By Lúria Mabui
Maputo (MOZTIMES) – The carbon credit market has increasingly become a strategic solution in the fight against climate change. Mozambique, with its vast biodiversity and wealth of natural ecosystems, has emerged as one of the active countries implementing carbon credit projects. However, a critical analysis reveals that despite the market’s potential to bring substantial benefits to the country, there are several shortcomings in how local communities are compensated and how climate change adaptation is being addressed.
Carbon credits are a financial mechanism designed to encourage the reduction of CO₂ and other greenhouse gas (GHG) emissions. The core idea of the carbon market is that emission reductions achieved in one sector or country can generate credits that are then purchased by companies or governments elsewhere that have failed to meet their reduction targets, thereby creating a “trade” system aimed at global compensation[1].
Mozambique loses approximately 276,000 hectares of forest each year, an area equivalent to 276,000 football fields. Much of this deforestation is driven by unsustainable agricultural practices, wood cutting for charcoal production, and timber smuggling for various purposes.
To address the impacts of deforestation and promote climate restoration, Mozambique launched the Zambézia Integrated Landscape Management Programme (ZILMP) in 2019, through the Forest Carbon Partnership Facility (FCPF).
Within the ZILMP, the MRV (Monitoring, Reporting and Verification) unit of the National Sustainable Development Fund (FNDS) measures deforestation and emissions reductions annually. The reported reductions are then verified by a third party contracted by the World Bank.
The benefit-sharing mechanism proposed under the REDD+ pilot programme, launched in 2018, stipulated that 70% of the expected monetary gains would go to local communities, 20% to the private sector, 4% to district governments, 4% to Gilé National Park, and 2% to the environmental sector. The project covers 5.3 million hectares across nine districts of Zambézia province: Alto Molocué, Gilé, Gurué, Ile, Maganja da Costa, Mocuba, Mocubela, Mulevala, and Pebane[2].
Local communities, particularly those living in conservation areas or engaging in activities that directly impact ecosystems, play a crucial role in the success of carbon projects. They are often involved in compensation initiatives, either through direct work in environmental protection or, more commonly, through the sustainable use of natural resources.
In 2021, Mozambique became the first country to receive payments from a World Bank trust fund for reducing emissions from deforestation and forest degradation[3]. The Forest Carbon Partnership Facility (FCPF) paid the country US$6.4 million for reducing 1.28 million tonnes of carbon emissions in 2018[4]. This payment was the first of four planned under the Emission Reductions Payment Agreement (ERPA), which could unlock up to US$50 million if the country succeeds in reducing up to 10 million tonnes of CO₂ emissions by the end of 2024.
To receive the first payment, Mozambique submitted an official monitoring report confirming the emission reductions. However, despite this progress, the benefits were not shared with local communities that year. Calls for proposals for community initiatives were only launched one month before the end of 2021.
In 2022, the compensation programme began its first disbursements, amounting to approximately USD 583,873, which was distributed as follows: USD 116,175 to the Zambézia provincial government, USD 232,349 to the district governments, and another USD 232,349 to Gilé National Park. The call for grant proposals from the private sector was launched only in 2022, resulting in the pre-selection of 59 private sector projects, whose business plans were submitted for approval by the end of that year.
It was only in 2023 that 133 community-based organisations were selected to receive a share of the benefits. Of these, 82 were formally legalised and 22 signed contracts with the FNDS, with payments subsequently approved. By November 2023, the project had disbursed USD 1 million among the beneficiaries. However, several obstacles resurfaced, including the lack of clear demarcation of community land boundaries, complex legalisation procedures, and limited financial infrastructure — namely, the absence of bank accounts for the communities. These challenges contributed to delays and to the inadequate disbursement of funds.
The Bitter Experience of the Nhambita Community
The carbon capture project in the Nhambita community, located within Gorongosa National Park and known as the “Nhambita Community Carbon Project”, was implemented by the company Envirotrade as part of a payment for environmental services (PES) scheme, under Mozambique’s national REDD+ strategy. The initiative, aimed at reducing carbon emissions through tree planting and preventing the clearing of new land for agriculture, involved around 1,510 local farmers between 2003 and 2008, according to the Rural Environment Observatory (OMR)[5]. The project’s core strategy was agroforestry — planting a variety of tree species to capture carbon and maintaining them throughout their growth period.
