Benefit sharing: Definition

Updated 2026-11-02 · 1 min read · By the akar.earth specialist team

What is benefit sharing in carbon projects? How carbon revenue is split between developers, communities and government, with Indonesian rules in view.

Benefit sharing is the set of rules and processes that decide how money and other benefits from a carbon project are distributed among the people and organisations involved, such as communities, farmers, landholders, project developers and government. A benefit sharing mechanism sets out who gets what, when and on what conditions.

Why it matters

Carbon revenue only builds lasting support when people who manage the land see fair, timely benefits. Opaque or unfair sharing is a leading cause of disputes, abandoned planting and reputational harm. Buyers and rating agencies increasingly ask for the benefit sharing plan and evidence of payments. Some standards, such as Plan Vivo, put community benefits at the core of certification.

How it is designed

• Identify rights holders and contributors: landowners, users, workers, local institutions.
• Agree a formula: percentage of net or gross revenue, per-tree or per-hectare payments, or a mix.
• Set timing: upfront support, performance payments and how prepayment or delays are handled.
• Choose channels: direct payments, cooperatives or village funds.
• Report publicly and audit payments, linked to a grievance mechanism.

Indonesia and Southeast Asia angle

Indonesian regulations on forestry carbon address how value is shared between permit holders, communities and the state. Permenhut 6/2026 frames forestry carbon as “carbon for the people” and recognises social forestry groups and customary communities as equal participants, which puts benefit sharing under closer scrutiny. Check current rules on benefit sharing in Indonesia before fixing percentages.

Transparency builds trust. Many projects publish a simple summary of revenue received, costs and payments made each year, in the local language, so farmers can see how their share was calculated.

Common mistakes

• Promising shares of “revenue” without defining costs deducted first.
• Paying only after the first issuance, years after planting.
• Agreeing terms with leaders without the wider community, skipping FPIC.
• No records of who was paid and how much.

See the agroforestry hub for smallholder project models.