Using Chinese county-level panel data from 2007 to 2022, this study employs the pro-pensity score matching–difference-in-differences (PSM-DID) method to empirically assess the impact of Forest Carbon Sequestration Projects (FCSP) on the economic welfare of rural residents in pilot counties, from both absolute and relative perspectives. The study found that from an absolute perspective, FCSP significantly improved the economic welfare of rural residents; but after incorporating relative comparison factors, the positive effect of the project was weakened, especially in the horizontal comparison between rural areas, showing a significant relative welfare loss. The impact of FCSP on rural economic welfare has obvious lag, and long-term implementation is more conducive to improving the absolute and relative welfare levels of rural residents. Heterogeneity analysis shows that the longer the project inclusion period, the stronger the economic welfare effect; the implementation of FCSP in poverty-stricken counties can significantly improve the economic welfare of rural residents compared with non-poverty-stricken counties, and FCSP are more suitable for implementation in non-ethnic areas.