Farmers Are Getting Paid for Building Soil Carbon, How Does It Work?

Farmers in Punjab and Haryana are being paid for adopting farming practices that can reduce greenhouse-gas emissions and increase carbon stored in soil. More than 2,500 farmers are set to receive over ₹2.9 crore through India’s first farm-level soil-carbon payment programme.

The first payments were released on September 17 at Punjab Agricultural University in Ludhiana. The payments are linked to practices adopted between 2019 and 2022, including direct-seeded rice, reduced tillage and crop-residue management.

What is soil carbon?

Soil contains carbon in organic matter, roots and other biological material. When farmers use practices that increase soil organic carbon or reduce emissions, some of the resulting climate benefit can potentially be measured and converted into carbon credits.

The process is different from simply receiving a subsidy for using a particular farming method. Under this programme, greenhouse-gas reductions and increases in soil carbon were measured and independently verified before carbon credits were issued.

The programme, called Aadi, was launched in 2019 by Grow Indigo with technical guidance from ICAR. The government says it now covers more than two million acres and over 100,000 farmers across seven states.

The farmers receiving the first payments adopted practices such as direct-seeded rice, reduced tillage and crop-residue management. These practices can reduce fuel use, water demand or residue burning while also affecting the amount of carbon retained in agricultural soils.

Farmers do not receive money simply because they use a practice described as climate-friendly. Carbon projects need to establish what changed, estimate the resulting emission reduction or carbon storage and verify those results before credits can be issued.

In the Aadi programme, the government says greenhouse-gas reductions and increases in soil carbon were measured and independently verified. The programme then issued agricultural carbon credits using the Verra VM0042 methodology.

The first direct benefit transfers were made to 2,550 farmers from Punjab and Haryana. Farmers who joined the programme after 2022 are still part of later monitoring cycles and are expected to receive payments when their credits are issued.

This means payments can take time. Farmers may adopt a practice today but receive carbon-related income only after data collection, monitoring, verification and credit issuance are completed.

Which farming practices can help?

Direct-seeded rice can reduce the need for repeated puddling and can change water and energy use. Reduced tillage leaves more crop residue and limits soil disturbance. Residue management can also reduce the need to burn straw after harvesting.

These practices can have several effects beyond carbon. Less tillage can reduce fuel consumption, while residue retention can add organic material to soil. Direct-seeded rice can also reduce water use under suitable conditions, although its success depends on weed and water management.

Farmers should not assume every climate-friendly practice automatically generates carbon income. Carbon projects require measurable changes and a recognised method for calculating them. The actual payment depends on verified carbon outcomes rather than simply the number of practices adopted.

ICAR’s recent work also shows growing interest in carbon farming outside Punjab and Haryana. In August, ICAR-Indian Institute of Soil Science organised a Carbon Pathshala for farmers in Vidisha, Madhya Pradesh, covering carbon markets and regenerative agriculture.

The first payment programme specifically includes smallholder farmers. The government says more than 2,500 farmers in Punjab and Haryana are receiving payments, showing that carbon projects are not limited to large agricultural operations.

But participation requires an organised programme that can collect field information and conduct monitoring. Individual farmers generally cannot create a marketable carbon credit simply by adding compost or reducing tillage on their own field.

Farmers should therefore check who is running a carbon programme, what practices it requires, how measurements will be conducted and when payments are expected. They should also understand whether participation is voluntary and whether any costs are involved.

ICAR-ATARI Ludhiana and Grow Indigo signed a 2025 agreement to advance carbon farming. ICAR said the programme was voluntary and free for participating farmers, with field demonstrations, training and extension support planned.

What should farmers ask before joining?

The first question should be how the carbon benefit will be measured. Farmers should know what data will be collected, who verifies it and what methodology is used before agreeing to participate.

They should also ask how payments are calculated and when they will arrive. Carbon projects can involve several stages between adopting a practice and issuing credits, so farmers should not treat expected carbon income as immediate farm revenue.

Land records and farm information may also be required. Farmers should keep records of crops, tillage, irrigation, residue management and other relevant practices. Good records can make it easier to document changes during the monitoring process.

Carbon farming can create another income stream, but its value depends on verified carbon outcomes and the terms of the programme. For farmers, the safest approach is to understand the agreement first and then decide whether the required practices fit their existing farming system.

The new payments show that climate-related outcomes are beginning to have a direct financial value for Indian farmers. More than ₹2.9 crore going to 2,550 farmers is an early example, not evidence that every farmer adopting regenerative practices will receive similar payments.