Carbon Finance Boosts Jharkhand Farmers’ Incomes

As world leaders hammered out carbon trading regulations at COP29 in Baku last year, a silent revolution was gaining ground in the Jharkhand countryside. Marginal farmers and farming communities in Ranchi district's Childari village were being introduced to carbon finance — an avenue that can provide them with long-term sustainable revenues through tree plantations under the Birsa Harit Gram Yojana (BHGY), a state-sponsored greening initiative.

Rolled out during 2016-17 under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), BHGY would transform barren lands into fertile lands with timber and fruit plantations, generating jobs and improving livelihoods. The scheme has enabled more than 1.35 lakh farmers to plant mango and other fruits on 1.16 lakh hectares, earning more than ₹50,000 a year per household, as per Jharkhand Economic Survey 2023–24.

But with the five-year window period of BHGY expiring for most, concerns hung over how the farmers would finance their plantations. Due to this, the scheme has now included carbon finance whereby farmers can earn an income for as long as 20 years depending on the carbon that their trees will be able to sequester.

In villages like Childari, where the soil had once been fallow, residents have turned hopeful. Namita Devi, a local farmer, planted 112 mango trees on her land in 2021-22. In 2024, she joined the carbon finance initiative, under which satellite technology will assess how much carbon her trees sequester. Based on this data, she will receive annual payments over the next two decades.

Early apprehensions regarding disclosure of bank details and contract electronic signing were deterred by campaigns by the Rural Development Department with the assistance of the Transform Rural India Foundation (TRIF) and Intellecap Advisory Services. In spite of previous cases of financial fraud based on biometric details, panchayat heads' assurances were enough to win farmers' confidence.

TRIF Director Ashok Kumar described the model of the scheme: "For one acre of land, one farmer can plant 112 fruit trees and 80 timber trees. Not only are they making money out of fruits but carbon credits as well now."

Carbon finance for BHGY is being availed of by Rabo Bank, a Netherlands-based bank, while technical support is being offered by ACORN, an accounting and verification platform. The process entails geotagging fields, satellite tracking, and tree canopy cover and trunk diameter analysis for CRU calculations. The farmers get paid in accordance with the price of CRUs, which at the moment range from 35 to 40 Euros per unit. Ninety percent of the money earned from the units will be directly deposited into the farmers' accounts.

The programme is already operational in 18 districts, with more than 30,000 beneficiaries on board. The carbon financing payment falls due by July–August 2025, with an expectation to expand the programme to 1.25 lakh farmers within a year.

Experts believe that carbon finance integration with BHGY will accelerate rural economies. It also fits India's overall carbon market ambitions. The structure of the Voluntary Carbon Market (VCM) was released and the Carbon Credit Trading Scheme (CCTS) notified by the Agriculture Ministry in December 2023 to allow marginal and small farmers to get income from carbon credits. The Indian Carbon Market (ICM), inaugurated in June 2023, now facilitates modalities for carbon trading in eight states of which Jharkhand is one.

Small farmers are one of the most exposed to the impacts of climate change. Carbon finance can provide them with stability and ownership," says Anurag Dhir, Associate Consultant, Intellecap.

Jharkhand, which has more than 70% marginal farmers with reducing landholdings and limited irrigation facilities, is a classic example of such interventions. The average size holding has reduced to 1.08 hectares, and marginal farmers have increased dramatically in numbers over the last few years.

The success of the project relies on honest CRU accounting and honest payment mechanisms. Experts such as Subrata Chakraborty, of the World Resources Institute (WRI), emphasize safeguarding farmers' rights. "This scheme is a good idea, but implementation and monitoring need to be strong. Farmers should not lose out to intermediaries."

There is also potential to scale the economic impact. With time, as yields grow—especially from high-value mango varieties like Mallika—farmers may benefit from export opportunities, enabling the development of food-processing industries and rural supply chains.

However, challenges remain. The legal complexity of carbon credit agreements can confuse uneducated farmers. Experts recommend simplifying contracts and strengthening panchayat-level support to ensure farmers fully understand their rights and responsibilities.

Environmentalists also caution against neglecting tree maintenance post-project. “Payments should be tied not just to planting but to tree survival and growth,” says energy policy expert Vaibhav Chaturvedi.

Despite these hurdles, the integration of carbon finance into agroforestry through BHGY represents a bold step towards climate-resilient rural livelihoods. If implemented equitably and monitored carefully, it could become a model for sustainable agriculture across India.