Between 2003 and 2008, the project generated approximately USD 900,000 on the carbon market. The revenue from carbon credit sales was divided between payments to farmers, project operational costs, and expenses related to the measurement and verification of emission reductions, which were carried out by third parties. However, due to a drop in the price of carbon and financial unsustainability, Envirotrade withdrew from the operation, halting payments to the farmers.
The company’s withdrawal left the producers in debt and disrupted their income structure. During the project’s implementation, farmers had shifted land use from agriculture to tree planting for reforestation. With the company’s departure, families lost their production-based income, which severely impacted their food security.
Under the terms of the contract between the company and the community, each farmer would initially plant trees on a plot of 0.22 hectares — or 22 hectares collectively — receiving a total of 3,215 meticais over a seven-year period, corresponding to the duration of the contract. To earn more, the farmer had to allocate a larger area for tree planting. The best-paid system offered by Envirotrade was called “forest plantation”, which paid producers around 17,500 meticais, spread over seven years.
This process illustrates how climate change mitigation and adaptation policies, such as REDD+, can result in rights loss and fail to deliver fair compensation.
Lack of Transparency in Public Policy
Public policies regulating the carbon credit market are not sufficiently transparent, nor are they adequately communicated to the local communities involved, as illustrated by the Nhambita case and, more recently, in Zambézia. The lack of clarity in compensation policies and benefit-sharing mechanisms results in significant economic and social harm, particularly for the most vulnerable populations, who often have no understanding of what carbon credits are or how they work.
"One of the greatest risks associated with these policies is the creation of an asymmetrical dynamic in which the benefits of the carbon market are concentrated among a few actors, usually external ones, such as verification companies and carbon credit buyers. These actors are, for the most part, major global polluters," said Mery Rodrigues, an Environmental Governance Specialist.
Information shared about the carbon market tends to focus on the benefits and opportunities Mozambique can gain through the implementation of REDD+, with little attention given to the specific disadvantages associated with this form of “green extractivism”.
Companies and countries responsible for a significant share of environmental pollution purchase carbon credits generated by countries like Mozambique, nations with relatively low emissions, but who are nonetheless encouraged to conserve their forests and biodiversity. While these buyers continue to industrialise, pollute, and generate wealth through ecological resource extraction, local communities who actively preserve the environment are often left behind, receiving little to no adequate compensation.
Corruption Risks
Failures in the compensation process within the carbon credit market pose a risk for corrupt practices. The lack of transparency, absence of effective oversight, and unequal distribution of benefits create opportunities for the misappropriation of resources and manipulation of information.
In Gilé and Nhambita, hundreds of beneficiaries did not receive their payments due to an alleged lack of commitment to plant care. Additionally, a significant number of farmers saw deductions applied for failing to meet the tree survival targets set at the beginning of the year. As one farmer from the region put it: “I planted the trees and took care of them, but I never really understood how the payment would be calculated. I don’t know why some people didn’t receive what was promised when we all did our part.”
Moreover, the fact that compensation is often negotiated between external companies and governments without proper transparency creates room for manipulation. With the pressure to generate revenue and meet emission reduction targets, there is a risk that the country could replicate the experiences of Colombia and Guatemala, where intermediaries diverted funds intended for conservation and community compensation projects in rural areas. (LM)
[1] The monetary benefits of the Emission Reductions (ER) Payment Programme are shared among beneficiaries based on net payments, calculated after deducting operational costs and the performance reserve. Gross payments represent the total amount received by Mozambique during a reporting period. Initially, gross payments are used to cover operational costs and secure the performance reserve. Once these deductions are made, the net payments are distributed among eligible beneficiaries according to the following formula: Net payments = Gross payments – (operational costs + performance reserve). The viability of the ER Programme and the benefit-sharing system depends on the adequate coverage of all these costs throughout its implementation.
[2] https://www.worldbank.org/pt/news/press-release/2021/10/15/mozambique-becomes-first-country-to-receive-emission-reductions-payments-from-forest-carbon-partnership-facility
[3] https://opais.co.mz/lancado-na-zambezia-janela-de-financiamento-para-reduzir-desmatamento/
[4] https://www.cipmoz.org/wp-content/uploads/2024/09/Creditos-de-Carbono-em-Mocambique-1.pdf
[5] https://omrmz.org/wp-content/uploads/DR-135-Mercado-de-carbono.pdf
