Impact of Carbon Trading Schemes on Mangrove Forest Ecosystem Services and Household Welfare: Evidence from Kenya’s Coastal Communities

Mangrove forests provide a myriad of ecosystem services and play a significant role in carbon sequestration, storing up to five times more carbon per hectare than terrestrial forests. Despite their significance, mangrove forests are increasingly threatened by the effects of climate change and anthropogenic factors. However, the ecological and economic roles that they play have hardly been explored. This study examines a unique pilot carbon trading scheme implemented in Kwale County on the Kenyan coast. Specifically, the study seeks to determine the overall and gender-disaggregated effects of the scheme on household welfare and ecosystem services. Using the endogenous switching regression (ESR) model, the results reveal that participants in the carbon trading scheme have above-average per capita monthly expenditure, food security and value of fish harvest whether they participate in the scheme or not but are better off participating in the scheme. Significant gender differences in the effect of the scheme are also noted, with female-headed participating households more food secure, while male-headed participating households experience a higher value of fish harvest. In addition, the results reveal that participation in carbon trading schemes increases welfare in both female-headed and male-headed households, but the effect is higher for non-participants than participants. Policy implications are also highlighted.