Introduction
Agroforestry is a land use system that involves the integration of trees with crops, livestock, or both on the same plot of land. This system offers many benefits such as soil conservation, improved water quality, biodiversity conservation, and enhanced livelihoods for farmers. In addition, agroforestry has been recognized as an important tool for mitigating climate change by sequestering carbon dioxide (CO2) in trees and soil. This potential for carbon sequestration presents an opportunity for agroforestry to play a key role in enhancing carbon markets and sustainable finance. This essay explores how agroforestry can be used to achieve these objectives.
Carbon Markets
Carbon markets are a mechanism for reducing greenhouse gas (GHG) emissions by creating a market for carbon credits. Carbon credits represent a tonne of CO2-equivalent that has been avoided, reduced or removed from the atmosphere. These credits can be bought and sold by companies and governments to meet their GHG reduction targets. Carbon markets can be divided into two types: compliance and voluntary. Compliance markets are created by government regulations, such as the European Union Emissions Trading System (EU ETS), which sets limits on the amount of emissions that can be released by covered entities. Voluntary markets, on the other hand, are created by businesses and individuals who voluntarily offset their emissions through the purchase of carbon credits.
Agroforestry and Carbon Sequestration
Agroforestry has the potential to sequester carbon in both trees and soil. Trees sequester carbon through the process of photosynthesis, where CO2 is absorbed and converted into biomass. This biomass can be used for timber, fuelwood, or other products, which can further offset emissions. In addition, trees also store carbon in their roots, which can remain in the soil for decades or even centuries. Soil carbon is stored in organic matter, such as plant and animal residues, which can improve soil quality and increase the productivity of crops.
There have been several studies that have quantified the carbon sequestration potential of agroforestry systems. For example, a study conducted in Kenya found that agroforestry systems could sequester up to 42 tonnes of carbon per hectare over a 30-year period. Similarly, a study in Brazil found that agroforestry systems could sequester up to 96 tonnes of carbon per hectare over a 25-year period. These studies demonstrate the potential for agroforestry to sequester significant amounts of carbon and contribute to climate change mitigation.
Agroforestry and Carbon Markets
Agroforestry can participate in carbon markets by generating carbon credits through the sequestration of carbon in trees and soil. These credits can be sold to companies and governments who are looking to offset their emissions. In addition, agroforestry can also participate in other carbon market mechanisms such as REDD+ (Reducing Emissions from Deforestation and forest Degradation), which provides incentives for countries to reduce deforestation and forest degradation.
There are several challenges that need to be addressed in order to facilitate the participation of agroforestry in carbon markets. Firstly, there is a need for reliable and accurate measurement of carbon sequestration in agroforestry systems. This requires the development of robust methodologies that can accurately estimate carbon sequestration in different agroforestry systems. Secondly, there is a need for transparent and efficient carbon market mechanisms that can provide incentives for farmers to participate in agroforestry systems. This can be achieved through the development of certification schemes and the establishment of transparent and reliable carbon registries. Finally, there is a need for technical and financial support for farmers to adopt agroforestry systems. This can be achieved through the provision of training, extension services, and financial incentives such as subsidies or payments for ecosystem services.
One example of an initiative that is working towards facilitating the participation of agroforestry in carbon markets is the Trees on Farm (ToF) initiative. The ToF initiative is a partnership between the World Agroforestry Centre (ICRAF), the International Fund for Agricultural Development (IFAD), and the Climate, Community and Biodiversity Alliance (CCBA). The initiative aims to develop and implement scalable and replicable business models that enable smallholder farmers to participate in carbon markets through the adoption of agroforestry systems.
The ToF initiative works with farmers to design and implement agroforestry systems that sequester carbon, improve livelihoods, and increase productivity. The initiative provides technical and financial support to farmers, including the provision of seedlings, training on agroforestry practices, and access to carbon markets. In addition, the initiative works with local partners to develop certification schemes and establish carbon registries that can provide transparency and accountability in carbon markets.
Sustainable Finance
Sustainable finance refers to financial products and services that integrate environmental, social, and governance (ESG) considerations into investment decisions. Sustainable finance aims to support the transition to a more sustainable and low-carbon economy by directing capital towards investments that have positive social and environmental impacts.
Agroforestry can contribute to sustainable finance by providing opportunities for investors to support projects that promote sustainable land use and climate change mitigation. For example, investors can support agroforestry projects by providing financing for the establishment of agroforestry systems, or by purchasing carbon credits generated through these systems.
In addition, agroforestry can also provide co-benefits that can attract investors who are interested in supporting sustainable development. For example, agroforestry systems can provide habitat for wildlife, improve soil quality, increase water retention, and provide economic benefits for smallholder farmers.
One example of an initiative that is working towards promoting sustainable finance for agroforestry is the Tropical Landscape Finance Facility (TLFF). The TLFF is a partnership between the United Nations Environment Programme (UNEP), BNP Paribas, and the International Finance Corporation (IFC). The initiative aims to promote sustainable land use and climate change mitigation by providing financing for agroforestry projects in Indonesia.
The TLFF provides financing for projects that integrate smallholder farmers into sustainable land use practices, including agroforestry. The initiative provides technical assistance to farmers, including the provision of seedlings, training on agroforestry practices, and support for certification and verification of carbon credits. In addition, the TLFF provides financing to agribusinesses and other actors in the supply chain to support the development of markets for sustainable commodities, such as palm oil or cocoa.
Conclusion
Agroforestry has the potential to contribute to both carbon markets and sustainable finance by sequestering carbon and promoting sustainable land use practices. However, there are several challenges that need to be addressed in order to facilitate the participation of agroforestry in these mechanisms. These challenges include the need for reliable and accurate measurement of carbon sequestration, the development of transparent and efficient carbon market mechanisms, and the provision of technical and financial support to farmers. Initiatives such as the Trees on Farm and the Tropical Landscape Finance Facility are working towards addressing these challenges and promoting the adoption of agroforestry as a tool for sustainable land use and climate change mitigation.