Agrifood systems in the voluntary carbon market: Growth with integrity can provide critical finance

Agrifood systems play an important role in the voluntary carbon market (VCM), accounting for more than 10 percent of projects. But with only 1 percent of carbon credits issued from these projects, impact is still limited. What can we learn from market developments and project experience so far to unlock their full potential?  

Food and Agriculture Organization (FAO) Investment Centre, and FAO Office of Climate Change, Biodiversity and Environment, in collaboration with the Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT), have released the first comprehensive global assessment of agrifood systems in the VCM.  

Agrifood systems in the voluntary carbon market: status and prospects reveals some early successes, key challenges, and opportunities to scale, to inform future guidance for policymakers, investors, and project developers. The report highlights the potential to unlock additional, untapped, finance for agrifood systems from companies purchasing carbon credits. 

“This report focuses on the VCM as a limited but growing market that could unlock new, additional private finance for low-emission agrifood transformation – finance not otherwise directed to the sector – which, if done right, could deliver broader environmental and social benefits,” said Mohamed Manssouri, Director of FAO Investment Centre. 

Building momentum 

Only five countries have issued nearly three-quarters of the credits so far, with carbon revenues typically flowing from high-income to middle-income countries, and limited activity in low-income countries. These credits came from just a few sources, and have not yet tapped major areas of mitigation potential in the agrifood sector. 

But momentum is building, with 70 percent of agrifood projects in the VCM currently in the pipeline, and significant developments in standards and methodologies underway that could pave the way for higher-integrity credits, growth, and greater diversification.  

The report spotlights case studies and innovations helping to drive agrifood’s growth in the VCM – such as the combined use of AI, remote sensing, and digital measuring, reporting and verification (MRV) tools – which can boost credibility and scale, and lower costs. 

These innovations also present opportunities for the participation of small producers, who are currently constrained by high costs, complex requirements, and limited support.  

Moving forward 

If agrifood projects in the VCM are to contribute to meeting climate targets, their credits must reflect genuine emission reductions based on robust quantification and MRV methods, particularly with regard to integrity criteria such as additionality and permanence. Growing demand and adequate price levels depend on agrifood credits meeting evolving integrity requirements. 

Prices in the VCM are opaque, with most credits traded privately. But there are opportunities in agrifood to capitalize on emerging price premia for credits with environmental and social co-benefits, and for removals for which market demand is high. 

“For carbon markets to help support and scale up climate action in agrifood systems, credits must reflect real, measurable emission reductions and deliver greater resilience and lasting benefits for producers and smallholders,” said Kaveh Zahedi, Director of FAO’s Office of Climate Change, Biodiversity and Environment. 

Scaling agrifood projects in the VCM will require action on multiple fronts. Governments can drive progress through conducive regulatory frameworks, accessible high-quality data and transparent registries.  

Building project developer capacities and strengthening MRV tools will be key to generating more robust pipelines. In this evolving market, increased knowledge-sharing can help countries learn from those already advancing innovation and demonstrating impact. 

While still small, the agrifood credit market is set to grow, with larger projects leading expansion. With clearer rules, better data, and sustained investment, agrifood’s participation in the VCM could make a modest but meaningful contribution to climate action and agrifood system transformation.