In recent years, AWD (Alternate Wetting and Drying) has gained attention in the carbon credit market. For example, in 2025, the Philippines’ AWD methodology was approved under Japan’s Joint Crediting Mechanism (JCM).
Yet many people are still unsure what AWD actually is, how it works, and why it’s important. The terms and market structure can seem complex, especially for those new to carbon markets and sustainable technology for rice cultivation.
This article breaks down what AWD means, how it differs from conventional rice production systems, its climate benefits, key regions, credit price trends, and how it fits into international frameworks — giving you a clear overview of AWD’s role in the carbon market.
AWD (Alternate Wetting and Drying) is an innovative water-saving irrigation technique in rice cultivation that is gaining global recognition as an effective climate change mitigation strategy.
Unlike traditional rice farming, where paddy fields are kept continuously flooded, AWD involves periodic drainage to allow oxygen to enter the soil before re-flooding. This intermittent irrigation approach introduces oxygen that suppresses methane-producing microbes in the soil, enabling a significant reduction in methane emissions from irrigated rice areas. In recent years, AWD has also attracted increasing interest for its potential to generate carbon credits through greenhouse gas reduction. This water saving technology not only contributes to climate change mitigation but also offers new economic opportunities for rice farmers by creating additional income from climate-smart practices.
The core mechanism of AWD (Alternate Wetting and Drying) is to temporarily drain water from continuously flooded rice paddies. This controlled irrigation allows oxygen to enter the soil and disrupts the anaerobic (oxygen-free) conditions that methane-producing microbes rely on. As oxygen is introduced into the soil, it suppresses anaerobic bacteria responsible for methane production, while promoting aerobic microbes that break down organic matter without releasing methane. This microbial shift results in a significant reduction in methane emissions from rice fields. By re-flooding the paddies at appropriate water levels before the rice plants become stressed, AWD maintains stable rice productivity while lowering greenhouse gas emissions.
Fig 1: Method of Alternative Wetting and Drying (AWD) and Traditoinal Flooding Methods.
Fig 2: How AWD play key role in addressing climate change
AWD (Alternate Wetting and Drying) plays a multifaceted role in addressing climate change. Its key contributions include reducing greenhouse gas emissions, improving water use efficiency, protecting water quality by reducing agrochemical runoff, and avoiding straw burning to prevent air pollution. AWD not only reduces methane emissions from rice fields but also supports climate mitigation from multiple angles.
Reduction of Greenhouse Gas Emissions
According to IPCC Fifth Assessment Report (AR5), methane (CH₄) has a global warming potential 28 times greater than that of carbon dioxide (CO₂) over a 100-year period. In other words, reducing just one ton of methane emissions is equivalent to cutting 28 tons of CO₂ in terms of climate impact.
Since rice cultivation is one of the world’s major sources of methane, implementing AWD — a field-level practice — has great significance as a practical climate solution for rice grain production.
Efficient Use of Water Resources
AWD also contributes to the sustainable use of water resources through its irrigation regime. By alternating between drainage and re-flooding with moderate wetting periods, AWD has been reported to reduce irrigation water use by 15–30%. This is particularly valuable in water-stressed rice-growing regions of Asia, where AWD is seen as both a feasible and effective water-saving technology.
Reduced water use can also lower pumping costs and fuel consumption, while potentially increasing farmers’ income.
Water Quality Protection and Reduction of Agrochemical Runoff
The introduction of AWD has also been shown to reduce the surface runoff of fertilizers and pesticides. In traditional continuous flooding systems, surface water often carries nitrogen, phosphorus, pesticides, and sediments into rivers and waterways — leading to water pollution, eutrophication, and ecosystem disruption. Some studies have shown that AWD can reduce nitrogen and phosphorus runoff by about 30%, and pesticide runoff by up to 89%, compared to continuous flooding.
Avoiding Straw Burning and Reducing Air Pollution
In many parts of Asia, open burning of rice straw is a significant contributor to air pollution and greenhouse gas emissions. Due to labor shortages and the need to quickly prepare paddy fields for the next crop, large volumes of rice straw are often burned after harvest. This practice is estimated to release approximately 379 million tons of CO₂ and 680,000 tons of CH₄ annually.
