“The expansion of carbon markets suggests that the global economy continues to seek ways to manage the climate crisis without confronting the structures that created it in the first place”

Debates Indígenas (Indigenous Debates) is a digital magazine run by the International Working Group on Indigenous Affairs (IWGIA). Recently Debates Indígenas featured an article about carbon markets and Indigenous Peoples.

The article is titled “Carbon Markets and Indigenous Peoples: Between False Solutions and Forced Choices.” It is co-written by five people:

• Paine Eulalia Mako is a Maasai Indigenous woman and the executive director of the Ugamaa Community Resource Team;

• Tunga Bhadra Rai belongs to the Rai Indigenous Nationality of Nepal and is the director of the Climate Change Programme of the Nepal Federation of Indigenous Nationalities;

• Gideon Sanago is a Tanzanian Maasai Indigenous person, working with Pastoralists Indigenous Non-Governmental Organisations (PINGO’s Forum);

• Rosario Carmona is a programme consultant on climate with IWGIA; and

• Stefan Thorsell is climate advisor at IWGIA.

The article notes that for many Indigenous Peoples, carbon markets “represent a familiar pattern of external control over their lands, now falsely justified under a green flag”.

Rather than addressing the root causes of climate change, mechanisms such as REDD+ reframe Indigenous territories as "carbon reservoirs" intended to offset pollution produced elsewhere — a form of climate colonialism that reshapes power over land and governance while allowing extractive economies to continue operating.

The article is critical of carbon trading and REDD in particular. The authors write that REDD has developed into a complex network of project developers, conservation NGOs, certification bodies, financial intermediaries, and government agencies.

One of the justifications for carbon markets is that they can “mobilise private finance”. But this ignores the trillions of dollars of fossil fuel subsidies every year. Carbon markets do nothing to challenge the economic structures that are driving the climate crisis.

The article notes that international safeguards are supposed to protect Indigenous Peoples’ rights. But in practice, these protections are often weak, non-binding, or easily circumvented.

Indigenous Peoples’ organisations have reported a series of problems, the authors note: “incomprehensible contracts, rushed consultation processes, unequal access to information, uninformed decisions, and growing restrictions over customary land tenure”.

None of this is new. Back in 2013, Francesco Martone and Tom Griffiths of Forest Peoples Programme raised the alarm of weak safeguard implementation.

Free, Prior and Informed Consent is an important right of Indigenous Peoples recognised under the international legal framework of the UN Declaration on the Rights of Indigenous Peoples and the Indigenous and Tribal Peoples Convention, 1989 No. 169 (ILO 169).

But as the authors point out, FPIC is “often reduced to a procedural formality or a simple verification requirement”.

Communities are approached through isolated meetings, technical presentations, or consultations conducted in foreign languages and under significant pressure. Contracts frequently involve highly complex legal and financial arrangements spanning decades, yet communities receive little independent legal or technical support to assess the long-term implications.

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The asymmetry of knowledge and power is profound in carbon projects, the authors write. Carbon project developers, intermediaries, and certification bodies have specialised expertise, legal advice, and access to international finance.

Communities are often pushed into making decisions about carbon projects without fully understanding carbon trading, or what the implications will be for their livelihoods, access to their territories, contractual risks, or how much they will receive from the sales of carbon credits.

“The result,” the authors write, “is an environment in which Indigenous Peoples’ territories become incorporated into volatile global carbon markets without the rights-holders exercising informed and meaningful engagement over the process.”

The restrictions on Indigenous Peoples’ livelihoods associated with carbon projects can be severe, including limitations on shifting cultivation, grazing, hunting, gathering, and subsistence forest use. Some carbon projects see Indigenous Peoples as a threat to protecting the forest, replicating the model of “fortress conservation”.

The authors give the example of a failed REDD initiative in Tanzania where “wilderness” narratives were used to justify violent evictions, authoritarian conservation, and treating Indigenous People as intruders in their own territories.

