Voluntary carbon trading: Potential for community forestry projects in India

Abstract

Voluntary carbon markets, such as the Chicago Climate Exchange (CCX), were worth $90 million in 2006. This paper finds that community forestry interventions of three organizations in India are eligible to sell carbon sequestration credits on CCX. Their combined annual sequestration potential is 104,427 tons of carbon dioxide (tCO2), worth $417,708 at 2007 prices. Although this value will be difficult to realize immediately, it indicates the potential for carbon sequestration to raise rural incomes in India. These benefits can be actualized by first linking small pilot projects with CCX and then scaling up operations. Projects will also need to reduce transaction costs to raise the shares of carbon revenue that farmers receive. The diversion of land to raise tree crops needs to be balanced with food security concerns. A potentially viable approach would be to take up carbon plantations on common lands with concerned agencies acting as a liaison between farmer groups and the market.