Abstract: Forests are globally important for climate change mitigation, but also locally important to over a billion people who rely on forest ecosystems for their livelihoods. Consequently, climate change mitigation in forests has been highly controversial with respect forest and resource access, land rights, and the role of carbon markets. These issues have been particularly heated within a newly proposed mechanism for Reducing Emissions from Deforestation and Degradation in developing countries or REDD. The central contradictions associated with REDD speaks to what scholars have identified as fundamental tradeoffs between market efficiency and development goals in carbon offset projects, where efficiency is almost invariably prioritized. While scholars of common property resources argue, and it is well documented, that collective action can result in sustainable resource management, I have found that in market-based carbon forestry projects, tradeoffs exist even in areas of collective action. Given that in many cases indigenous and forest communities who manage land collectively have been important stewards of forest ecosystems, this paper explores the ways in which community engagement with carbon markets shape forest governance, and the resulting social and environmental outcomes. Based on research of a carbon forestry project in Chiapas, Mexico, I argue that the process of carbon commodification shapes community rules and land use that have previously protected forests, in ways that in some cases lead to loss of culturally important livelihood benefits associated with traditional land uses.