Abstract This paper is part of a two-year study to investigate the feasibility of initiating a Clean Development Mechanism (CDM) project in an indigenous community of Eastern Panamá, Ipetí-Emberá. We use participatory mapping and matrices as well as household surveys to develop a land-use/land-cover baseline scenario and examine the role of local participation in assessing land-use change. In Ipetí, land-use change has not occurred in a linear way over the last decades, and our data unveils socio-economic factors as potential key drivers of change. The concordance that we observed between geographic information and individual and collective perceptions of land-use change substantiates the possibility of using local knowledge in the establishment of baseline data for CDM projects. Our calculations suggest that the total carbon (C) stocks in the Tierra Colectiva (TC) of Ipetí-Emberá in 2004 represents a 47% reduction from the estimated C stock at the onset of settlement in the early 1970’s. Results from the participatory assessments predict that, in 2024 and in absence of a CDM project, the C stocks will decline from 301,859 t C in 2004 to 155,730 t C, which constitutes a reduction of 52%. The scenario with CDM estimates C stocks of 305,853 t C for 2024, a value slightly superior to the 2004 value. In the TC there is ground to believe that cattle ranching is likely to become an ever more important activity as the population is young and growing and cannot easily move elsewhere. Forests tend to be cleared for cultivation while pastures are established on short fallows. Our baseline scenario underlines the potential for a CDM project to make a significant difference in the future C stocks of this landscape.