Without Trust, There Is No Carbon Market: Why Community Compensation Must Be Central to Climate Finance

At Carbon Tide, we believe that every carbon credit begins at the roots—not in boardrooms or blockchain registries, but with the people restoring forests, protecting peatlands, and changing the way land is managed.

And yet, across the global carbon landscape, one hard truth continues to undermine the legitimacy of carbon markets: local communities too often see little of the financial benefit their work generates.

A recent case from India, one of the world’s leading producers of carbon credits, brings this into sharp focus. The country has reportedly generated over US$650 million from carbon credits, yet the farmers and communities enabling these emissions reductions have received only a fraction—if anything at all. Delays in verification, opaque payment structures, and layers of intermediaries erode trust and participation. Without systemic change, these structural issues will sabotage the very impact carbon markets claim to deliver.

This isn’t just India’s problem—it’s a warning for all carbon developers, especially those of us working across Southeast Asia, including in Indonesia, Cambodia, and Vietnam. If fair and transparent compensation is not guaranteed, communities will understandably opt out. When that happens, no satellite or sensor will be able to replace the hands and hearts needed to steward landscapes over decades.

Communities Are Not “Stakeholders”—They Are Co-Developers

At Carbon Tide, we reject the notion of treating communities as passive “beneficiaries.” In our Riau Community Peatland and Mangrove (RCPM) Project in Indonesia, we approach villagers, smallholder farmers, and Indigenous groups as co-developers and co-owners of the project’s long-term success.

It’s not just a moral stance—it’s an operational necessity. Community members are the ones who monitor forest boundaries, replant native species, patrol against encroachment, and steward the land. Without their active and enthusiastic involvement, nature-based solutions don’t work. Period.

But enthusiastic participation only comes with trust. And trust requires a clear answer to a simple question:“How and when will I be paid?”

The Pitfalls of Broken Promises

As seen in India, delays in credit issuance, obscure revenue-sharing models, and third-party brokers taking substantial cuts have left farmers feeling exploited. This creates a vicious cycle: low trust leads to poor participation, which in turn undermines the permanence and quality of the project—ultimately lowering the credit’s value.

We cannot allow this pattern to take root in ASEAN’s emerging carbon markets. With Indonesia’s new international carbon exchange, the region has a chance to do things differently—to set a new benchmark where transparency and equity are not afterthoughts, but starting principles.

Our Approach: Clear, Direct, Transparent

Carbon Tide’s development model is built around a few non-negotiables when it comes to community benefit-sharing:

Pre-agreed Payment StructuresEvery community engagement begins with a clear financial model. Communities are shown exactly how revenue from carbon credits will be allocated, including timelines for disbursement, percentage shares, and safeguards against manipulation.

1. Digital and Local Payment AccessWe work to ensure that payments can be received through accessible means—whether via digital banking, mobile wallets, or village-level financial intermediaries. No one should wait 18 months to receive a share of their work.

2. Real-Time Updates and Capacity BuildingCommunities are kept in the loop through ongoing communication—town halls, dashboards, and feedback loops. We also invest in building local capacity, so that villages can manage funds themselves with growing independence over time.

3. Community Reinvestment FundsA portion of carbon revenue is directed to community-selected projects, from clean water to microenterprises, ensuring collective benefits alongside individual ones.

   
   

Integrity Is a Two-Way Contract

Carbon markets often speak of environmental integrity—but social integrity is just as vital. The legitimacy of a carbon credit should depend not only on its carbon accounting, but on whether the people enabling it were treated with fairness and dignity.

The global carbon market is projected to grow into a multibillion-dollar industry. If even a fraction of that capital doesn’t reach the communities who make it possible, then the system is not just flawed—it is extractive.

At Carbon Tide, we are committed to being part of the solution. We believe that a credit is only as good as the trust behind it. And in Southeast Asia, where trust is built face-to-face, field-to-field, and over time, we will always choose to walk the longer road—one that leads not only to net zero, but to shared prosperity.

Let’s create a market that doesn’t just value carbon. Let’s create one that values people.

For partnerships or advisory services on equitable carbon project design, contact us at hello@carbontide.co.