Carbon markets alone won’t keep Southeast Asia’s forests standing, study says

Lush, leafy and luxuriantly diverse, tropical forests are home to an immense array of plants, animals and fungi. They also provide humanity with water, clean air and flood protection, and lock vast amounts of carbon in their tree trunks, roots and soils. Yet, forest conservation often loses out to extractive industries and agribusiness when valued through a purely economic lens.

As a result, forests across the planet continue to be cleared in pursuit of financial profits. Across Southeast Asia alone, nearly 68 million hectares (168 million acres) of forest was lost between 2001 and 2023, much of it cleared to make way for logging, plantations and agriculture, according to researchers.

However, new research indicates “massive and untapped” conservation potential remains within commercial concessions across the region.

The study, published in Nature Communications, analyzed satellite data from 3,754 logging, oil palm, timber and rubber plantation concessions across four countries: Cambodia, Indonesia, Malaysia, Myanmar. Roughly 42 million hectares (104 million acres) of intact forest was identified inside these concessions — an area larger than the entire country of Malaysia.

Losing these forests could lead to emissions in the range of 1.2 gigatons of carbon dioxide over the next three decades, the study says, equivalent to 20% of all industrial carbon dioxide emissions across all 11 ASEAN countries between 2000 and 2023.

Protection of forests inside production landscapes, therefore, presents a significant opportunity for conservation, the study authors say, if concession holders could be incentivized to switch from converting land to protecting it.

“A substantial portion of Southeast Asia’s remaining forest lies within concession landscapes,” study lead author Annabel Lim, a Ph.D. student at the National University of Singapore, said in an interview with Mongabay. “Meeting climate and biodiversity goals will, therefore, require engaging the concession owners as potential conservation partners.”

Carbon markets alone are not enough

To find out if a pivot from production to conservation could become a reality, the research team calculated the carbon prices that would have to exist to make forest conservation match or exceed the profits of commodity production in concessions.

They found a carbon price range between $33 to $1,677 per metric ton of carbon dioxide would be required. This is multiple times higher than current values. For instance, carbon credits from avoided deforestation projects in Southeast Asia were selling at roughly $5-$12 per metric ton of carbon dioxide in mid-2026, according to the World Bank’s 2026 State and Trends of Carbon Pricing report.

Carbon prices would, therefore, have to increase substantially to support conservation at scale within concessions. “Carbon finance has an important role to play, but it will not be sufficient on its own to protect all remaining forests in concessions,” a senior author of the study Yiwen Zeng, a conservation scientist at the Nanyang Technological University in Singapore, told Mongabay in an email.

Carbon prices at the lower end of the range calculated in the study might become a reality if climate policies are strengthened and carbon markets mature, Zeng said. However, this is unlikely to be achieved over the short term, he said.

The researchers point to the need for diversified sources of conservation funding that complement carbon markets. Other financial tools include blended finance (using public or charitable funding to stimulate private investment), green bonds tied to specific environmental projects, payments for ecosystems services, and biodiversity credits.

“Diversifying funding sources is textbook good economic sense,” Lim said. “Our study lends empirical weight to this idea and shows that carbon finance can be a powerful financial incentive, but it isn’t a silver bullet. Complementary green finance mechanisms should definitely be explored.”

Supportive governance required

Matthew Struebig, a conservation scientist at the University of Kent in England who was not involved in the research, said the study’s detailed financial and spatial analyses makes it possible to gauge what it would realistically cost to save specific areas of forest.

“Sectors like oil palm are very expensive to pivot, but others like pulp and paper (planted wood) and certain logging concessions could become financially competitive with only modest improvements to current carbon prices,” Struebig said.

Struebig said several regulatory barriers must be overcome if conservation is to become a reality in concessions. Many governments in Southeast Asia grant concession licenses on the condition that license holders carry out specific commercial activities, whether it be resource extraction or cultivation. Therefore, concessionaries might be reluctant to protect forests since under-developing their concession could put their license at risk.

“Without regulatory reform that allows companies to re-categorise their land, even the highest carbon price in the world won’t convince a company to risk their underlying land tenure,” Struebig said.

Lim and her colleagues also underscore the need for more supportive governance in their study. They urge policymakers to introduce proactive forest policies and to redirect “harmful” financial flows, such as excessive subsidies, private investments and lending that supports industrial logging and agricultural expansion, toward forest protection.

“If governments, corporations and banks redirected even a portion of those incentives towards forest protection and sustainable intensification, I think it will go a long way towards leveling the playing field and making it possible to pursue forest protection in concessions,” Lim said.

Having highlighted the need for a broader mix of conservation funding and identified the concession types that could be most economically viable for conservation, Lim said she hopes to see more on-the-ground demonstrations of how these approaches can work in practice. “Having guidelines of best practice, design, finance and management derived from real-world case studies would provide an invaluable blueprint for future projects,” she said.

The research has also thrown up new questions about the ideal mix of financing mechanisms in different contexts, which she would like to see explored. “Understanding how these mechanisms complement one another will give a fuller picture of how forest transitions could be financed in Southeast Asia,” Lim said.

Zeng says he hopes the research prompts decision-makers to prioritize the broader value of forests to society over short-term economic gains.

“The question for policymakers is not simply whether conservation can outcompete commodity production,” he said, “but whether the full suite of environmental, social and long-term economic benefits provided by intact forests justifies stronger governmental investment in keeping these forests standing.”

Banner image: An oriental pied hornbill in a forest in Malaysia. Image by Rhett Ayers Butler/Mongabay.

Carolyn Cowan is a staff writer for Mongabay.

Citations:

Tian, P., Yan, Y., Zhang, F., Zhang, H., Liu, Y., Ying, C., … Li, J. (2026). Forest loss and carbon flux in Southeast Asia: Spatiotemporal patterns, ecological impacts, and key determinants. Land Degradation & Development, 37(10), 5752-5766. doi:10.1002/ldr.70484

Lim, A. J., Zeng, Y., Teo, H. C., De Alban, J. D., & Koh, L. P. (2026). Pivoting forestry and agricultural concessions toward conservation in Southeast Asia. Nature Communications, 17(1). doi:10.1038/s41467-026-72921-8

See related story:

SE Asia forest carbon projects sidelining social, biodiversity benefits, study finds

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Cite this article

Carolyn Cowan (2026). Carbon markets alone won’t keep Southeast Asia’s forests standing, study says. Mongabay Conservation news. DOI: https://doi.org/10.66709/news-325137