PERTANIKA JOURNAL OF SOCIAL SCIENCES AND HUMANITIES

The purpose of this paper is to study the impacts of carbon trading project towards stakeholders involving in the project. Carbon trading is a part of the United Nation (UN) initiatives to mitigate climate change issue due to the higher concentration of Greenhouse gases (GHG) in the atmosphere. The data used in this research was fully dependant on secondary sources which were obtained from recognized organizations, reports and previous researches. The General Equilibrium (GE) model was used as a framework to elaborate on the interconnection of the actors affected by the project. This model is suitable to describe the complex relationship between the government, firms, households and developed country which been affected through the implementation of the project. Palm oil mill functioned as a firm in this research as the highest contributor in the project since 2006. Trade policy agreement, between developed country and mills, will deliver advantages through technology transfer and financial flow into developing countries. Households who are staying close to the mills are considered as a source of employees will benefit when the company can offer more vacancies for local communities. The government will also be able to encourage more industrial sectors practicing eco-friendly project. The implementation of the project expecting will affect all the actors through the circulation of the income investment by developed country through carbon trading project.