Large areas in the Upper Tana river catchment, Kenya, have been over-exploited, resulting in soil erosion, nutrient depletion and loss of soil organic matter (SOM). This study focuses on sections of the catchment earmarked as being most promising for implementing Green Water Credits, an incentive mechanism to help farmers invest in land and soil management activities that affect all fresh water resources at source. Such management practices can also help restore SOM levels towards their natural level. Opportunities to increase soil organic carbon (SOC) stocks, for two broadly defined land use types (croplands and plantation crops, with moderate input levels), are calculated using a simple empirical model, using three scenarios for the proportion of suitable land that may be treated with these practices (low = 40 per cent, medium = 60 per cent, high = 80 per cent). For the medium scenario, corresponding to implementation on ~348 000 ha in the basin, the eco-technologically possible SOC gains are estimated at 4·8 to 9·3 × 106 tonnes (Mg) CO2 over the next 20 years. Assuming a conservative price of US$10 per tonne CO2-equivalent on the carbon offset market, this would correspond to ~US$48–93 million over a 20-year period of sustained green water management. This would imply a projected (potential) payment of some US$7–13 ha−1 to farmers annually; this sum would be in addition to incentives that are being put in place for implementing green water management practices and also in addition to the benefits that farmers would realize from the impact on production of these practices themselves. Copyright © 2012 John Wiley & Sons, Ltd.