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Carbon rights and the importance of benefit sharing

Blog | Fri, 03 Jun, 2022 · 9 min read
Carbon rights and the guardians of forests: A key axiom for REDD+ to succeed

                                                                                                                   Carbon rights and the guardians of forests: A key axiom for REDD+ to succeed


Catalyzing change with gender-responsive, climate-forest finance

Assigning forest carbon rights is crucial for any effective REDD+ system. Often linked to debates about forest tenure, carbon rights also determine who can benefit, how and to whom carbon is sold and under what circumstances. Debates about forest carbon rights strongly link to debates about equity in REDD+. Clear and secure forest carbon rights are also important for encouraging public and private investment into REDD+.

What are carbon rights?

Currently, there is no internationally accepted definition of carbon rights, and very few countries have adopted definitions in their national legal systems. As it concerns the right to trade carbon, carbon rights need to be determined by legislative and/or contractual arrangements. The term carbon rights comprises two fundamental concepts: 1) the property rights to sequester and store carbon, contained in land, trees, soil, etc. and 2) the right to benefits that arise from the transfer of these property rights (i.e. through emissions trading schemes).

Carbon markets can be part of the solution to protect natural resources, but only if the rights of those who depend and live in forest areas are duly recognized and protected.

Recognizing the rights of forest guardians

Projects that sequester carbon in forests and soils generate a significant share of the carbon credits traded on the market. Such projects are also likely to play an increasing role in compliance markets, as countries seek to meet their mandatory emissions reduction targets and commitments under the Paris Agreement.

However, increased interest in carbon markets that operate across borders comes with a number of risks. In particular, many forest carbon schemes are located in lands historically claimed, inhabited and used by indigenous peoples and local communities. Often, however, their rights are not secured, putting their well-being at risk and threatening the future of carbon markets.

At COP26 in November 2021, the Glasgow Leaders’ Declaration on Forests and Land Use highlighted the importance of recognizing the rights of indigenous peoples and local communities in accordance with relevant national legislation and international instruments.

States have also agreed on a series of rules to govern market-based activities under Article 6 of the Paris Agreement, to improve environmental integrity, avoid the double counting of emissions reductions and provide enhanced transparency

As private and public carbon markets develop, the potential benefits and risks of carbon trading for indigenous peoples and local communities must be carefully assessed.

Potential benefits might include increased financial flows for forest protection and conservation, better recognition of community rights and improved livelihood opportunities, such as the sustainable production of non-timber forest products.

To maximize benefits and avoid harm, governments, public and private investors, among others actors in carbon finance must adopt rights-based approaches to fully respect, protect and realize the rights of indigenous peoples, local communities and Afro-descendant peoples, such as the Quilombola in Brazil.

In Latin America and the Caribbean, research shows that forest communities are the best guardians of the region’s forests and that supporting them is a highly cost-effective way to reduce carbon emissions.

In other parts of the world, like Cameroon, Nepal and Zambia, the potential for community-based forest management is already showing benefits in reducing deforestation and poverty and improving biodiversity protection and carbon sequestration.

Environmental integrity and carbon credits

Large-scale programs that reduce emissions from deforestation and forest degradation, as part of the REDD+ process, produce the high-integrity, high-quality carbon credits that buyers demand. Examples of such emission reductions come from the Forest Carbon Partnership Facility through Mozambique’s Emission Reduction Payment Agreement (ERPAs), which demonstrated an emerging market for jurisdictional REDD+ carbon credits. This market is part of an evolution in the climate finance landscape and includes the acceptance of Verified Carbon Standard’s Jurisdictional and Nested REDD+ and the Architecture for REDD+ Transactions (ART-TREES) into Carbon Offsetting and Reduction Scheme for International Aviation.

Agreements between the program entity and/or participants and landowners, communities and rights holders for the transfer of carbon rights (ERRs rights) are an essential requirement to demonstrate the participant’s capacity to internationally trade carbon rights. However, such agreements are often complex to implement at a large scale, especially if tenure rights are not yet formalized.

As countries progress towards the accomplishment of those conditions, lessons can be learned from previous experiences and programs, while consistent efforts are needed to recognize and formalize community forest tenure at large scale. Additionally, benefit-sharing plans at the jurisdictional level must be developed to guarantee transparency and equity in the distribution of REDD+ payments and to target vulnerable groups and small stakeholders based on their actions and contributions, in line with REDD+ safeguards.      

The UN-REDD Programme provides support to forestry countries in order to clarify carbon rights, taking into consideration countries’ perspectives and encouraging decision-making when needed. As we know, it is a fundamental piece to access forest carbon finance under different modalities and standards, including under ART-TREES.