Nepal has embraced the promise of international carbon markets as a means of mitigating the impacts of climate change while promoting the economic development of both the country as a whole, and of forest-dependent communities in particular. The government is formulating a national policy and institutional framework for the REDD (Reduced Emissions from Deforestation and Degradation) mechanism and various actors are initiating piloting activities. Meanwhile, Payment for Environmental Services (PES) regimes are receiving increasing attention as a potential means of enhancing forest conservation while providing vital services, such as water supply for municipal and hydropower uses. Community forestry in Nepal is at a crossroads—one that will determine whether local communities and their forest management practices can be effectively linked to broader carbon markets and thereby help reduce the global threats of climate change and biodiversity loss. However, before recommending international carbon-trading schemes such as REDD for Nepal or countries with similar forest conditions and governance regimes, we must study and draw lessons from the outcomes of existing PES schemes; conceptualize carbon as but one element in a suite of nested environmental services provided by forests; innovate a variety of carbon trading options; and resolve fundamental constraints to effective forest governance.
