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Indigenous Peoples and local communities (IPs and LCs) engage with the voluntary carbon market (VCM) primarily as the owners and custodians of lands where VCM activities are developed. IPs and LCs voluntarily participate in the VCM as project developers, consulted partners, and beneficiaries of VCM activities and proceeds. In some cases, IPs and LCs are involuntarily involved in the VCM because activities are developed on their lands without appropriate consultation or recognition of their rights. The full and equitable participation of IPs and LCs is necessary for the long-term success of VCM activities in their territories. VCM activity developers, carbon standards, governments, and buyers of carbon credits can improve requirements and practices to promote benefits for and mitigate risks to IPs and LCs.
Why are IPs and LCs involved in the VCM?
IPs and LCs’ territories exhibit high rates of carbon storage and biodiversity, provide essential ecosystem services, and have significantly less deforestation and degradation than surrounding areas. IPs’ lands are estimated to account for at least 36 percent of intact forest ecosystems globally. In 2018, IPs and LCs were estimated to manage at least 17 percent–or nearly 300 metric tons–of the total carbon stored in 64 countries, including in all of the major rainforest regions (Figure 11.1). This is likely an underestimate. Globally, the carbon stored in forest lands to which IPs and LCs have legal rights may be as much as 37.7 billion tonnes of carbon. Depending on how tenure rights are allocated, IPs and LCs’ lands have potential to sequester 8.69 to 12.93 million tonnes of carbon dioxide between 2020 and 2050.
The climate and conservation services provided by IP- and LC-managed lands attract VCM investment. Protecting or restoring IP and LC lands can generate carbon credits from nature-based solutions (NbS) that also provide sustainable development or other social benefits. Some VCM activities generate credits by supporting the rights and capacities of IPs&LCs to protect, manage, or restore ecosystems. Carbon credits can be generated through activities that strengthen land tenure rights, provide education and livelihoods, and support implementation of IPs and LCs’ territorial management plans. VCM activities may also aim to change practices that degrade ecosystems by developing livelihood alternatives or supporting sustainable development.
IPs and LCs may choose to develop VCM activities themselves or be engaged by organizations seeking to develop activities on IPs and LCs’ territories. When IPs and LCs choose to develop VCM activities or enter into benefit sharing arrangements through a consultative process that follows free, prior, and informed consent (FPIC), the VCM can support their needs and goals. There are also cases in which IPs and LCs are involuntarily involved in VCM activities due to VCM activities being developed on their land without their consent. This abridges the rights of IPs and LCs and poses risks to the long-term success of the VCM activities.
How are IPs and LCs involved in the VCM?
IPs and LCs engage with the VCM when activities are developed on land they manage or use. IPs and LCs are most often involved in VCM activities through consultation processes and benefit sharing arrangements. In some cases, IPs and LCs may be activity developers, directly involved in the design and implementation of a VCM activity. There are also cases of involuntary involvement, where a VCM activity impacts IPs and LCs who were not appropriately consulted.
Consultation
Some VCM carbon standards and methodologies require that communities be consulted in activity development. VCM activity developers should demonstrate compliance with IPs’ right to FPIC as required by the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). FPIC gives IPs the right to grant or withhold consent from activities that will impact them or take place on their territories. VCM activity developers may also demonstrate that they consulted with LCs and other vulnerable groups that are not protected under UNDRIP. VCM validation and verification processes review compliance with consultation requirements.
Benefit sharing
VCM activity developers should establish benefit sharing agreements with IPs and LCs that are involved or impacted by VCM activities. High-quality VCM activities include benefit sharing in NbS activities and other activities that impact IPs and LCs. Benefit sharing agreements can provide direct financial payments to IPs and LCs or support needs identified by the IP and LC beneficiaries such as building infrastructure such as schools or roads, supporting education or alternative livelihood development, or strengthening rights and land tenure. Host countries governments may set benefit sharing requirements that VCM activity developers need to follow. Inclusion in benefit sharing plans set by governments does not confer carbon rights to IPs and LCs.
Activity development
In cases where IPs and LCs hold formal forest and land rights, they can claim carbon rights and directly develop VCM activities in their territories. This means that IP and LC organizations, groups, or individuals can determine the VCM activity design, implementation, and terms of carbon credit production and use. Most IP- and LC-led VCM activities are focused on NbS. IPs and LCs may choose to develop VCM activities to finance their own ecosystem protection efforts, support local sustainable development goals or territorial management plans, and strengthen land tenure.
IP- and LC-led VCM activities have been developed under carbon standards Verra and Plan Vivo as well as under some compliance carbon market standards. The Architecture for REDD+ (Reducing Emissions from Deforestation and Degradation Plus) Transactions’ The REDD+ Environmental Excellence Standard (ART/TREES) allows the registration of REDD+ programs developed across one or multiple Indigenous territories until the end of 2030. However, as of August 2023, no Indigenous jurisdictional programs have been developed under ART/TREES.