Carbon projects “reshape local governance systems,” the authors write. They “exacerbate internal inequalities and generate conflicts regarding representation, benefit-sharing and territorial authority.”

Benefit-sharing is often unclear, delayed, and minimal, with communities receiving only a small fraction of total revenues. Women, youth and traditional authorities are frequently excluded from negotiations — despite bearing much of the social and environmental burden — while project revenues, when they do materialize, may be captured by local elites or external intermediaries. As the “carbon rights” or the benefit share is often defined together with the land ownership, the carbon market has become another weapon for eliminating customary land rights of Indigenous Peoples due to the non-recognition of customary land rights by many governments.

The authors also look into the issue of junk credits — credits issued for emissions that either did not occur, or cannot be reliably verified. In January 2023, The Guardian, Die Zeit, and SourceMaterial published the results of a nine month investigation into forest carbon offsets. They found that 94% of carbon credits did not actually benefit the climate.

Three structural issues with REDD are behind this problem — these are the fundamental problems inevitably underlying all REDD projects:

• Leakage refers to the fact that while deforestation might be avoided in one place, the forest destroyers might move to another area of forest or to a different country.

• Additionality refers to the impossibility of predicting what might have happened in the absence of the REDD project.

• Permanence refers to the fact that carbon stored in trees is only temporarily stored. All trees eventually die and release the carbon back to the atmosphere.

But these credits are used by Big Polluters to greenwash their destructive operations.

“Therefore,” the authors write, “carbon offsetting does not function as a pathway beyond fossil fuels, but rather as a mechanism that allows emissions to continue elsewhere.”

Some Indigenous organisations reject carbon markets, pointing out that they are false solutions that commodify nature and allow polluters to continue polluting.

The authors note, however, that “the reality on the ground is often more complex”. Some communities take part in carbon projects “not from endorsement, but rather from the need to navigate an increasingly restrictive political and environmental environment”.

Some Indigenous communities see carbon trading as a lesser threat, compared to other forms of extractivism. Others hope to secure territorial recognition through engaging in carbon projects. “In this sense, participation may function less as acceptance than as a strategy of defence and political survival,” the authors write.

Indigenous Peoples’ organisations are demanding stronger territorial protections, transparent contracts, independent legal support, community-controlled benefit-sharing mechanisms and consultation processes designed according to Indigenous Peoples’ governance systems rather than project timelines.

This has been a crucial issue since the beginning of REDD discussions. Yet Indigenous communities are still struggling to get their rights recognised in the face of REDD projects on their territories. To give just one example, Kichwa Indigenous communities in Peru have seen their land rights and territory taken away by the Cordillera Azul REDD project and have been campaigning for their rights for many years.

The article ends with a call to go “beyond carbon markets”. Regardless of whether Indigenous communities engage with carbon markets or not, a key issue for all Indigenous Peoples is self-determination. The right of Indigenous Peoples to determine what happens within their territories is a fundamental right. “Secure collective land tenure must be a precondition for any legitimate form of engagement,” the authors write.

They note that Indigenous Peoples’ organisations are promoting “alternative approaches centred on on territorial rights, direct access to climate finance and non-market forms of climate action”.

The authors conclude their article as follows:

These approaches also challenge the broader political economy underpinning carbon markets. Addressing climate change requires far more than new financial instruments. It demands a radical structural transformation of society and the economy, facilitating a rapid fossil fuel phase-out, strict regulation of extractive industries and supply chains linked to deforestation, cancellation of illegitimate debts, and large-scale public investment in Indigenous and community-led initiatives.

The expansion of carbon markets suggests that the global economy continues to seek ways to manage the climate crisis without confronting the structures that created it in the first place. Indigenous critiques expose the limits of that approach. They remind us that forests are not simply carbon reservoirs, and that climate justice cannot be reduced to accounting exercises conducted in distant financial centres.