Equitable Carbon Markets: Addressing Equity and Governance Deficits in Colombia's Voluntary Carbon Market

Key Findings

• CFP have expanded to nearly 26 million hectares, covering 22.7% of Colombia’’s continental area, and surpassing the 19.5 million hectares protected under the National System of Protected Areas. 

• Reducing emissions from Deforestation and Forest Degradation projects (REDD+) projects, account for 98.4% of total CFP’s  areas while Afforestation/Reforestation (ARR) remains limited.

• 92% of REDD+ project areas overlap IPALC lands, encompassing 60% of Indigenous Reserves, 71% of Afro-descendant Community Council territories, and 0.5% of Peasant Reserves, involving 71 Indigenous communities, 35 Afro-descendant community councils, and 7 Peasant Reserves (No ARR projects are identified within IPALC’s territories.)

• CFP cover 21 million hectares of forest, accounting for 37% of Colombia’s total forested area in 2022.

• There is an overlap of 1.6 million hectares between REDD+ projects and Nationally Protected Areas.

• 59% of the 218 projects have already issued credits, generating nearly 160 million carbon credits and mobilizing approximately USD 180 million. 

• The market is highly concentrated in the Amazon and Pacific regions, where projects cover 44.5% and 34.6% of these territories, respectively.

• 37 projects with reported conflicts were identified, affecting 37.5% of the total project areas. Most conflicts are co-located in Indigenous territories (21 cases), followed by Afro-descendant territories (8), peasant reserves (2), and unidentified communities (5).

Key Messages

• The VCM has surpassed protected areas in scale, but its rapid and decentralized growth has produced uneven outcomes and exposed important governance gaps.

• Carbon finance, with annual project revenues ranging from USD 867,000 to USD 16.7 million over 20–30 years, is reaching remote areas in the Amazon and Pacific, representing an unprecedented source of conservation finance to target frontier areas facing emergent pressures with revenue sources to strengthen communal governance, monitoring systems, and livelihood options that shift the business-as-usual trajectory. While reported community rights conflicts are present in a relatively small number of projects, likely reflecting underreporting, they account for large expanses of land. These conflicts most commonly stem from disputes regarding land tenure, benefit-sharing arrangements, intermediary conflicts of interest, and the legitimacy of decision-making processes. This highlights the critical importance of strengthening governance mechanisms, ensuring equitable benefit-sharing, and fostering meaningful community participation to secure the long-term sustainability of the market.

• Given that CFPs operate across diverse regions with differing deforestation rates, diverse socio-cultural contexts, and varying levels of territorial governance capacities, a surge in market demand could rapidly push VCM initiatives into the remaining of IPALC’s territories 

• Overlapping CFPs with Protected Areas raises concerns regarding double counting and additionality. However, the additionality of REDD+ initiatives within these territories must be evaluated against intensifying deforestation risks and weak institutional contexts. Although legal status technically bans clearing, protection mechanisms frequently fail when undermined by weak institutional capacity and high market pressures. Under these conditions, Protected Areas, IPALC collective land rights, and CFP economic incentives must be treated as complementary, interlocking strategies rather than mutually exclusive choices as their efficacy relies on their combined deployment to target different dimensions of deforestation pressures 

• To maintain high environmental integrity, Colombia's CFPs must shift away from low-risk deforestation locations. Carbon finance should be systematically funneled into high-pressure frontier areas, whether within collective territories or PAs, where the threat of deforestation is demonstrably high, baselines are conservatively formulated, and carbon projects revenue can bridge critical gaps in local enforcement, co-management, natural resources management and ecological restoration.

Governance, Equity and the IPALC Participation Ladder

Our study conducted a qualitative assessment of the enabling and disabling factors shaping participation across Colombia’s VCM. The analysis combined semi-structured interviews, transcript coding, and thematic analysis covering the regulatory landscape, governance and participation mechanisms, benefit-sharing arrangements, existing safeguards, and the contribution of CFP to the SDGs. 

A central contribution of this study is the “IPALC Participation Ladder”, an eight-level framework mapping the progressive engagement of communities within the VCM. The lowest rungs of this continuum reflect acute existing challenges, where communities experience fraud, manipulation, or a lack of structural support to participate effectively. Communities ascend the ladder as their agency expands: they progressively overcome participation barriers and develop the self-organizing capacity needed to leverage CFP financial opportunities. At the highest tiers, engagement in CFP actively strengthens community governance and norms, culminating in complete autonomy over project design, implementation, and benefit-sharing.