Carbon trading potential and economic viability of carbon farming practices in developing countries

Abstract

Observations from early carbon credit programs across Latin America and sub-Saharan Africa suggest that smallholder farmers can generate meaningful income from soil carbon sequestration, yet comprehensive economic assessments of carbon farming under developing-country conditions remain scarce. This research evaluated the carbon sequestration rates, credit generation potential, and 10-year economic viability of three carbon farming practices-no-till agriculture, agroforestry, and cover cropping-using data synthesized from 47 field trials across Argentina, Brazil, Kenya, and India, analyzed at the University of Buenos Aires, Argentina. Carbon sequestration rates ranged from 0.31 to C ha⁻¹ yr⁻¹ for cover cropping to 1.84 t C ha⁻¹ yr⁻¹ for mature agroforestry systems. At current voluntary carbon market prices (US$8-15 per tonne CO₂ eq), agroforestry generated the highest cumulative revenue (US$992 ha⁻¹ over 10 years) but required the largest upfront investment (US$340 ha⁻¹). No-till agriculture offered the best return on investment (287%) due to minimal establishment costs. Transaction costs consumed 18-42% of gross credit revenue for smallholders, compared to 6-12% for large operations, identifying aggregation and digital MRV as priority interventions for equitable market access.