Due to the technical complexity of VCM activity development, there are few IP- and LC-led VCM activities. Furthermore, most countries fail to fully recognize or formalize the carbon and land rights of IPs and LCs, which limits the ability of these groups to develop activities independently. In most cases where IPs and LCs are VCM activity developers, they work with non-governmental organizations (NGOs) that provide technical support and to facilitate credit trading.
| Box 11.1. Benefits and challenges of Indigenous-led carbon projects Indigenous-led forest carbon projects can provide financial and tenure security to Indigenous communities. Yet, the success of Indigenous-led projects is subject to the strength of governance and legal recognition of Indigenous people in the jurisdictions where these projects take place. Examples from the United States, Colombia, and Brazil demonstrate some of these benefits and challenges. The Yurok tribe in the lower Klamath River Basin in California (United States) sell 100-year contracts for forest offsets under California’s offset program. The Yurok have used the sale of these contracts to purchase and restore timberland in their ancestral territories. Carbon credits are generated based on reduced timber harvest and improved management that reduces forest fires. Indigenous communities represented by the Regional Indigenous Council of Middle Amazonia (Colombia) have been able to receive stable income from the purchase of carbon credits generated by REDD+ projects they developed. These communities say that income from carbon credits has enabled them to conserve their forests and avoid illegal or environmentally unsustainable livelihoods. However, there are concerns now among communities that they will lose access to this income source as the Colombian government seeks to take more control over carbon market activities. The REDD+ Suruí Forest Carbon Project in Pará, Brazil was the first Indigenous-led forest carbon project. Certified under the Verified Carbon Standard (VCS), this project generated almost 300,000 carbon credits from 2009-2014. The credits were owned by a Suruí association and credits sales were put into the Suruí Fund. The Paiter-Suruí people used proceeds from the sale of those credits to support defense of their territory, local governance, and food security. However, in 2014 and 2016, gold and diamonds were discovered in the Paiter-Suruí territory. Some community members supported allowing extractive activities, arguing that logging and mining provided more revenue than forest protection. Illegal mining also began and agricultural activities followed. Sanctioned and illegal mining and agriculture resulted in fewer credits being issued and ultimately a suspension of the Suruí project by Verra. The Suruí Forest Carbon Project was undermined by internal divisions, insufficient revenues from carbon, collusion between a Suruí leader and miners, and lack of support from the Brazilian government for Paiter-Suruí rights. These examples show how Indigenous communities can benefit directly as project developers and that stable governance environments are necessary to ensure long-term social and environmental benefits. The Yurok are in a relatively unique position with their secure, enforceable, long-term management rights. Indigenous REDD+ project developers in Colombia and Brazil face unstable governance and political conditions that can abruptly lead to the loss of access to carbon finance. |
Involuntary involvement
In some cases, IPs and LCs are involuntarily involved in VCM activities. This is most likely to occur where land ownership is unclear and governance is weak. Much of the land where NbS VCM activities are developed are in areas where the tenure or use rights of IPs and LCs have not been recognized or formalized. Governments may grant VCM developers the rights to land where IPs and LCs have unrecognized claims, use resources but do not inhabit the land, or are settled illegally. In other cases, unscrupulous activity developers establish VCM activities without following proper consultation processes or convince IPs and LCs to participate in VCM activities that result in them losing ownership, rights, or access to resources. Some carbon standards have safeguards in place to avoid the development of VCM activities without consultation with IPs and LCs, but there are still risks of nonconsensual involvement of IPs and LCs, especially in remote and low governance regions.
How can VCM activities promote benefits for and mitigate risks to IPs and LCs?
Lack of legally-recognized rights can result in insufficient engagement with, weak benefit sharing for and disenfranchisement or displacement of IPs and LCs.
The most important measure to ensure that the VCM promotes benefits for and mitigates risks to IPs and LCs is to develop VCM activities that are led by communities and based on local knowledge and Indigenous innovation. The Australian National Indigenous Carbon Forum calls for Traditional Owners of lands where carbon projects are developed to be treated as equal partners and for carbon market activities to only make claims about benefiting Indigenous people if and when IPs and LCs are the partners and beneficiaries. VCM activity developers should heed such demands from IPs and LCs’ groups and organizations to create activities that truly benefit IPs and LCs.
VCM activity developers are responsible for ensuring that VCM activities provide benefits and avoid risks. They can do this by considering and recognizing IPs and LCs’ land, resource, and carbon rights from the beginning of VCM activity development. This includes recognizing customary and ancestral claims and uses of land and resources, which may not be formally recognized in law. In many regions, legacies of land seizures, forced expulsions, and conflict result in land that is owned or claimed by IPs and LCs being controlled by governments or other private landowners. VCM activity developers need to be responsive to these claims in determining how to allocate carbon rights and structure benefit sharing agreements. Activity developers can support IPs and LCs in accessing legal services to clarify land and carbon rights.
