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to estimate the net economic benefits for households, but surmised that the costs of “displaced
production and additional expenditure on food items may outweigh carbon income” (German et al.
2009, 16).
How a carbon project affects employment and livelihoods tends to depend on how much it restricts or
facilitates productive activities (Wunder 2008). Carbon projects commonly attempt to compensate for
lost economic activity by facilitating new commercial and employment opportunities through training,
technical assistance, and by subsidizing or promoting alternative livelihood activities such as
agroforestry and microenterprise development. It is expected that through upfront investments projects
can produce a net increase in local employment opportunities, even if only in the short term (Grieg-Gran
et al. 2005; Wunder 2008). 13
But some project efforts to promote new income and livelihoods may fall
short, and the net effect on employment could be negative. The rural poor, who depend on logging,
charcoal production, harvesting NTFPs, or clearing and cultivating land, are commonly among those
most affected by lost sources of livelihood (Bond et al. 2009; Grieg-Gran et al. 2005).
New or supplementary income from carbon projects can allow community members or community
organizations to make new purchases or investments that generate indirect social outcomes and
impacts in the areas of health, education, or economic productivity. For example, carbon payments to
community organizations or community trust funds have been used for building new physical capital
such as schools and health clinics (Jindal 2010). In the case of carbon income for individual farmers in
projects in Mozambique and Uganda, new household income was used to pay for building materials for
home improvements, food, clothing, and school fees and supplies (Jindal 2010; Carter 2009). Similarly,
farmers on an agroforestry based carbon sequestration project in Chiapas (Mexico) stated that they
intended to use new carbon income to pay for health care services and education, as well as purchase
durable goods such as agricultural machinery and food processing equipment (DFID 2000). In one of the
villages in Chiapas, new carbon income led to an indirect health benefit for farmers’ families as it
allowed them to purchase and install fuel efficient stoves with chimneys that removed dangerous smoke
from their homes.
Under some circumstances, payments and employment from carbon projects can result in improved
income diversification and stability (Wunder 2008, Peskett et al. 2008; Pagiola et al. 2004). For
example, income from carbon projects in Costa Rica and Ecuador was cited by local people as being a
significant means of income stabilization and diversification (Grieg-Gran et al. 2005). As Peskett et al.
(2008) note, PES schemes (including carbon projects) that provide annual payments that do not vary
from year to year offer participants income streams that are more stable than, for example, those based
on agriculture (Peskett et al. 2008). The relative diversity and stability of income from carbon payments
or new employment opportunities depends on many factors including the payment regime, frequency
13 Plantations or A/R projects can provide a significant but short-lived increase in local employment, but they also
have well-documented environmental and social risks (Smith & Scherr, 2002; Wunder 2008). REDD+ projects that
preserve forest cover while permitting some level of forest use, such as improved forest management, generally
provide more diverse livelihood benefits than A/R projects.
Social Impact Assessment of Land-Based Carbon Projects (1.0) – Part II | 83