will the CO2 offset market work and if so will it reward or penalize the world's poorest people?
a global market for CO2 offset credits doesn't really exist today. given how interested a number of nations are in reducing their CO2 and given how much cheaper and easier it will be to pay somebody else to do it for them, the creation of a market is inevitable.
considering that the people buying the CO2 credits don't benefit from them being real and that people selling the CO2 credits do benefit from them being fake, there is no obvious built-in force to make sure that the market will ever trade anything real.
but lets pretend that a real global CO2 offset market exists and it trades real CO2 offsets, globally.
Europeans are willing to pay $35 to offset 1 ton of CO2 (considering the premium people pay for fuel efficient cars in Europe, this number sounds low). Brazilian farmers only get about $5 worth of value for each ton of CO2 they emit by chopping down a forest and grazing cattle on the area for a couple of years. so, a global CO2 offset market would resolve the supply and demand. and viola, no more wanton deforestation.
the market will transfer say $20/ton from European coal plants to Brazilian land owners and everyone will be happy. the Europeans will save $15/ton and the Brazilian land owners will make $10/ton.
the Brazilian poor, who no longer have a farm to work on are the only losers. along with virtually everyone else in the poor world. why make $10/ton of CO2 to produce bicycle parts in India when a European (USAmericans aren't party to the Kyoto protocol, so our CO2 demand and supply are unmarketable) manufacturer will pay you $30/ton not to.
i don't think it is the intent of environmentalists to stifle economic prosperity in the poor nations, but it seems to be a nearly unavoidable consequence.
agroforestry may offer some portion of a solution. agroforestry is the practice of multi-level farming. so, you grow squash on the ground and walnuts in the trees on the same piece of land. it would allow poor farmers to greatly decrease the need to deforest before farming, increasing their $/ton of CO2 output.