VCM activity developers must budget and invest sufficient time and financial resources to build trust and conduct full consultations with IPs and LCs. Conducting consultations and obtaining consent can take years. Consultations and FPIC are necessary to develop activities and benefit sharing agreements with IPs and LCs that achieve long-term climate goals. If consultations have not been conducted appropriately, there is a much higher likelihood that the needs of IPs and LCs will not be met by a VCM activity and the goals of that activity (e.g., avoiding forest loss, changing livelihoods, securing land tenure) will not be achieved or sustained. Consultations should be transparent about activities, outcomes, expectations, changes, and achievements. Appropriate consultation enables IPs and LCs to decline participation in or introduce changes to VCM activities.
Carbon standards can promote benefits and mitigate risks to IPs and LCs by providing specific guidance and safeguards for consultations and benefit sharing. This could include instituting requirements and procedures for human rights impact assessments for REDD+ and other NbS activities. Carbon standards can also improve the accessibility of their platforms, methodologies, and grievance procedures for IPs and LCs. This would make it easier for IPs and LCs to lead as activity developers.
Governments can promote benefits and mitigate risks to IPs and LCs by attributing to them rights to natural resources or recognizing their roles as stewards of ecosystems. Governments can also clarify how carbon rights and carbon markets will be treated in the future, which provides IPs and LCs and VCM developers the stability to develop activities. Where IPs and LCs have clear and secure ownership of land or other resources, they can be VCM activity developers and use carbon credit finance to support their land management, livelihoods, and governance.
Buyers of carbon credits can conduct thorough due diligence assessments to ensure that credits they acquire were generated by VCM activities that follow all social safeguards and promote benefits to IPs and LCs. Carbon credits with labels indicating social benefits—such as labels issued by the Climate, Community, and Biodiversity Standard or Gold Standard for the Global Goals—are more likely to support IPs and LCs’ rights and needs.
When engagement is done effectively, VCM activities can strengthen the position of IPs and LCs in negotiating, securing, and maintaining land and resource rights. In turn, where IPs and LCs have secure land and forest rights, they can counter ecosystem conversion and degradation, which benefits both communities and climate change mitigation goals.
Further Reading
- Almås, O., & Merope-Synge, S. (2023). Carbon Markets, Forests and Rights: An Introductory Series. Retrieved from https://www.forestpeoples.org/en/report/2023/carbon-markets-forests-rights-explainer
- Frechette, A., Ginsburg, C., & Walker, W. (2018). A Global Baseline of Carbon Storage in Collective Lands. Retrieved October 13, 2021, from https://rightsandresources.org/wp-content/uploads/2018/09/A-Global-Baseline_RRI_Sept-2018.pdf
- Garcia, B., Rimmer, L., Canal Vieira, L., & Mackey, B. (2021). REDD+ and forest protection on indigenous lands in the Amazon. Review of European, Comparative & International Environmental Law, 30(2), 207–219. https://onlinelibrary.wiley.com/doi/abs/10.1111/reel.12389
- Lofts, K., Frechette, A., & Kumar, K. (2021). Status of Legal Recognition of Indigenous Peoples’, Local Communities’ and Afro-descendant Peoples’ Rights to Carbon Stored in Tropical Lands and Forests. Retrieved September 30, 2021, from https://rightsandresources.org/publication/carbon-rights-brief/
- Reyes-García, V., Fernández-Llamazares, Á., Aumeeruddy-Thomas, Y., Benyei, P., Bussmann, R. W., Diamond, S. K., et al. (2022). Recognizing Indigenous peoples’ and local communities’ rights and agency in the post-2020 Biodiversity Agenda. Ambio, 51(1), 84–92. https://doi.org/10.1007/s13280-021-01561-7
- Sarmiento Barletti, J. P., & Larson, A. M. (2017). Rights abuse allegations in the context of REDD+ readiness and implementation: A preliminary review and proposal for moving forward. Retrieved August 13, 2023, from https://www.cifor.org/library/6630/rights-abuse-allegations-in-the-context-of-redd-readiness-and-implementation-a-preliminary-review-and-proposal-for-moving-forward/
- World Resources Institute & Climate Focus. (2022). Sink or swim: How Indigenous and community lands can make or break nationally determined contributions. Retrieved from https://forestdeclaration.org/resources/sink-or-swim/
- Zwick, S. (2019, March 25). The Story of the Surui Forest Carbon Project. Forest Trends. Retrieved September 28, 2023, from https://www.forest-trends.org/blog/the-story-of-the-surui-forest-carbon-project/
Acknowledgements
Authors: Melaina Dyck, Charlotte Streck, and Danick Trouwloon
Designer: Sara Cottle
Contributors: Darragh Conway, Leo Mongendre, Pablo Nuñez, María José Rodezno, Laura Carolina Sepúlveda, and Theda Vetter
Date of publication: October 2023
The Voluntary Carbon Market Explained (VCM Primer) is supported by the Climate and Land Use Alliance (CLUA). The authors thank the reviewers and partners that generously contributed knowledge and expertise to this Primer.
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