All Clean Development Mechanism (CDM) projects are designed to contribute to the sustainable development of the host country. Livelihood is an important sustainable development benefit promised by carbon forestry projects. This aspect is more prominent in small-scale (SSC) Afforestation and Reforestation (AR) CDM projects as these are developed and/or implemented by low-income communities. India has the highest number of registered SSC-AR-CDM projects in the world. We selected two Joint Forest Management (JFM) projects located in the Kashi and Mahoba forest divisions of Uttar Pradesh, India, registered as SSC-AR-CDM project activities. We conducted household interviews using a structured questionnaire to find out the changes in livelihood scenario in project areas. Sustainable Livelihood Framework was applied wherein five indices were calculated for Natural, Human, Financial, Physical, and Social capital asset classes comprising of 18 indicators in total. Sustainable Livelihood Index (SLI) was calculated for “before and after” the project implementation. We found that SLI has marginally increased in case of Mahoba while marginally decreased in the case of Kashi Forest Division. This indicates that the projects, even after 8 years of implementation, have not generated any perceivable livelihood benefits to the local population. The SLI-based livelihood assessment framework is suggested for non-carbon Measurement, Reporting, and Verification of future forest carbon projects.