Attracting private-sector investment in agriculture is crucial for scaling soil health and climate action, and sustainably transforming food systems. This study explores carbon farming projects under the voluntary carbon market and classifies them according to their source and conditions of finance. The analysis assesses how the resulting carbon farming funding models shape the economic viability and inclusiveness of carbon farming projects. Drawing on evidence from twelve projects in Kenya, four distinct funding models are identified: (1) donor-financed, (2) investor-financed with forward purchase agreements (FPAs), (3) private-sector led with equity financing, and (4) buyer-led. The comparative assessment reveals that while the donor-financed model supports initial project piloting and emphasizes community benefits, it risks donor dependence and high project costs. The investor-financed model provides stable funding but restricts potential future gains. The private-sector model offers marketing flexibility yet faces financial risks, while the buyer-led model centralizes power with investors, potentially undermining equitable benefit-sharing for farmers. Across all models, four cross-cutting insights emerge: (i) the terms of investment critically shape the distribution of risks and rewards; (ii) achieving scale early and reinvesting profits is key to economic viability; (iii) transparency in cost and revenue accounting underpins fair benefit-sharing; and (iv) reducing reliance on international intermediaries by empowering farmer-based organizations is essential for inclusive governance. These findings provide valuable insights into the operationalization of viable smallholder carbon farming projects for project developers, financers, and policymakers in Africa and beyond.
Published in Land Use Policy, Volume 398, 19 February 2026, 107996.