reflect the specific challenges and opportunities within the Indian agroforestry sector. An India-centric approach would recognise that even small, incremental changes in land management practices such as adopting more systematic agroforestry techniques or utilising carbon finance to maintain tree cover can be transformative.

Revising and consideration of the common practice standards to accommodate the fragmented, small-holder model prevalent in India would unlock the vast potential for carbon sequestration. This would enable a greater number of farmers to participate in carbon finance projects, providing them with additional income streams while contributing to India’s climate goals. Further, by acknowledging the fragmented nature of Indian agriculture, carbon credit platforms could design incentives that encourage systematic agroforestry, thereby enhancing both environmental sustainability and rural livelihoods.

Agroforestry, when integrated with ARR initiatives, offers a viable solution to the various challenges faced by India’s agricultural sector. By promoting alternative livelihoods and providing additional income streams for farmers, these projects can help address issues such as low productivity, dependence on monsoons, and environmental degradation. The carbon finance provided by ARR projects enables a more systematic and sustained approach to agroforestry, which would otherwise be difficult to achieve given the financial pressures and market constraints faced by many Indian farmers. For farmers grappling with unpredictable weather patterns and fluctuating crop yields, participating in ARR projects presents a pathway to income diversification. By integrating trees into their agricultural landscapes or restoring degraded forest areas on their land, farmers can tap into additional revenue streams through carbon sequestration. Beyond economic gains, ARR projects deliver crucial environmental benefits, such as enhancing soil fertility, improving water retention, and mitigating erosion, thereby bolstering agricultural productivity and ensuring long-term sustainability.

Help small and marginal farmers

Research institutes such as The Energy and Resources Institute (TERI) have already demonstrated the potential of ARR projects in India, spearheading 19 projects across seven States, benefiting over 56,600 farmers. However, for such initiatives to scale up, it is imperative that international carbon finance platforms revise their standards to better align with the realities of Indian agriculture.

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As India looks to expand its agroforestry sector and leverage the benefits of carbon finance it is crucial that international standards evolve to reflect the specific conditions of the Indian subcontinent. Revising the “Common Practice” guidelines to be more inclusive of Indian agroforestry practices will enable millions of small and marginal farmers to participate in ARR projects. This would not only drive sustainable development but also provide a much-needed boost to the incomes of millions of rural households, ultimately contributing to the overall economic and environmental resilience of the country.

It is imperative that carbon credit platforms such as Verra and Gold Standard recognise the need for India-centric standards. Only then can the full potential of agroforestry and ARR initiatives be realised, paving the way for a greener, more sustainable, and economically prosperous future for India’s farmers.

Sayanta Ghosh is Associate Fellow, Land Resources, The Energy and Resources Institute. Jitendra Vir Sharma is Senior Director, Land Resources, The Energy and Resources Institute