Social capital from carbon property: creating equity for indigenous people

New incentives for protection and in situ use of forests and the services they provide raise hopes for the reversal of tropical and temperate deforestation. Past management of forests appropriated the rights of forest communities, providing incentives to convert natural forest into financial capital through logging, while destroying the underlying physical property. Carbon trading aims to provide a means to convert the forest property into financial capital, while protecting the physical property of forests, thereby providing new incentives for in situ forest management. The potential for carbon-emission trading as a contributor to these new incentives is tempered by concerns that it is another tool for capitalists to exploit the indigenous communities of the developing world. Estimates of annual emission trading amounting to US $200 billion raise alarm bells about the effect of such trade in the developing world. People are right to be concerned, as the history of exploitation of indigenous people, the appropriation of their rights, the loss of forests and their benefits is well documented. This exploitation resulted in the exclusion of forest communities from the basic tenets for development created by the wealth generated by traded property. However, one virtue of trade is that it can be made subject to constraints. Through international treaties and agreements, trade can be constrained and national governments obliged to observe the rules of trade. The value of tradable carbon credits will be discounted or invalid if they do not meet these criteria, providing all parties with strong incentives to achieve the necessary performance standards relating to both processes and contracts. For carbon trading to develop social capital from natural capital requires the admission of forest communities into the polity and management of forest resources. In this paper we argue for responsible carbon-emission trading based on the clear and appropriate definition of carbon entitlements, with the proviso that trading respects the rights and needs of indigenous people. We adopt this position as emissions trading now seems inevitable and there should be proper rules to control this trade where it affects forests and their inhabitants. It is imperative that the poor and indigenous people are not excluded from these systems. Trading systems and the property systems they depend on need to be more accountable, transparent and inclusive of those features which we propose.