Forest carbon rights must benefit local communities

Unlocking capital from carbon credits, opening pathways for international exchange of emissions reduction outcomes and carbon credits, the United Nations’ approval of the first batch of credits under a new mechanism, and provincial efforts such as Khanh Hoa’s integration of forestry planning with carbon market development all underscore the growing momentum around this sector.

Challenges in defining forest boundaries and measuring carbon stocks

On April 6, a policy dialogue titled “Carbon Credit Supply Chains, Value Addition, and Upstream Watershed Co-Governance Strategy,” organized by the Institute for Development Consultancy (CODE), convened stakeholders to discuss solutions for turning carbon credits into a lever for sustainable development in Viet Nam’s forest regions.

A key challenge lies in defining forest boundaries and measuring carbon stocks. Carbon credits are one of two primary commodities in carbon markets, alongside greenhouse gas emission allowances. In Viet Nam, forest carbon credits constitute the main source of supply. According to Le Xuan Nghia, Director of CODE, while the legal framework underpinning Viet Nam’s carbon market is relatively well established, implementation continues to face significant challenges that concern both policymakers and researchers.

In principle, forests in Viet Nam are owned by the state and allocated to households and communities for management and protection. This has resulted in fragmented forest plots. However, establishing ownership of carbon credits requires first resolving land tenure issues and clearly delineating boundaries between communities, a complex and time-consuming process.

In addition, measuring forest carbon stocks requires determining appropriate sampling density and selecting representative areas across large forest landscapes. The entire forest carbon value chain, from management and measurement to verification, certification, and reporting, carries technical risks. If not handled carefully, issuing forest carbon credits could prove even more complex than determining emissions quotas for industrial enterprises.

Enhancing the value of carbon credits is therefore critical

Tran Van Viet of the Party Central Committee’s Policy and Strategy Commission noted that developed countries currently hold advantages in setting standards and pricing power in international carbon markets. Without a sound strategy, Viet Nam risks becoming a supplier of low-cost credits while bearing long-term opportunity costs.

To increase value, forest ecosystems must be viewed beyond their carbon storage function. Forests provide essential services such as water regulation, biodiversity conservation, and livelihood support. Integrating carbon credits into broader landscape development programs can generate multidimensional value: diversifying rural income, strengthening resource access rights, and enhancing ecosystem resilience. Achieving this requires policy mechanisms that recognize and price co-benefits, rather than allowing them to remain invisible in purely carbon-based transactions.

Viet also proposed an upstream watershed co-governance approach as a platform linking emissions reduction with climate adaptation. This model emphasizes coordination among the state, communities, the private sector, and downstream beneficiaries. When tied to carbon credit mechanisms, upstream forest protection can be financed by downstream economic interests such as hydropower or industrial production, reducing conflicts and strengthening accountability.

Sharing international experience, Professor John Quayle cited Australia’s Carbon Credit Unit (ACCU) model. In Australia, one ACCU represents one ton of CO2 equivalent and is treated as a hybrid asset, an environmental instrument, a compliance tool, and a financial product. Its value reflects not only abatement costs but also confidence in regulatory frameworks and system integrity. As of March 23, 2026, ACCUs were priced at AUD 36.40 per unit.

For Viet Nam, Quayle suggested a reference pricing roadmap starting at $3-8 per ton during the pilot phase and rising to $8-20 per ton under full compliance integration. A key strategic step would be establishing community-based forest carbon cooperatives, enabling smallholders to gain legal standing and manage contracts transparently. The HEPA model in Ha Tinh illustrates how applying ACCU standards can generate high-integrity credits while empowering ethnic minority communities.

Clarifying property rights for carbon credits remains a central issue. Carbon finance expert Nguyen Xuan Thao emphasized Viet Nam’s significant supply potential but identified the lack of clearly defined property rights as a major bottleneck. She proposed recognizing carbon credits as a “special asset” under the Civil Code, creating a legal foundation for lending, collateralization, and other financial transactions.

Experiences from the European Union, China, and South Korea show that treating carbon credits as intangible property rights enables deeper and more transparent market development. Expanding ownership eligibility to include individuals, households, and communities, not just legal entities, is also essential. Viet Nam’s legal framework is currently being refined to support a pilot carbon market through 2028, with full operation expected from 2029.

Experts warn that if implemented in a fragmented manner, carbon credits could become a “low-value trap.” However, if integrated into co-governance strategies and value-added frameworks, they can serve as a catalyst for a new development model that balances economic growth, environmental protection, and social welfare.

A practical example is the Cao Quang Community Forestry Cooperative in Quang Binh. The cooperative brings together 525 forest-owning households managing 7,500 hectares of natural forest, supported by 65 regular patrol groups. Pilot assessments in Vinh Xuan village (712.77 hectares) recorded carbon stocks of up to 253.30 tons of CO2 per hectare. According to Director Nguyen Xuan Huy, forest-based income has become a primary revenue source for local residents, partly due to early efforts in clearly defining forest boundaries.

To date, Cao Quang has completed two-thirds of the work required to bring its carbon credits to market, including securing full forest tenure, land use certificates, and clearly defined boundaries.