The Green Credit Programme (GCP) represents a new market-based incentive to encourage sustainable agricultural and forestry practices. Since its launch in 2023, the programme has evolved to focus on ecological outcomes rather than mere activity counts. The latest 2025 framework tightens rules to improve environmental integrity but raises concerns about financial viability and community inclusion.
Background of Green Credit Programme
Agriculture is both a contributor to climate change and highly vulnerable to its impacts. Sustainable practices can mitigate emissions and improve resilience but lack sufficient incentives for widespread adoption. The GCP was introduced to fill this gap by offering tradable credits for eco-friendly activities. Initially, eight activities generated credits, but detailed rules were first applied to tree plantations in 2024.
Initial Tree Plantation Methodology
The original method rewarded one green credit per tree planted at a minimum density of 1,100 trees per hectare. Credits were issued within two years based on sapling counts, not survival or ecosystem benefits. Credits could be traded or used to meet Corporate Social Responsibility (CSR), Environmental, Social, and Governance (ESG), or compensatory afforestation obligations. This approach incentivised large-scale planting on degraded lands and wastelands.
Revised 2025 Framework and Its Features
The 2025 update introduced a performance-based system. Credits are now awarded only after five years of restoration and achieving at least 40% canopy density. Credits depend on surviving trees and vegetation improvements rather than planting alone. These credits are non-tradable except for transfers within corporate groups. The change aims to ensure real ecological gains and prevent superficial planting.
Challenges and Concerns
Delaying credit issuance by five years increases upfront costs, making private investment riskier. Failure to meet canopy targets means no credits, adding financial uncertainty. There is also a risk that projects will prioritise survival and canopy over local ecology, potentially harming water tables or increasing wildfires. Restricting credit trading limits market innovation. Crucially, the framework overlooks the rights and roles of local communities dependent on these lands, focusing solely on biophysical targets.
Policy Implications and Future Directions
Balancing integrity and flexibility remains critical for the GCP’s success. Introducing phased credit issuance could reduce financial risks. Incorporating community rights and ecological diversity would improve sustainability. The government and stakeholders must collaborate to refine regulations that promote voluntary climate action without stifling innovation or ignoring social dimensions.
Questions for UPSC:
- Point out the role of market mechanisms like green credits in promoting sustainable agriculture and forestry in India.
- Critically analyse the challenges faced by afforestation projects under performance-based incentive schemes with suitable examples.
- Estimate the impact of delayed financial incentives on private investment in environmental restoration projects and suggest possible solutions.
- Underline the importance of community rights in natural resource management and how their exclusion can affect ecological outcomes.
