Smallholder farmers have an important role to play in the prevention of climate change by reducing net greenhouse gas (GHG) emissions. However, they are not benefitting from international financial mechanisms established as a result of the United Nations Framework Convention on Climate Change (UNFCCC). This paper examines finance and risk-related obstacles hindering smallholders from participating in current carbon finance mechanisms. It suggests a framework for identifying how to prioritise and aggregate smallholders to achieve mitigation goals.The report present ways of supporting smallholder production through incentive financing, risk mitigation and engaging farmers in greenhouse gas mitigation. This includes an overview of financing production in smallholder systems, a gap analysis of smallholder needs versus requirements for mitigation activities and information on identifying and incentivising smallholders to participate in greenhouse gas mitigation.The paper includes the following recommendations for a variety of key stakeholders.

Government agencies in developing countries: incorporate climate change mitigation and adaptation into economic development plans by using the emerging carbon finance mechanisms; explore potential public private partnerships; create, amend, implement and enforce legislature to address issues such as standardisation, capacity building and more efficient smallholder-friendly bureaucracy.
Private finance institutions: work with governments to develop and implement GHG mitigation activities.
Multilateral agencies, research agencies, donors and not-for-profit entities: integrate mitigation into all activities; increase efforts to engage private sector actors to assess and disclose GHG impacts; cooperate with other stakeholders to ensure consistent agricultural extension services and advice.
Carbon finance and policy makers: design and implement mitigation incentives focused on the long-term viability and requirements of smallholders.