ABSTRACT
While the combined value of markets for greenhouse gas (GHG) emission reductions increased to more than US$100 billion 1 (Capoor and Ambrosi 2009), agriculture has been largely excluded from both formal and informal carbon markets. Key reasons for the marginalization of agriculture include the high transaction costs associated with smallholder agriculture and the high level of uncertainty surrounding carbon sequestration and emission reductions. Transaction costs depend largely on the costs of monitoring, reporting, and verifying changes in the above- or below-ground carbon pool and emissions, and on the cost of aggregating and organizing farmers. Uncertainties in mitigation include the amount of carbon that can be sequestered by agricultural soils, the reduction in net emissions for all GHG obtainable from the agricultural sector, and the length of time that carbon can be stored in the soil. This chapter reviews these challenges and highlights some of the areas that need further research and exploration.
