Carbon Credits/Trading in Agroforestry System and Its Sustainability: A Way Forward

Abstract

Agroforestry (AF) is a significant agricultural land-use practice, covering 1.6 billion hectares (78% in tropical areas and 22% in temperate regions). It enhances plant diversity, boosts productivity, generates livelihoods, and maintains ecological balance. Carbon (C) trading in agroforestry systems (AFs) refers to the buying and selling of C credits generated by practices that reduce greenhouse gas (GHG) emissions or increase C sequestration (C[[inf]]seq[[/inf]].) in the plant-soil system. C trading in AF is seen as an additional financial incentive for farmers to adopt eco-friendly practices, which helps mitigate climate change. The concept of C trading is considered a ‘win–win’ situation, as it reduces GHG emissions while providing economic benefits to farmers. The price of C credits per ton is expected to range from USD 40 to 80 by 2023. McKinsey predicts that demand for C credits will increase 15-fold by 2030, potentially driving a significant rise in market prices. Over time, farmers in tropical regions who adopt AF practices stand to gain not only extra income from selling C credits but also improvements in soil quality, yields, acreage, and overall profitability. Moreover, a variety of innovative methods and strategies are employed in AFs to enhance C sequestration and C credits, ultimately reducing global C footprints. However, farmers often face challenges due to a lack of information, limited access, and insufficient knowledge about the benefits and drawbacks of C credits. It is crucial to develop policies that support the monetization of C credits to improve farmers’ livelihoods globally. AFs play a critical role in providing environmental services such as soil health, food security, and climate resilience, which are essential for advancing toward the goal of achieving net-zero emissions worldwide. © 2025 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG.