Reducing emissions from deforestation and forest degradation (REDD) has been given a principal role in post-Kyoto, climate change agreements. Resulting markets and mechanisms for carbon forestry offsets could generate considerable global revenues for both forest conservation and sustainable rural development; or they may impose political and economic pressures on forest governance that threaten indigenous and rural peoples’ rights. Some inherent challenges to developing carbon forestry projects that support rural peoples’ welfare are reviewed. The experience of Scolel Te’, a carbon forestry project for Mexican indigenous farmers, suggests how projects can be adapted for smallholder provision of carbon services on benign terms and still meet the demands of carbon markets. However, carbon sales alone have not supported investments in knowledge development, institutional learning, and strategic farmer participation needed for significant political or economic change. This supports critiques that policies based on economic valuations of environmental services are unlikely to support social and equity objectives.
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