AWD improves soil aeration during rice growth, which promotes the activity of aerobic microorganisms. As a result, rice straw can be more easily decomposed when incorporated into the soil, without disrupting land preparation for the next planting season.
In this way, AWD offers a practical alternative to straw burning, helping to reduce both air pollution and additional greenhouse gas emissions.
AWD offers a wide range of environmental benefits, including methane emission reductions, more efficient water use, improved water quality, and prevention of air pollution. As climate-smart agricultural practices like AWD become more widely adopted, they will play an increasingly important role in supporting climate change mitigation at the local, national, and global levels.
AWD (Alternate Wetting and Drying) is increasingly being adopted across major rice-growing regions in Asia, particularly in the Philippines, Indonesia, and Vietnam.
In particular, under Japan’s Joint Crediting Mechanism (JCM) with partner countries, AWD was officially approved as a recognized methodology in the Philippines in 2025. This milestone has prompted Japanese carbon credit companies to accelerate adoption of AWD deployment throughout the region.
As AWD adoption expands, there is growing demand for farmer training, field monitoring, and local coordination, which is creating new business opportunities for agricultural service providers and private enterprises. For companies involved in project development and on-the-ground implementation, this trend offers considerable economic potential.
In addition, to issue verified carbon credits based on GHG emission reductions, rigorous measurement and analysis are essential. This requirement is encouraging greater involvement from local universities and research institutions, leading to enhanced scientific knowledge and the revitalization of regional research activities.
Since AWD involves a relatively simple change in water management practices through the existing irrigation system, it is also highly accessible for farmers, making it a practical and scalable solution. Its ease of implementation supports further expansion across new areas in the coming years.
In this way, AWD serves as a critical approach to enhancing sustainability across environmental, economic, and social dimensions. It holds strong potential to become a core strategy in future regional development and international cooperation.
Carbon credits generated through AWD (Alternate Wetting and Drying) technology are beginning to rise in value. In Japan, AWD-based credits are issued under the J-Credit Scheme, a government-backed domestic carbon market. This paragraph explores recent price trends of AWD-related carbon credits based on data from Japan Exchange Group (JPX) Carbon Credit Market Daily Report.
J-Credit Prices as of July 2025 (Including AWD)
AWD-related credits fall under the category of “Agriculture (Extended Mid-Season Drainage)” in the J-Credit system. Below is a summary of carbon credit prices across various categories as of July 23, 2025:
| Category | Price (JPY) | Price (USD) |
| Agriculture (Alternate Wetting and Drying) | 3,600 | 24 |
| Agriculture (Biochar) | 40,000 | 267 |
| Forest | 4,700 | 31 |
| Energy Efficiency | 4,900 | 33 |
| Renewable Energy (Electricity) | 4,700 | 31 |
| Renewable Energy (Heat) | 4,700 | 31 |
| Renewable Energy (Mixed) | 1,990 | 13 |
| Renewable Energy (Woody Biomass) | 4,700 | 31 |
Table 1: Carbon credit prices across various categories (prices on J-credit system as of July 23, 2025, Exchange rate: 1 USD = 150 JPY (as of July 23, 2025)
AWD carbon credits are currently priced at 3,600 JPY, placing them in the mid-range compared to other categories.
Since AWD credits were introduced to the J-Credit market in January 2025, the price trend has been as follows:
Fig 3: Carbon credit prices on J-credit system as of July 23, 2025, (Exchange rate: 1 USD = 150 JPY (as of July 23, 2025)
| Month (2025) | Price (JPY) | Price (USD) |
| January | 5,000 | 33 |
| February to April | 3,000 | 20 |
| May to July | 3,600 | 24 |
Table 2: Carbon credit prices on J credit system as of July 23, 2025, (Exchange rate: 1 USD = 150 JPY)
While prices declined after the initial launch, they began to rise again from May onward. This timing coincides with the acceptance of the AWD methodology under the Joint Crediting Mechanism (JCM) in the Philippines, which may have sparked renewed interest in AWD technologies.
