The Clean Development Mechanism (CDM) of the Kyoto Protocol aims to provide carbon mitigation benefits as well as sustainable development to local communities. This paper investigates the potential implications of carbon sink projects under the CDM for developing countries and examines what capacity is necessary to administer such forestry projects, particularly community-based ones.

The paper provides an assessment of the benefits and risks to local livelihoods from CDM projects, and concludes with conditions that enable benefits based on existing projects. Of particular interest are the sections assessing large-scale industrial pulp and timber plantations, agroforestry and community forestry plantations, secondary forest and fallows, forest rehabilitation and regeneration, strictly protected areas, and multiple use forestry.

The authors say that forest carbon projects can enhance livelihoods, provided that carbon prices are high enough and that project design is attentive to local social realities. This paper is accessible to anyone with a basic knowledge of carbon sinks and the international climate change negotiations.