Turning climate action into rural income
This article is authored by Chandrakant Kumbhani, COO, Ambuja Foundation.
In the heartlands of rural India, agriculture remains more than an occupation--it is a way of life, a cultural backbone, and the source of survival for millions of families. Yet, this way of life is increasingly threatened by the realities of the climate crisis. Erratic rainfall patterns, prolonged dry or wet spells, floods, rising temperatures, soil degradation, and declining net returns from agriculture are squeezing already fragile farm incomes. For smallholder farmers who depend on seasonal harvests for both food and income, even a single failed crop can spell disaster.
Yet, within this challenge lies a transformative opportunity: the emergence of carbon markets as a new possibility for rural prosperity. What once seemed like a distant, technical concept—carbon credits are today very much a viable reality. By transforming everyday farm practices, farmers can create a new income stream for rural households while simultaneously supporting global climate goals.
At the heart of this shift is regenerative agriculture. A wide range of practices--such as agroforestry, crop rotation, use of organic inputs, crop residue incorporation, cover cropping, composting, and conservation tillage--help farmers build resilience to climate variability. Added to these are water-smart techniques like drip irrigation, raised beds, alternate ridge-and-furrow methods, and Alternate Wetting and Drying (AWD), along with improved rice cultivation approaches such as Direct Seeded Rice (DSR) and the System of Rice Intensification (SRI). Together, these methods not only strengthen soil health and farm productivity but also reduce greenhouse gas emissions and increase the ability of soils and trees to sequester carbon. When such outcomes are scientifically measured and verified, they can generate carbon credits--tradable assets in global markets where corporations and countries seek to offset their own emissions.
For India’s smallholder farmers, carbon farming not only provides a climate solution but also offers the possibility of an additional, performance-based income stream--one that rewards sustainable practices and reduces dependence on volatile crop prices. The model works best when smallholders aggregate their land and efforts under a common framework, supported by NGOs, social enterprises, or carbon project developers. Through collective participation, farmers can access technical guidance, adopt digital tools for monitoring, and benefit from transparent revenue-sharing systems.
Although still in its early stages in India, carbon farming has already shown encouraging results in pilot projects. Farmers engaged in these initiatives have reported not only improved soil health and yields but also increased enthusiasm for sustainable practices once they saw the prospect of additional earnings. With digital technologies making monitoring and verification more accessible, and with growing corporate demand for high-quality, farmer-centric carbon credits, the sector is poised for rapid expansion.
India, with millions of hectares of farmland and one of the world’s largest populations of climate-vulnerable smallholder farmers, is uniquely positioned to capitalise. Success, however, depends on building an ecosystem of trust, finance, and implementation. Policies that reduce entry barriers, patient capital that underwrites early costs, and strong on-ground partnerships to guide farmers will all be critical in scaling this model.
The road ahead is not without complexity. Measurement protocols, certification requirements, and upfront investments remain hurdles. But with the right support, carbon farming can shift the narrative so that our once-vulnerable farmers now hold the cards. In an innovative convergence of climate finance and rural development, farmers can not only feed the nation but also help fight climate change. More importantly, they can diversify their livelihoods and turn the climate crisis into an opportunity.
This article is authored by Chandrakant Kumbhani, COO, Ambuja Foundation.