AWD is gaining attention as a practical and scalable solution to reduce emissions from rice cultivation, especially in developing countries. As international frameworks like JCM and CORSIA continue to adopt AWD-based methodologies, the demand and price for AWD carbon credits are expected to increase.
Projects that implement AWD stand to benefit not only from environmental impact but also from growing financial returns through carbon markets, as the effects of alternate wetting become more widely recognized and valued by the market.
AWD (Alternate Wetting and Drying) is supported by several internationally recognized carbon credit certification schemes, making it a reliable and credible source of carbon credits. Notable methodologies include:
Projects based on these methodologies are already being implemented across Asia. In recent years, AWD has attracted growing attention in the carbon market, with reports published by the World Bank and leading climate finance organizations highlighting its potential.
As more methodologies are registered and refined, AWD is expected to become a significant and sustainable source of income for rice farmers, while contributing meaningfully to global methane reduction goals.
Alternate Wetting and Drying (AWD) is emerging as a high-quality carbon offset category that is gaining increasing attention in the carbon credit market. Its importance is expected to grow significantly in the years ahead.
Market Growth and Rising Credit Prices
In recent years, growing institutional support and policy momentum have accelerated the deployment of AWD-based projects. While the supply of AWD credits remains limited, demand — particularly from the carbon markets and agribusiness sector — is steadily increasing. This imbalance suggests that AWD credit prices are likely to remain stable at a premium level over the medium to long term.
Strategic Value for Investors and Credit Buyers
Given this trend, now is the time for investors to explore AWD and develop procurement strategies or investment pipelines.
For credit buyers, AWD represents a strategic new category that intersects three critical domains: agriculture, climate mitigation, and high-impact offsets.
Benefits for Farmers
For rice farmers, adopting AWD may require a shift from traditional practices, which can initially seem challenging. However, AWD offers a rare combination of benefits: reduced water use, maintained yields, and additional income through carbon credits. It is a highly sustainable agricultural approach that aligns with both environmental and economic goals, adaptable to different rice varieties.
Looking ahead, increased access to subsidies and technical support from national or local governments is expected. For farmers, AWD presents a promising opportunity — one that should be actively considered now to ensure long-term resilience and competitiveness.
Offset8 is a global emissions investment and management group founded in Abu Dhabi, United Arab Emirates. At COP28, Offset8 announced the Middle East's first carbon market fund with target size of $250m that was highlighted by Bloomberg.
Offset8 seeks to finance nature-based solutions in Africa and Southeast Asia, as well as provides financing in the form of prepayments and offtake contracts for the delivery of verified carbon credits, with subsequent sale of the carbon credits under compliance markets (e.g., CORSIA and regional ETS), Article 6 of the Paris Agreement or voluntary purposes.
Offset8 Capital has an existing pipeline of approximately 70 projects: the investment portfolio includes such projects as CORSIA-eligible iRise (Malawi's largest reforestation and clean cooking program), Sawa (Indonesia's largest biochar carbon removal project), and others. These projects undergo rigorous verification, ensuring institutional investors receive premium carbon credits that meet evolving regulatory requirements. Our commitment to carbon neutrality across Scope 1, 2, and 3 emissions aligns with Science-Based Targets initiative requirements, demonstrating institutional leadership while providing credible expertise for client engagement on climate strategy development
Disclaimer
*Disclaimer: This commentary is for informational purposes only and should not be considered financial, investment, or regulatory advice. Offset8 Capital Limited is regulated by the ADGM FSRA (FSP No. 220178). No assurances or guarantees are made regarding its accuracy or completeness. Views expressed are our own and subject to change
The required water level may vary depending on the methodology, but generally, it involves either lowering the water level to 15 cm below the soil surface before re-irrigation, or maintaining a water level of 0 cm for a specified number of consecutive days prior to project implementation.
No, AWD should not be applied during the heading stage (from one week before to one week after flowering), as rice is most sensitive to water stress during this critical period. It is important to demonstrate that rice yields have not decreased compared to pre-project levels when implementing an AWD project.
