This chapter describes obstacles to financing mitigation in smallholder agricultural systems, and provides recommendations to overcome these; it also emphasizes how smallholder agricultural finances overlaps with carbon finance. Analysis and recommendations are based on literature reviews and the author’s experience. Descriptions of obstacles to financing both smallholder carbon credit projects and agricultural projects involving smallholders are given.
Overlapping barriers are: ability to manage risks, access to inputs, aggregation, best practices and capacity and tenure, property rights and enforcement. The conclusion is that existing agricultural investment barriers are fundamental to the livelihoods of many, and go far beyond carbon finance issues, although significant overlap is acknowledged. By tackling these barriers, it may be possible to unlock some of the potential mitigation from agriculture. Vice versa,‘fit-for-purpose’ carbon finance for mitigation could help to overcome some existing barriers faced by smallholders. The paper provides recommendations to a variety of stakeholders on how they could help design fit-for-purpose carbon finance.