Tropical forests are a source of several high-value products that provide livelihood to small communities in different regions. Exotic fruits such as annatto are feedstock sources containing bioactive compounds with important applications in the food industry. Nevertheless, the integral use of annatto for community improvement and the crop’s contribution to carbon sequestration in tropical forests have not been analyzed. This paper aims to demonstrate the economic and environmental performance of small-scale alternatives to obtain natural colorants using annatto seed. The extraction of natural colorants (bixin and norbixin) was analyzed using ethanol and NaOH as solvents. The experimental results were used to simulate two scenarios. Scenario one involved bixin production, and scenario two comprised bixin and norbixin production. The economic and environmental assessments were performed considering the life cycle assessment (LCA) methodology based on a Colombian context. The best extraction yield was 72.65 mg g−1 for bixin and 193.82 mg g−1 for norbixin. From a simulation perspective, scenario two showed the best economic performance since a payback period of 3.1 years was obtained. The LCA showed a high CO2 sequestration potential (6.5 kg CO2 eq kg−1 seed) of the annatto crop. Moreover, the solvents used during the colorant extraction proved to be the most environmentally representative. Nevertheless, the CO2 sequestration of the crop continues to exceed the emissions generated by the process. This work demonstrates that the annatto is an alternative for small communities to reach equilibrium between the economic and environmental of the tropical forest.