Carbon Forestry
Forests play a central role in regulating the earth's climate, removing and storing enormous quantities of atmospheric carbon. But these carbon reservoirs are reversible and continue to be a major source of emissions. The unsustainable use and degradation of forests contributes about 17% of human emissions each year. Most of these emissions are caused by deforestation of tropical rainforest in developing countries. 

In addition to protecting existing forests from deforestation there is great potential to increase carbon removals through planting new forests and reforesting degraded landscapes. Together avoided deforestation, afforestation, and reforestation have the potential reduce one fifth of the greenhouse gas emissions which is needed to stabilise the earth's climate.

Emissions trading has emerged as a key mechanism to achieve emissions reductions. Putting a price on pollution is expected to drive the development of clean technologies and encourage a shift from the global reliance on fossil fuels towards low carbon economies. 

Over the past decade many different carbon markets have developed and global carbon trade has grown to a US$136 billion industry. However, so far the use of forest carbon credits has been largely minimised in the compliance markets accounting for less than 1% of all projects developed under the Kyoto Protocol and being excluded from the worlds largest carbon market, the European Union Emissions Trading Scheme.

Despite this marginalisation many countries recognise full inclusion of forestry is necessary to achieve emission targets and a greater acceptance of forest carbon credits is emerging. Forest credits are currently being traded under the Kyoto Protocol, within the NZ Emissions Trading Scheme and within the various voluntary markets.

In addition to sequestering carbon forests provide a range of other important ecosystem services such as reducing soil erosion, improving water quality, and promoting biodiversity. Markets are developing which put a value on these services such as biodiversity offsetting, and nitrogen reduction trading.