Isra-Mart srl : The farmer, the trader and the carbon credit pot

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Isra-Mart srl news:

As announced on the weather forecast, it is another very hot day during one of the hottest months in Orissa since the last century. Mahji, a poor farmer is admiring a shiny red "Krishak Bandhu" (farmer's friend) treadle pump in a roadside shop. Mahji knows that if he doesn't find a solution to irrigate his small vegetable plot in the coming days, he and his family will lose everything. The diesel pumps sold in the next door machinery shop are too expensive for him; even renting one at 80 rupees ($1.70) per hour isn't affordable given he earns less than a dollar a day.

On the same day, at the other end of the globe, a city trader is on his way to work, reading the latest news on the preparation talks for the upcoming UN climate change conference in Cancun, Mexico, at the end of November.

Mahji and this trader have more in common than one would think. The trader is dealing with carbon credit schemes, a controversial financial tool that was encouraged by the Kyoto Protocol to support the efforts of countries and companies in reducing greenhouse gas emissions. One of the main criticisms of carbon finance is that it is too complex to be accessible to the poor.

At the same time, finding new funding sources to support small-scale family agriculture is essential to boost global food security and cope with growing population and the slowdown of the Green Revolution, which decades ago boosted Asia's crop production.

The majority of farmers in India are smallholders (with less than 1 acre of land). Most rely on rain-fed agriculture so they only grow one crop a year watered by the monsoon. Entire families have to move to towns in search of work during the dry season as they cannot afford to irrigate their land.

The need for small scale, financially and environmentally friendly irrigation in India is huge. International Development Enterprises India (IDEI), is an Indian non-for-profit social enterprise that develops and disseminates affordable micro-irrigation solutions such as treadle pumps (foot operated pumps used in a similar way to a step machine) and drip irrigation adapted to poor farmers. This means they can grow two or three crops a year and significantly increase their income.

By 2010, IDEI's equipment had helped more than 1.1 million farmers out of poverty enabling each of them to earn net additional income of about $400 a year. One of the keys to IDEI's success in reducing poverty is their market based approach. A fair trade supply chain (manufacturers, retailers, and installers) is established, equipped, and encouraged by IDEI through research and development, training, quality control, and logistical support.

As rural poverty is an enormous challenge in India and in other developing countries, IDEI needed to identify new funding. One solution was to try and link poor smallholder farmers with international carbon markets.

For a poor farmer to buy his own irrigation equipment, it needs to be low-cost and provide a quick investment return within a year. Harvesting a second and third crop during the dry season will do just that. But making and disseminating such low-cost irrigation equipment with a positive environmental impact is challenging. IDEI's work proves it is possible. And that is the key to accessing pro-poor carbon finance.

The dissemination of IDEI's technology has led to a significant CO2 emission reduction related to avoided fossil fuel consumption as treadle pumps are replacing diesel pumps. CO2 is a major greenhouse gas (GHG) playing a big role in global warming. Carbon finance schemes aim at supporting such GHG emission reduction efforts.

To qualify for carbon finance, IDEI needed to have the carbon credits, measured in tonnes of CO2 saved, "certified" by an outside body to show that the reduction in emissions is really happening. While simple in principle, the process of gaining carbon reduction certification can be quite complicated.

To ensure that each farmer buying a KB treadle pump receives the best service and quality, IDEI has established a solid quality control system. Each pump has a unique number identifying the product and manufacturer. Every pump sold is recorded so IDEI can trace all its customers and products.

IDEI's diligent monitoring has enabled TUV Nord, a German certification company, to assess the impact of these pumps and certify that 0.1 million tonnes of CO2 were saved through the KB treadle pump sales since 2004 (the year IDEI applied for carbon credits). These Verified Emission Reductions (VERs) were bought by JP Morgan Climate Care. This valuable funding will help support IDEI's work in remote villages in India where millions of poor farmers are still unaware of the existence of such micro-irrigation technologies that could change their lives.

With such financial support, IDEI can make the KB treadle pump affordable for poor farmers such as Mahji (the pump can cost as little as $12). Mahji first saw the KB pump at a farmer's meeting at the local market. He learned that it was easy to use and had very little to no recurring costs when compared with the diesel pumps.

He bought one and now feels proud and excited to have found this long term solution, which in some way would not have been possible without this improbable cooperation between a social enterprise and the carbon market.