The Kenya Agricultural Carbon Project (KACP), developed by the Vi Agroforestry programme, receives mitigation funding from the World Bank’s BioCarbon Fund for soil carbon sequestration and above-ground sequestration in trees. Apart from providing farmers with a small sum of extra cash, the switch to climate-smart agricultural practices has had the additional benefits of increasing crop yields as well as improving farmer’s resilience to climate change. According to a recent World Bank commissioned study, the crop yield increases alone are worth US$ 200-400/ha/year. In KACP, Vi Agroforestry and the BioCarbon Fund has developed the Sustainable Agricultural Land Management (SALM) methodology. A model approach to measuring soil carbon sequestration is being used, which has been approved by the Verified Carbon Standard (VCS) agency. SALM is a public good, free for any organization to use. However, concerns have been raised, notably by the International Agricultural Trade Policy Institute (IATP), about the adequacy of a carbon market approach to financing a shift to sustainable agriculture. This event will also discuss these concerns.

1. Questions on Soil Carbon Markets:
Learning from the Kenyan Experience
Karen Hansen-Kuhn
December 3, 2011

2. Markets need buyers and sellers
Compliance markets
• Kyoto/JI/CDM
• EU EmissionsTrading
Scheme
• Alberta, Canada
• California Carbon
Exchange
Voluntary Markets
• Chicago Climate Exchange
• Africa Climate Exchange
• OTC Exchanges

3. Falling Carbon Prices
Source: Environmental Finance, based on ICE data

4. Transaction Costs
Kenya Agricultural Carbon Project
• $2.48 million in carbon revenues over 20 years
(assuming $4 per ton)
• 60% discount rate
• $1.04 million to establish and market fund
• 60,000 farmers receive $22.83
over 20 years

5. Alternatives
“the sustainability of finance from carbon trading is …structurally
reliant on the failure to reduce emissions adequately in
industrialized countries”
– FERN et al. 20
• Annex 1 countries should honor commitments
• FinancialTransactionsTax
• IMF Special Drawing Rights