Ancestral domain titles: The missing link in the carbon market

By Erwin L. Tiamson

As typhoons grow stronger and floods become deadlier, the Philippines faces a stark reality: climate change is no longer a distant threat, but a present crisis. Yet amid the devastation lies an untapped solution — carbon projects rooted in ancestral domains.

There is a real opportunity for the Philippines’ indigenous communities, one that can turn decades of unrewarded stewardship into sustainable local income, jobs, and investment. As carbon finance matures, forest restoration is no longer only a public good: when structured correctly, it can become a durable revenue stream for Indigenous Peoples (IPs) who hold Certificates of Ancestral Domain Title (CADTs) and who, by law, are recognized as the rightful stewards of their ancestral lands — covering over 6 million hectares with more titles still under processing.

The key is institutional design. Treating carbon benefits as an accessory to ownership, much like the fruits of the land belonging to the owner-farmer, can lead to several positive outcomes. This enables indigenous communities to gain clearer entitlement to revenues. At the same time, project bankability improves because investors see stable titles and predictable revenue streams, then denuded land finally attracts long-term capital for reforestation and environmental recovery.

Philippine law already contains the building blocks for this shift in which the Indigenous Peoples Rights’ Act (IPRA, Republic Act No. 8371) awards ancestral domains to indigenous communities as private but communal property — recognizing that ownership arises from their long-standing ecological stewardship, including the reforestation of denuded land. Under this framework, the carbon benefits generated from such restoration rightly belong to them as fruits of ancestral domain ownership.

This principle also finds support in property economics, particularly in Harold Demsetz’s theory where ownership evolves to internalize the gains and responsibilities of productive activity. Assigning rights to those who manage and restore the resource ensures that the benefits of stewardship flow to those who bear its costs. At the same time, the Department of Environment and Natural Resources (DENR) has begun operationalizing carbon accounting, verification, and certification systems (CAVCS), which explicitly include projects in ancestral domains and on private lands — providing a practical platform for ownership-based models.

Another market development makes the moment even more promising. The Philippines recently amended the Investors’ Lease Act (RA No. 12252, 2025) to extend the maximum permissible lease period for foreign investors on private lands not to exceed 99 years, a reform intended to increase long-term private investment certainty. While the amendment principally targets industrial and commercial investment, it also includes ecological conservation projects. The intention is to signal a shift in the investment climate: long-tenure property arrangements are now easier to structure, which can help match long-term restoration returns with long-term capital. This distinction is critical. Ancestral domains under IPRA are classified as private but communal property. As such, they are not subject to the constitutional restrictions on foreign equity or land ownership. This legal status creates room for compliant, long-term partnerships that bring in both local and foreign capital while fully respecting indigenous ownership and control.

Why does ownership matter for carbon financing and for IPs?

First, ownership clarifies entitlement. Lenders and carbon buyers prefer projects with well-defined legal rights to the asset generating revenue. If carbon credits are legally accessory to CADTs, indigenous communities can use projected carbon revenues to access readiness finance, technical assistance, or even structured pay-for-performance contracts that pay upfront for reforestation work.

Second, ownership aligns incentives: when communities own the credits, they have their own equity in the outcome, which strengthens accountability and ensures that reforestation efforts endure.

Third, ownership unlocks local benefits: generating wage jobs in plantation and nursery work, supporting community forestry enterprises, and enabling downstream value-chain activities such as seedling nurseries, eco-tourism, and wood-friendly agroforestry to be realized. These activities not only create sustainable livelihoods within the community but also build a foundation for inclusive local economies rooted in environmental stewardship.

Fourth, ownership helps reduce poverty and counters rural insurgency: Beyond economics, this model also contributes to social stability. Ownership-based projects turn ancestral lands into productive assets, helping reduce rural poverty and foster stability in upland areas long affected by marginalization and insurgency.

To convert opportunity into reality, several institutional steps are needed. They are practical, achievable, and policy-friendly:

Affirm carbon rights as an accessory to CADTs. A clear administrative clarification that carbon benefits arising from restoration within titled ancestral domains belong to the CADT holder will remove ambiguity for buyers and financiers.

Make indigenous communities the default project proponents. IPs should have the legal presumption of project proponent status for carbon activities in their domain, with the option to partner with technical developers — not to be supplanted by them.

Standardize agreements and FPIC to reflect ownership. Agreements must disclose valuation, revenue flows, and service fees; FPIC must confirm who retains carbon rights and under what terms.

Integrate CADTs into carbon registries and Measurement, Reporting, and Verification (MRV). Registries and MRV protocols should recognize indigenous titleholders as registrants or named beneficiaries, so credits are legally and operationally tied to the community.

Shift the Government’s role to capacity and finance facilitation. The government should only provide measurement, legal, and financial readiness support.

Leverage long-term financing instruments. Align project periods and investment horizons with restoration timelines, a shift now more feasible under the recent reform of the Investors’ Lease Act (RA 12252).

Over time, carbon rights anchored on ancestral domain ownership can also be securitized and traded, much like other environmental assets. This would enable a wider range of local and foreign investors to participate in sustainable restoration while channeling capital directly to indigenous-led projects.

When these elements come together, carbon projects in ancestral domains become more than conservation drives: they become inclusive, investment-grade community enterprises that restore forests, create jobs, and provide predictable income for historically marginalized groups. For policymakers, donors, and private investors, the message is clear: prioritize property-aligned design. Doing so transforms carbon finance from a short-term program into a durable pathway for IPs’ prosperity.

Crucially, these efforts also advance the country’s climate adaptation goals. Restoring forest cover, as emphasized by the UP Resilience Institute, is one of the most effective and sustainable flood control measures — acting as a natural first line of defense that is far more resilient than dikes or purely structural interventions. Restoring cover has become more urgent in light of the deleterious effects of climate change on the Philippines, including the destructive floods and typhoons we are experiencing these days.

The goal is to realign incentives so that developers, buyers, and financiers work with indigenous owners on terms grounded in law and fairness, creating stronger projects, lower risk for investors, and lasting gains for the communities that have protected these lands for generations.

The Philippines can show how an ownership-anchored carbon strategy turns stewardship into prosperity. The policy changes are straightforward; the market signals are present; the social benefits are real. What remains is political will, clear rules, and practical capacity-building — small inputs that yield significant outcomes for climate, communities, and a more inclusive green economy.

Atty. Erwin L. Tiamson leads the Indigenous Peoples Property Rights Project of the Foundation for Economic Freedom. He teaches Property and Land Laws at the UP Geodetic Engineering Department and Arellano Law School and is a policy consultant specializing in land rights, environmental law, and institutional design.