Green credits for sustainable development of agriculture

agriculture Victim and source of climate change. But it also offers solutions. Developing countries are highly dependent on agriculture and lack the resources to look for cost-effective solutions to climate change in agriculture itself. India has committed to achieving The goal of net zero emissions by 2070That is why I took several preemptive measures. The Government of India has enacted the ‘Energy Conservation (Amendment) Act, 2022’ to promote the use of renewable energy and create a national carbon market.

at recent days Union budget 2023 It places great emphasis on green growth for sustainable economic development. However, most of these measures are broad, indicative, and not specific to any economic activity. Recognizing this gap, the Ministry of Environment and Forests recently proposed the Green Credit Program under the Environmental Protection Act of 1986, which provides a basic framework for harnessing the green growth potential of various agricultural and non-agricultural activities through economic incentives.

Nodal agency for issuing credits

The program provides a market-based mechanism to reward voluntary environmental actions that help conserve nature and mitigate climate change. Offers green credits as incentives for specific activities that achieve positive environmental outcomes. The program involves all stakeholders i.e. individuals, industries, farmer producer organizations, urban local authorities, gram panchayats and private entities to earn green credits for adopting environmentally friendly practices including tree planting, water conservation, sustainable agriculture, waste management, mangrove conservation and restoration, eco-labeling, sustainable building and infrastructure, and reduction of air pollution.

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The Indian Council of Forestry Research and Education (ICFRE) has been appointed as the lead agency for issuing green credits, overseeing their implementation and tracking progress. Green credits earned through these activities can be traded on the local market platform. In addition, activities that generate green credits are also eligible for carbon credits for trading on the carbon market.

The Government of India has taken several initiatives to promote sustainable development of agriculture, but a dedicated voluntary national market mechanism has been proposed for the first time to incentivize stakeholders involved in agriculture for adaptation and mitigation actions.

Support forwarding

The program can be a game-changer by providing the much needed market mechanism for sustainable development of agriculture and boosting farmers’ incomes. Firstly, several agricultural practices such as no-tillage, direct sowing and alternate wet and drying systems in rice, green manure, compost, cultivation of leguminous crops, rainwater harvesting and conservation, Organic or natural farmingPrecision agriculture and agroforestry generate many intangible ecosystem services, which are not appreciated but freely available to society. Through green credits, farmers will be rewarded for adopting farming practices that generate positive externalities to the environment, human and animal health.

Second, the program could serve as an entry point for reorienting agricultural subsidies, which have become detrimental to natural resources and unsupportive of sustainable production patterns. For example, heavily subsidized electricity for irrigation has caused a significant drop in the water table in states like Punjab and Haryana. Burning rice straw pollutes the environment and affects human and animal health. The current subsidy system can be changed by linking the economic incentives of green credits to the adoption of environmentally friendly agricultural practices.

challenges

Although very promising, many practical challenges are likely to arise while operating a green credit program. The biggest challenge is to create a parity factor for allocating green credits across different activities. For example, estimating the equivalence factor for water conservation and carbon sequestration is a complex and challenging task.

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Another hurdle is the assessment of the intangible ecosystem services that agriculture generates. Since the program’s primary goal is to provide monetary incentives for environmental protection, the lack of robust green credit verification and monitoring mechanisms may lead to greenwashing. Moreover, measuring green credits at the farm level is a challenging task due to the wide variety of farm size, cropping patterns and farming practices. Of the total farming households, about 86 percent own land less than or equal to 2 hectares, and often face significant financial constraints on purchasing environmentally friendly inputs and adopting capital-intensive farming practices.

The first step to implementing a green credit program is the need to distinguish between green credit prices from agricultural practices and prices from practices in other sectors. There is a high potential for low crop yields in the early years of switching to green practices. Second, the program should adopt a community-based approach to green credit certification to reduce transaction costs. Third, to avoid the risks of greenwashing, a distinction must be made in the pricing of green credits by type of activity. Finally, agriculture mitigates greenhouse gas emissions and enhances carbon sequestration; Hence the price of green credit should be higher for agricultural activities.

(Kumar is a scholar at ICAR – National Institute of Agricultural Economics and Policy Research, New Delhi, and Bernthal is Director of ICAR – National Institute of Agricultural Economics and Policy Research).