Sustaining Forests and Strengthening Communities in Costa Rica

Standing in an open-sided community building surrounded by lush Costa Rican rainforest, José Ulises Uva Ríos reflects on how carbon finance is helping communities protect forests and sustain conservation. As president of the Cabécar Talamanca Association (ADITICA), he has seen firsthand the impact of these efforts.

ADITICA has played a key role in Costa Rica’s efforts to reduce deforestation and forest degradation—efforts that generate carbon credits. Under the country’s Emission Reductions Payment Agreement  (ERPA) with the Forest Carbon Partnership Facility (FCPF), Costa Rica receives payments for verified emissions reductions. These funds are then distributed to communities like José’s through Costa Rica’s Payment for Environmental Services (PES) mechanism, recognizing the essential role of local communities in protecting forests and sustaining conservation efforts.

Carbon Credits Delivering for People

Costa Rica, with tropical rainforests covering nearly 50% of its land, is widely recognized as a global leader in conservation and sustainable use of its abundant natural resources. Under its ERPA, signed in December 2020, the country can receive up to $60 million across three payments for reducing a total of 12 million tons of carbon emissions by 2025.

Costa Rica recently received a second payment of $17.5 million, following an initial payment of $16.4 million in August 2022. These payments recognize national efforts to reduce emissions from deforestation and enhance carbon sequestration under the REDD+ framework.

A portion of the proceeds from ERPA payments flows directly to local communities through a benefit-sharing plan, ensuring that those who contribute to emissions reductions receive tangible benefits for their efforts.

Maria Elena Herrera, project coordinator and Head of the REDD+ Secretariat, has seen firsthand how these payments are making a difference in communities that have long faced challenges in accessing resources: “This project has generated a lot of capacity. It has also addressed many needs that exist in the communities. The communities, because they are indigenous or from a remote place… there are many needs that have not been addressed by the national government system. These resources complement those needs that the people have.”

Costa Rica’s Carbon Market Leadership

With support from the World Bank and the FCPF, Costa Rica has positioned itself as a leader  in jurisdictional REDD+ markets, becoming the first Latin American country  to receive payments from the FCPF for reducing emissions from deforestation and forest degradation.  

Continuing its innovation in carbon finance, Costa Rica also became the first country to sell high-integrity "excess" carbon credits—those exceeding its ERPA commitments—through a recent agreement to sell 100,000 credits to a LEAF Coalition member.

Jorge Mario Rodriguez Zuniga, Vice Minister of Environment highlights how Costa Rica’s participation in carbon markets and collaboration has supported the country’s long-term green and resilient economy: “FCPF has contributed to generating robust data that shows how certain forest conservation actions can effectively sequester carbon. This data is enabling the sale of carbon credits, ensuring the continuation of payments for environmental services, and strengthening the PES program’s ability to measure and reward carbon sequestration.”

Costa Rica is taking its Payment for Environmental Services program a step further by incorporating biodiversity and freshwater conservation, reinforcing its role as a leader in sustainable finance and environmental stewardship.

Looking Ahead to Strengthen Resilience and Engagement of Local Communities

Costa Rica is deepening its commitment to social inclusion and climate resilience through a new initiative supported by the EnABLE Trust Fund. Developed in collaboration with indigenous networks, the project complements the implementation of the Territorial Forest Environmental Plans by prioritizing the conservation of indigenous cultural heritage while promoting ecotourism, sustainable agriculture and local enterprises. It places a strong emphasis on transparent resource distribution, participatory monitoring, and collaborative governance between Indigenous territories, regional stakeholders, and the World Bank.

A key focus is ensuring Indigenous voices are heard in national climate policy and decision-making, strengthening their role in shaping the country’s environmental agenda. By strengthening governance structures and fostering economic opportunities, Costa Rica continues to empower communities and reinforce sustainable land management practices.

Communities Driving Change

Costa Rica’s carbon market journey demonstrates how these financial mechanisms empower local communities, enhance forest governance, and provide resources that can be reinvested into conservation and economic development. Payments for emissions reductions are not only reinforcing environmental stewardship but also enabling communities to improve local infrastructure, create new economic opportunities, and build long-term resilience.

Farlin Telles Ríos, Secretary of the Direct Board of Cabécar Talamanca Association (ADITICA) underscores the tangible impact of these efforts: “For me, the project is important because it allowed us to develop infrastructure in the communities. I am very happy with the scope of this project.”

Through sustained investment in carbon finance, Costa Rica is proving that protecting forests can go hand in hand with economic resilience, inclusion, and environmental sustainability—setting a model other countries can follow.