The carbon credit market for agriculture, forestry, and other land use (AFOLU) is poised for significant expansion, with projections indicating a growth from $7,536.8 million in 2024 to $67,075.2 million by 2035. This remarkable trajectory, reflecting a compound annual growth rate (CAGR) of 22.51%, is driven by a confluence of corporate decarbonization targets, carbon farming incentives, and growing investments in nature-based solutions.
The market is transitioning from an early-growth phase into rapid maturity, as governments and corporations increasingly embrace carbon offset projects as part of their net-zero strategies. Land-based carbon sequestration projects, particularly in reforestation, agroforestry, and regenerative agriculture, are becoming central to both voluntary and compliance markets. This shift is underscored by the rising demand for verified, nature-based offsets and technological advancements in digital Measurement, Reporting, and Verification (MRV) systems, which are accelerating adoption.
The growth of the carbon credit market presents substantial opportunities, particularly in geographies like Asia-Pacific, Latin America, and Africa, which offer high scalability for land-based carbon projects. For those analyzing the competitive landscape, benchmarking project developers, MRV technology vendors, and offset registries leading the AFOLU space is crucial. Moreover, innovations in remote-sensing-based MRV, blockchain-enabled registries, and soil carbon modeling are areas ripe for exploration.
Technologies such as satellite- and drone-based MRV systems, blockchain-integrated carbon registries, and AI-enabled modeling for soil carbon measurement and forecasting are transforming the market. Nature-based solutions (NbS) like afforestation and regenerative farming are also gaining traction. However, the market faces barriers including a lack of standardization in credit validation and methodologies, high costs of MRV implementation in rural areas, and concerns around offset permanence and double counting.
The market is segmented by application into removal projects, avoidance projects, and combination projects. By project type, it is divided into forestry and land use (including REDD+, ARR, and IFM) and agriculture. Regionally, the market is segmented into North America, Europe, Asia-Pacific, and the Rest-of-the-World, with country-level forecasts and adoption patterns providing valuable insights.
Key players in the market include Indigo Ag, Inc., Carbon Credit Capital, LLC, Terra Global Capital, South Pole, and Nori, Inc., among others. These companies are forming global alliances, integrating MRV with IoT and satellite tools, and aligning with Article 6 of the Paris Agreement to tap into future compliance markets. Investment in high-integrity credit protocols and regional capacity building is expected to intensify.
A notable case study is Indigo Ag’s Carbon by Indigo program, which helps U.S. farmers adopt regenerative practices and earn verified soil carbon credits. By 2024, over 7 million acres were enrolled across 34 states, with credits verified by registries like Verra. This model showcases a scalable, farmer-first approach to high-integrity carbon offsetting, with major buyers including JPMorgan and BCG, and over $5 million paid directly to farmers.
The implications of this market growth are profound. For farmers and landowners, there are new revenue streams through carbon credits. For corporations, there are opportunities to meet sustainability targets while supporting rural communities. For governments, there are pathways to achieve national climate goals. However, ensuring the integrity and transparency of carbon credits will be paramount to maintaining trust and driving continued growth in this market.