Don't lock Indigenous peoples into bad carbon deals: experts

Indigenous peoples are critical for saving forests, but receive less than one per cent of conservation finance. Carbon trades should give them a bigger share — and enable them to back out of deals they feel are unfair, say experts.

Indigenous women_Wamena_Papua
Indigenous women of Wamena, Papua. Image: ILO Asia Pacific / Flickr 

“No effort to conserve biodiversity will succeed without supporting our values and our world view,” said Rukka Sombolinggi, secretary general of Indonesia’s Indigenous Peoples Alliance of the Archipelago (AMAN), in response to a landmark study published last week on how to sustainably manage the world’s natural resources.

The study from the Intergovernmental Panel on Biodiversity and Environmental Services (IPBES) warned that without wild plant and animal species, the ecosystems on which billions of people depend for food, medicine, energy and water will unravel, and noted that bolder policies are needed to secure land rights and alleviate poverty for Indigenous Peoples, which are increasingly being recognised as effective stewards of nature.

“There is a growing body of evidence showing that when the rights of Indigenous peoples are guaranteed, we outperform all other forest managers in reducing deforestation and preventing wildfires,” said José Gregório Díaz MIrabal, lead coordinator of the coordinating body for the Indigenous organizations of the countries of the Amazon Basin.

Though Indigenous peoples are gaining more credit for their role as natural resource guardians — Indigenous communities keep intact nature estimated to be worth $33 trillion to the global economy — they receive less than 1 per cent of conservation and climate finance.

The issue of Indigenous rights being bulldozed for carbon capital emerged in Malaysian Borneo earlier this year, when an US$80 billion carbon deal was made without any consultation with local communities.

We must be guided by the principle that Indigenous communities have the right to withdraw their consent [from carbon deals] at any time.

Regan Pairojmahakij, landscapes in a changing climate lead, RECOFTC

Lessons from a bad deal for Indigenous Peoples

At the AVPN Global Conference in Bali last month, climate finance specialist Sandeep Choudhury shared an anecdote that has convinced him that Indigeneous Peoples should be able to regularly review the terms of carbon contracts so that they are not locked into bad deals. 

Choudhury recently met a young man from an Indigenous tribe in eastern India who remembers him from the time he tried to sell the tribe’s land for carbon credits in 2011.

The man, who was seven years old at the time of the negotiation, told Choudhury that the carbon price offered to his father for their customary forest more than a decade ago — US$2 a tonne — seemed fair then, but it does not now.

The current price of carbon, the Indigenous boy informed him, is US$14 a tonne — seven times what his tribe had been offered when Choudhury tried to register their land onto REDD+, a United Nations-backed scheme that incentivises developing countries to stop deforestation.

Speaking on a panel, Choudhury admits that the benefit sharing sheme to protect the forest, which would have spanned 30 years, had not been fair. But in any case he had not been able to find an investor, and it fell through. Now the forest on Indigenous land near the border with Myanmar is almost completely gone.

Nature-based carbon projects are structured for the long-term, usually spanning a generation or more. But gaining consent from Indigenous peoples to sell their land for carbon credits — a process known as free, prior and informed consent (FPIC) — should not be a one-off event, he said.

“We need to take consent again and again and again.” 

Choudhury’s organisation, Bangalore-based social enterprise VNV Advisory Services, advocates for “rotational FPIC”, where Indigenous peoples can renegotiate their contract every seven years. The minimum duration for carbon projects under Verra, a commonly used standard for certifying carbon credts, is 20 years.

“Traditional buyers don’t like it, because they want to hedge their forward purchases over a longer period of time. But we need to stop looking at Indigenous Peoples as just a carbon offsetting exercise,” he said.

Giving Indigenous peoples more control over carbon trades will translate into higher-quality carbon credits for buyers, Choudhury said.

No one carbon contract is the same

Regan Pairojmahakij, senior programme officer, landscapes in a changing climate lead, for Regional Community Forestry Training Center for Asia and the Pacific (RECOFTC), a conservation non-profit, said Indigenous Peoples need to be aware of their rights and entitlements — which is not a static process.

“We must be guided by the principle that Indigenous communities have the right to withdraw their consent at any time,” she told Eco-Business.

RECOFTC is part of a new initiative called The Peoples Forests Partnership, which guides carbon project developers on how to engage with Indigenous Peoples to ensure their fair treatment.

Just as there are 68 different pricing instruments for carbon markets, there is no standardised approach to working with Indigenous peoples on carbon market deals.

If you work with Indigenous people, the forest will take care of itself.

Sandeep Choudhury, director, VNV Advisory Services

Though standards such as the Climate, Community and Biodiversity Standards (CCB) exist to ensure that there are reasonable social safeguards in place, they are not infallible and not all projects use CCB, Pairojmahakij noted.

Choudhary is not a fan of a standardised approach to conservation projects.

“I understand the frustration among corporates who want to reduce their time to transaction by using standards. But nature is not standardised, neither are Indigenous tribes,” he said.

“If investors are serious about climate action, they need to be willing to spend more time on the ground talking to people. It will helps de-risk the project, and builds transparency and credibility.” 

What does a fair carbon deal look like? 

Forest communities often need help building capacity to absorb conservation finance, as many do not have bank accounts.

“As carbon prices increase, payments to communities may be sizeable and there needs to be careful consideration of benefit sharing mechanisms and the capacities to ensure fair and transparent absorption of carbon project proceeds,” Pairojmahakij said.

Until recently, the money that could be made from carbon projects was insignificant compared to the pay-back from cutting a forest to grow cash crops such as palm oil or soy. But the voluntary carbon markets is now a billion-dollar industry which has double in size since 2020 as more companies pursue net-zero targets.

While some indigenous communities, particularly those in Asia, are opposed to a monetary value being placed on the forests with which they have spiritual relationship, a growing number are pragmatic that revenue streams are desperately needed, Pairojmahakij added.

“If this aligns with traditional, customary norms of forest protection, then it is potentially a win-win situation,” she said.

Choudhury is sceptical of cash-based payments, noting that in some instances they have led to social problems in local communities such as gambling and alcohol addiction.

Instead of direct cash benefits, his organisation guides investments in infrastructure that plug Indigenous peoples into supply chains, for instance setting up mango pulp processing centres.

“They don’t necessarily need capitalism. They just need their natural ecosystems to remain intact,” he said.

He also advises companies to frontload their carbon investments in Indigenous communities, rather than spread payments out over years or even decades. “The socioeconomic work you need to do in the field cannot wait,” he said.

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