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Socio-Economic Impacts from Community Perspectives

Published: March 8, 2022 by Editorial Team

Many carbon offset projects are supported by carbon finance based on future offset supply, making it challenging to gauge what socio-economic impacts will be produced in forward-looking timespans. A study conducted on a voluntary forest carbon offset project involving an indigenous community in Panama collected data over 14 years (2004-2018) from participants and non-participants across different wealth categories to assess changes in natural and financial resources for the duration of the carbon project. Areas included in the project were relatively small individually owned parcels, with the largest plot of land equaling about 2.5 acres [1]. Findings demonstrated the need for more evidence to clearly understand the socio-economic realities of carbon offset projects; an important indicator that can be difficult to support with project-based data. As a growing number of offset projects are developed, efforts are being made to gain localized perspectives on how communities are affected before, during, and after carbon payments. The Panama case study showed that income from the forest carbon project generally allowed participants to explore alternative revenue streams. For example, poorer participants had income nearly double from $1444 in 2004 to $2295 in 2018 due to income source diversification enabled by the carbon project payments [1]. In addition to individual gains, 20% of funds from the carbon offset payments were set aside to build communal housing used for greeting tourists, hosting events, and selling handicrafts. The reforestation project therefore acted as a catalyst for enabling improved livelihoods and built generational wealth. The data also showed an increased level of engagement in reforestation practices even after offset payments ended, indicating how permanence of sequestered carbon and permanence of socio-economic impacts can go hand-in-hand. Although this research was limited to a small sample size, data like this can help signal the long-term impacts of nature-based carbon projects from a community level.

In California, the Yurok Tribe’s forest carbon project has been publicly recognized for the integration of cultural and economic benefits from their restoration practices and carbon finance agreements. By funding land re-acquisition through forest carbon payments under the California Cap and Trade program, the Yurok Tribe innovated a way to reclaim important heritage sites, support youth programming, and improve local infrastructure [2]. Following years of successful project management, the Yurok Tribe project was awarded the United Nation’s Equator Prize for outstanding efforts to reduce poverty through conservation and sustainable use of biodiversity. Awardees of the Equator Prize are required to meet selection criteria related to a variety of factors including economic impact, adaptability, and social equity [3].

Understanding the socio-economic outcomes within communities will be essential to evaluate as more carbon offset projects are implemented. Through learning these lessons, documenting case studies like the one in Panama, paired with accolades like the Equator Prize may help to foster greater transparency among project stakeholders. Alongside the growth of the global carbon market, these socio-economic findings will be critical to achieving the spectrum of co-benefits that carbon projects seek to encourage.


News + Resources

[1] Natural and financial impacts of payments for forest carbon offset: A 14 year-long case study in an indigenous community in Panama

[2] The Yurok Tribe is using California’s carbon offset program to buy back its land

[3] Equator Prize – United Nations Development Program