Participation in the world's first clean development mechanism forest project: The role of property rights, social capital and contractual rules

Clean Development Mechanism (CDM) forest projects are perceived as an attractive way to both help mitigate climate change and transfer income to rural poor. However, to engender participation of small-scale producers, a CDM forest project must offer sufficient incentives, while minimizing their costs of participation, all the while respecting the need for additionality. Property rights, social capital and contractual rules are critical in the success of CDM forest projects. In this paper, we ask what factors affect participation in the world's first CDM project, established in Guangxi Province, China. Using village-level surveys, we find that although the project facilitates participation through carbon pooling and a share-holding system, much of the project land remains unforested. We find that the primary reasons for the unforested regions are constrained contractual rules, property rights allocation disputes and low levels of social capital in some villages.