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Climate mitigation finance through carbon offsets is increasingly considered a tool
to improve land management and agricultural productivity in developing countries while
also promoting sustainable development and enhancing climate mitigation and adaptation
capacity. Under an offsets program, farmers or herders can adopt certain management
practices to minimize carbon loss from the soil and augment carbon returns to the
soil that earn carbon credits to be sold on a voluntary carbon market. These management
practices ideally improve soil fertility and productivity as well as soil carbon stocks,
thus providing farmers with additional revenue from higher production and from carbon
payments. Nepal’s agriculture and grazing lands have strong potential for additional
carbon sequestration. Despite potential benefits, a soil carbon offsets project must
address many challenging technical issues, including additionality, permanence, leakage,
measurement and monitoring.
The report is designed to help the Mountain Institute understand the tradeoffs of
developing a soil carbon offsets project. As the organization considers the potential
value of soil carbon offsets, it is imperative first consider the organizational objectives
of the project: is this project designed as development tool or as a means of becoming
an early actor for a novel but very risky funding source? While there are more direct
ways to support agriculture-‐based livelihoods in Nepal and significant technical
issues to resolve, an offsets project may offer valuable co-‐ benefits including
improved crop productivity and food security.
To weight these tradeoffs, the report reviews soil carbon in agriculture and rangeland
systems, key concepts for offset development, possible carbon markets and other funding
sources and offers recommendations for best practices in developing soil carbon offsets
in Nepal. The Kenya Agricultural Carbon Project is used as a case study for the tradeoffs
of establishing a soil carbon offsets project. The project demonstrates that participating
farmers may gain valuable co-‐benefits from increasing the pool of soil organic carbon,
but program payments are expected to be quite low.
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