This is the second part of a two-part series examining what community forest management in Odisha and Meghalaya can teach climate finance. Read Part 1 here.
PART 1: Summary
In the first part, the authors examined how communities in Odisha and Meghalaya manage forests where they hold secure rights. Fieldwork in 15 villages found that local stewardship rests on care for the forest, detailed knowledge of its resources and the authority to make management decisions.
Ecological surveys also found greater tree species richness in stewarded forests than in comparison sites in both states. In Odisha, these forests held an estimated 337 tonnes of carbon per hectare, compared with 243 tonnes in control sites. The findings show what community stewardship can achieve and set up Part 2’s examination of how climate finance schemes interact with local forest management.
When climate finance arrives: Two different stories
The study contrasts how the payment-for-ecosystem-services (PES) schemes have unfolded in each state.
In Meghalaya, a state-run PES programme launched in 2022 and revised in early 2025. It offers payments of roughly ₹10,000–₹20,000 (US$104–208) per hectare per year to villages, clans or individuals who register at least one hectare of natural forest for at least 30 years. Uptake has been strong. Within two years, more than 1,000 villages covering about 34,000 hectares, along with more than 3,000 individuals, had applied. But the scheme requires communities to fence off registered forests, post compliance rules and follow fire-line maintenance and grazing restrictions set by the implementing agency.
Many of the forests being registered were already protected under customary rules at least as strict as the state’s requirements. The scheme therefore often formalizes existing practices while introducing external controls, such as fencing, that don’t fit easily with traditional stewardship.
Given these conditions, the natural question is whether communities stay in the programme after signing up. Mostly they do, though less reliably than individual registrants. Of roughly 895 villages admitted to the scheme, 154, or about 17 per cent, had withdrawn by the second year, compared with 14 percent of the 2,564 individual registrations. The median enrolled holding is about six hectares and the median payment is roughly ₹55,000 a year.
By and large, what is being registered is forest already under customary protection at least as strict as the state’s conditions. Where the scheme’s rules and local practice coincide, compliance costs communities little. The recent untying of the funds makes enrolment cheaper still.
The restrictions bind where they cut across the working order, and the community figures are telling. Withdrawals removed 8,449 of the 30,684 hectares of community-managed forest admitted to the scheme, more than a quarter of the enrolled area, compared with roughly a sixth of individually held land. Commons, where many households’ grazing, fuelwood and seasonal claims must be accommodated at once, are the hardest to fit inside the scheme’s terms.
One caveat: two years is a short window on a 30-year promise. The restrictions will be tested hardest in the years for which no payment has yet been committed.
In Odisha, the layering of governance regimes, including reserve forests, joint forest management (JFM) areas and community forest resource (CFR) titles, creates a fragmented picture, sometimes within a single village. Even where communities have won CFR titles, the state forest department retains the final word on where forest boundaries lie and who can be granted rights. The study finds a clear gradient: reserve forests offer communities the least authority, JFM offers something in between and CFR titles offer the most, though even CFR stops short of full devolution.
Using a “bundle of rights” framework that distinguishes use rights, control rights and authoritative rights, the study shows that PES and government programmes consistently keep the most important lever, rule-making power, in the hands of outside institutions, even when they give communities cash or usufruct rights.
The “visual order” versus the “working order”
One of the study’s conceptual contributions draws on the political scientist James C. Scott: the distinction between the “visual order”, the simplified, map-based version of a landscape that is legible to planners, donors and administrators, and the “working order”, the socially embedded, seasonally shifting reality of how people use and manage land day to day.
Carbon programmes, the authors argue, are built almost entirely around the visual order: a hectare count, a fixed boundary and a measurable sequestration target. But real forest landscapes function more like overlapping, interlocking systems: grazing here, fuelwood collection there, seasonal cropping somewhere else, and sacred groves treated differently from timber patches. These systems are largely invisible to anyone looking at a spreadsheet or satellite map.
When financing schemes impose a simplified, uniform management regime on top of these arrangements, they risk breaking systems that took generations to develop, even when the stated goal, more carbon and more trees, sounds reasonable on paper.
The study’s wider literature review finds similar patterns elsewhere in the tropics. Reviews of REDD+ and PES programmes in Indonesia, Latin America and Verra-certified carbon projects have found that many overstate their impact on deforestation, deliver limited benefits to household well-being and, in the worst cases, reduce communities’ flexibility to respond to droughts, pests or market shocks. Their land and labour can become locked into rigid carbon contracts.
The core recommendation: fund the working order, not the visual order
The study’s policy recommendations are direct. Rather than “payment-for-performance” schemes that tie cash to specific, externally defined outcomes, the authors call on donors, governments, companies and NGOs to invest in the social and ecological well-being that already sustains good stewardship, without attaching restrictive conditions.
The study recommends:
- Shifting away from conditional, performance-based payments towards broader investment in community well-being and ecological sustainability, including climate-adaptive food crops, swidden-based long-term agroforestry and crop rotations. Social programmes, including health and education initiatives, can also strengthen socio-ecological systems.
- Dropping penalty- and restriction-based conditions that limit how communities use their own forests.
- Preserving and, where necessary, strengthening community management rights, rather than treating the transfer of rights as a one-way flow from community to state or market.
- Starting with local priorities. Ask communities what problems they face and what support, such as skills, finance, tenure security or infrastructure, would help, rather than designing interventions around a predetermined carbon target.
The study’s authors describe plans to convene conversations in Meghalaya between forestry officials and community members. The aim is to build a shared understanding of local landscape management and bridge the gap between the visual order officials see and the working order communities live.
Why this matters beyond Odisha and Meghalaya
The Indian states studied here are becoming an increasingly attractive target for carbon market developers because they combine intact forest cover with constitutionally protected community tenure, a combination that is rare globally. The choices made here could shape how climate finance treats Indigenous and local stewardship elsewhere in the tropics.
The study’s claim is not that communities don’t want or need outside support. Many actively seek finance, infrastructure and new skills. Its claim is narrower: the current default model of climate finance is indifferent to good local stewardship and treats it as something to manage around rather than a foundation to build on. Given the ecological results documented in stewarded forests in Odisha and Meghalaya, including higher biodiversity, healthier carbon stocks and active regeneration, that approach is hard to justify.
As the study’s authors put it, local stewards are not labourers waiting for instructions. They are, and long have been, forest managers in their own right.
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