Agroforestry as a Corporate Carbon Sink: Institutionalizing Farmer-Generated Carbon Credits

Abstract

The accelerating climate crisis and rising corporate net-zero commitments have intensified demand for credible carbon offset mechanisms. Agroforestry, which integrates trees with crops and livestock systems, presents a scalable nature-based solution capable of sequestering significant atmospheric carbon while enhancing rural livelihoods. This paper proposes an institutional framework for transforming farmer-managed agroforestry systems into structured corporate carbon sinks through verified carbon credit generation. Drawing upon global climate governance frameworks such as the Paris Agreement and mitigation pathways outlined by the Intergovernmental Panel on Climate Change, the study conceptualizes a Farmer–Corporate Carbon Institutional Model (FCCIM). The model integrates carbon measurement, reporting and verification (MRV), aggregation through Farmer Producer Organizations (FPOs), and corporate procurement mechanisms. A financial simulation framework is developed to estimate revenue potential per hectare under different agroforestry densities. The paper argues that institutionalizing farmer-generated carbon credits can simultaneously address Scope 3 emissions for multinational corporations and income diversification for smallholders. Policy implications for emerging carbon markets, governance safeguards, and risk mitigation strategies are discussed.