Ecological economics, institutionalized with the formation of the International Society for Ecological Economics in 1988, positions the economy as embedded within, and constrained by, ecosystems. Carbon markets, however, are built on the very neoclassical assumptions that ecological economists have long challenged: substitutability of natural capital, reduction of ecological processes to monetary metrics, and the prioritization of economic growth over planetary boundaries.
Carbon markets have rapidly become the world’s preferred mechanism for addressing climate change. From voluntary offsetting schemes to increasingly complex compliance markets. They promise cost-efficient emission reductions through the power of market incentives. However, from the perspective of ecological economics, carbon markets are not just inadequate; they are fundamentally contradictory to the principles required for genuine sustainability.
Carbon markets rely on “weak sustainability,” a framework that assumes natural (land, air, water) and manufactured (technology, machinery) capital are interchangeable. If emissions cannot be reduced at the source, they can be “offset” elsewhere, typically through afforestation, conservation, or technological projects. This assumes three things:
- A tone of carbon avoided in Kenya equals a tone of carbon emitted in Europe
- Future risks can be discounted against present gains
- Complex ecological systems can be reduced to a price per tone.
Ecological economics directly rejects these premises. Natural capital is not commensurable with financial capital, ecological thresholds cannot be priced, and regeneration cannot be outsourced. Ecosystems have non-negotiable limits, and climate regulation cannot simply be “bought back” through offsets.
The modern carbon market exists to preserve economic growth while creating the appearance of environmental responsibility. By enabling continued emissions through low-cost offsets, carbon markets allow high-emitting industries to delay structural change. This is a direct contradiction of ecological economics, which calls for shifting from growth to development, reducing material throughput and designing economies that regenerate rather than degrade ecosystems.
Kenya has quickly become a hotspot for voluntary carbon markets, drawing investors eager to secure cheap offsets. On 24 June 2025, Kenya joined Singapore and the United Kingdom in co-chairing a new government-led initiative called the “Coalition to Grow Carbon Markets”, which aims to establish a unified global approach to high-integrity carbon credits.
The Coalition released a set of Shared Principles guiding the voluntary use of carbon credits, principles later reinforced at the COP30 Business and Finance Forum. These principles emphasize a strict “reduce first, then offset” sequence, requiring companies to focus on genuine emissions reductions before relying on offsets.
Read also: The wins and loses for Africa at COP30 from its conclusion
However, behind the glossy promise of climate finance, the coalition reveals a global contradiction in how carbon markets operate. Take the Ogiek eviction from Kenya’s Mau Forest.
In 2023, a project aimed at clearing space for carbon credit projects resulted in the eviction of hundreds of people, revealing the darker side of these schemes. Instead of partnering with Indigenous knowledge and offering fair economic returns, the project favored elites, concealed contract terms, and left communities with minimal compensation.
Carbon markets assume human behavior follows the “homo economicus” model by connecting only to financial incentives. In contrast, Kenyan communities have long practiced forms of environmental stewardship rooted in culture, identity, and collective responsibility. These values are sidelined when carbon becomes the primary arbiter of land use.
Vast pastoralist lands, forests and rangelands are being absorbed into offset schemes, often with little community consultation. As a result, complex ecosystems are turning into tradable carbon units. Programmes like REDD+ flatten vibrant cultural and ecological landscapes into numbers on a ledger, sidelining the very stewardship practices that keep these environments alive.
Ultimately, while the Coalition represents a major strategic opportunity for Kenya and Africa to influence global carbon governance, its success will depend on how effectively these high-integrity principles are applied on the ground.
Read also: Malawi joins Singapore’s growing Article 6 network with new carbon market agreement
Most critically, these offsets allow major emitters in the Global North to continue polluting, effectively turning Kenya’s ecosystems into a subsidy for the global fossil fuel habit. This exposes a fundamental contradiction with ecological economics, which rejects monetizing natural capital and emphasizes systems thinking and environmental limits. Carbon markets, shaped by neoclassical logic, reduce complex ecosystems to tradable units and obscure the systemic nature of climate change.
Ogiek community’s experience illustrates this global contradiction vividly: ecosystems are monetized, communities marginalized, and emissions elsewhere are legitimized. For climate stability, we must move beyond carbon markets toward policies that respect ecological ceilings, strengthen social foundations, and prioritize regeneration over growing. Ecological economics offers the framework; the challenge is the political will to abandon market illusions and embrace ecological reality.
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