Rethinking carbon finance

How carbon markets can deliver real benefits for land and livelihoods 

Carbon markets are expanding quickly, but the benefits are not reaching everyone. Today, the voluntary carbon market – where companies and individuals buy carbon credits outside any government-mandated system – is valued at roughly USD three billion and could grow many times over by 2030. Yet many drought-affected and land-dependent communities still find the system difficult to access and hard to trust. 

As voluntary carbon markets continue to expand, the urgency is growing to ensure that carbon finance delivers more than emissions reductions – supporting land restoration, livelihoods and long-term resilience. 

This challenge – and the growing need for carbon markets to deliver real co-benefits – is at the heart of a white paper released by the United Nations Convention to Combat Desertification (UNCCD) on 5 February 2026.    

The white paper, From carbon to co-benefits: Scaling carbon finance for land, livelihoods and long-term resilience, outlines practical ways to ensure carbon finance supports land restoration and strengthens rural livelihoods – rather than leaving vulnerable communities behind. 

Why carbon finance matters for land 

Nearly 40 per cent of the world’s land is already degraded, and droughts have become almost 30 per cent more frequent in the last twenty years. For many countries, especially those in drylands, improving land health is directly tied to food security, water supply and community wellbeing. 

Carbon finance is one of the few tools with the potential to bring significant resources to land restoration. Agroforestry, regenerative agriculture, rangeland management and community-led restoration all remove or store carbon – and can generate credits that help fund long-term recovery. But these opportunities only work if the market is credible, accessible and fair. 

When designed well, carbon finance can help unlock private investment for these priorities – supporting farmers, pastoralists and local communities, while strengthening national pathways toward Land Degradation Neutrality (LDN) and drought resilience. 

Across regions, however, many land users face barriers: high monitoring costs, lack of technical capacity and complex procedures that favour large developers over smallholders. In some contexts, the cost of measuring carbon can exceed the income a project is expected to generate. 

Meanwhile, climate vulnerability is intensifying. Global assessments referenced in the paper show that poor rural households lose 4.4 per cent of their income each year to floods, while female-headed households lose USD 53 billion more than male-headed households due to climate shocks. When communities cannot access carbon finance, they lose a critical chance to invest in resilience. 

Supporting land and people 

A central principle guiding effective carbon finance is straightforward: it must deliver real benefits to land and to people. Healthy soils, restored vegetation, greater drought resilience and fair income for communities are at the heart of long-term confidence. 

The white paper was initially discussed and soft-launched at UNCCD CRIC23, where it generated strong interest from Parties and partners. Many welcomed the practical, case-based approach, noting that real-world examples of high-integrity land-based carbon projects can help inform national strategies, project design and engagement with private sector investors. 

The examples highlighted in the paper show that high-integrity land-based carbon projects can be scaled – but only if markets are designed to include dryland regions and small-scale land users. 

Opportunities also extend far beyond forests. Drylands – the arid and semi-arid regions that cover nearly one-third of the Earth’s land – hold significant potential for storing carbon in soils and mixed vegetation. Yet despite being among the most climate-affected regions, they continue to receive far less investment from carbon markets. 

What fair and inclusive carbon finance can look like 

Examples from different regions show what is possible when systems are accessible and aligned with local needs. 

 In Guatemala, a community-led project has restored more than 2,000 hectares of degraded land and captures around 45,000 tons of carbon dioxide each year.  

In Asia and Africa, digital monitoring tools developed by Earth banc are helping farmers manage over USD 100 million in land assets across 26,000 hectares, lowering costs and improving transparency.  

Meanwhile, through ACORN  – a digital platform that enables smallholder farmers to earn income from agroforestry carbon removals - more than 419,000 farmers have generated USD 8.6 million in carbon revenue. 

““Carbon markets can support land restoration and resilient livelihoods, but only when the benefits are real, measurable, accessible and fairly shared with the communities managing the land. For farmers and pastoralists, credibility is not a technical detail, it is the foundation for trust,” said UNCCD Executive Secretary Dr. Yasmine Fouad.  

As countries broaden their engagement with carbon markets, many emphasize the importance of approaches that communities can navigate easily. Simpler procedures, transparent frameworks and clear links to land improvement are seen as essential for building confidence and expanding participation. 

“Stronger safeguards and lower transaction costs will be essential to unlock broader participation – particularly in dryland regions that remain underrepresented in carbon finance,” said the Managing Director of the Global Mechanism of the UNCCD Louise Baker.  

Looking ahead to COP17 

The release comes at a pivotal moment. With preparations underway for the seventeenth session of the Conference of the Parties (UNCCD COP17) in Mongolia, many Parties are looking for ways to attract private climate finance while safeguarding environmental integrity and community rights. 

The paper also calls for stronger alignment between carbon markets, national development strategies and the frameworks under the three Rio Conventions. 

The recommendations set out a practical path forward: lowering barriers to participation, strengthening safeguards, diversifying beyond forests and ensuring that every carbon credit reflects genuine improvements in land health and community wellbeing. 

The message is simple: carbon finance can help restore land – but only if integrity and inclusion guide the system from the start.