The government’s recent announcement that it intends to pursue opportunities in carbon markets signals a new phase in Bangladesh’s engagement with global climate finance. It deserves close attention, because the decisions made now will shape how the country’s forests, wetlands, coastal ecosystems, and other natural assets contribute to national development for decades to come.
Carbon markets are growing rapidly as governments and businesses look for ways to reduce greenhouse gas emissions while financing climate action. For Bangladesh, the markets offer opportunities. Well-designed projects could attract investment for mangrove restoration, renewable energy, climate-smart agriculture, sustainable land management, and other initiatives that strengthen resilience while supporting economic growth. They could also encourage technology transfer, create green jobs, and improve the country’s capacity to measure, verify and manage emissions.
These opportunities should be welcomed. But they should not be mistaken for a silver bullet.
International experience offers an important lesson in this regard. The success or failure of carbon markets depends on governance, not just the market itself. Countries that have built transparent institutions, credible monitoring systems, and fair benefit-sharing arrangements have generally delivered stronger environmental and development outcomes. But where governance has been weak, projects have fuelled land disputes, concentrated benefits in too few hands, raised doubts about environmental integrity, and eroded public trust.
The message for Bangladesh, therefore, is neither to embrace carbon markets uncritically nor to reject them out of caution. It is to approach them with strategic foresight, careful planning and robust governance.
Bangladesh’s greatest asset is not simply the carbon stored in its forests or wetlands. It is the wider value of its natural capital. The Sundarbans, coastal mangroves, rivers, wetlands, and agricultural landscapes protect communities from cyclones and floods, sustain biodiversity, support food production, and provide livelihoods for millions of people. Carbon storage is one of the many benefits these ecosystems generate. Their value cannot be reduced to the price of a tradable carbon credit.
That perspective should shape Bangladesh’s negotiating position. As demand for high-quality carbon credits increases, investors, development partners and market intermediaries will seek partnerships with countries that possess significant natural assets. The country should welcome such partnerships, but on terms that strengthen national development rather than simply supplying credits to international markets. Agreements should encourage technology transfer, strengthen domestic expertise, build institutional capacity, and ensure that a fair share of the value created remains within the country. The objective should not be to maximise carbon transactions but to maximise national value.
The government should evaluate every carbon market proposal through a transparent national assessment that considers not only its financial returns but also its implications for national sovereignty, environmental integrity, food security, livelihoods, institutional capacity, and the equitable sharing of benefits. Transparency in project selection, contracting, and revenue management will be essential to maintaining public confidence and ensuring that climate finance delivers lasting national benefits. Carbon markets should complement, not replace, public investment, concessional climate finance, adaptation finance, and long-term development planning.
Another lesson from international experience deserves equal attention. Carbon credits are ultimately generated from landscapes where people live and work. Farmers, fisherfolk, forest-dependent communities and women are often the primary stewards of these ecosystems. Policies that fail to recognise their knowledge, rights and contributions risk weakening both environmental outcomes and public trust. Experience from around the world increasingly shows that meaningful participation and fair benefit-sharing are not simply matters of social justice; they are essential ingredients of effective climate governance.
This is particularly relevant for Bangladesh, where local communities have long managed natural resources under increasingly difficult climatic conditions. Their knowledge, experience and stewardship should be recognised properly, especially in project design.
Carbon markets must also not become an excuse for delaying deeper emission reductions elsewhere. They should complement, not dilute, the responsibility of high-emitting countries to reduce emissions at source and honour their commitments on climate finance, adaptation, and loss and damage. Bangladesh should continue to advocate firmly for these commitments while pursuing carbon market opportunities. It has more leverage than it may realise in this sphere. The country is internationally recognised for its leadership on climate adaptation and possesses ecosystems of global significance. Decisions about how these national assets are valued and used should therefore remain firmly anchored in its long-term development priorities rather than the preferences of or the timelines set by external actors.
The measure of success will not be the number of carbon credits Bangladesh sells or the volume of finance it attracts. It will be whether these initiatives strengthen ecosystems, improve livelihoods, build stronger public institutions, and leave the country more resilient than before. Carbon markets should hence be viewed as one instrument within a broader national development strategy, not as a development strategy in themselves.
Farah Kabir is country director at ActionAid Bangladesh.
Views expressed in this article are the author's own.
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