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The United Nations climate treaty may soon include a mechanism for compensating tropical nations that succeed in reducing carbon emissions from deforestation and forest degradation, source of nearly one fifth of global carbon emissions. We review the potential for this mechanism [reducing emissions from deforestation and degradation (REDD)] to provoke ecological damages and promote ecological cobenefits. Nations could potentially participate in REDD by slowing clear-cutting of mature tropical forest, slowing or decreasing the impact of selective logging, promoting forest regeneration and restoration, and expanding tree plantations. REDD could also foster efforts to reduce the incidence of forest fire. Potential ecological costs include the accelerated loss (through displaced agricultural expansion) of low-biomass, high-conservation-value ecosystems, and substitution of low-biomass vegetation by monoculture tree plantations. These costs could be avoided through measures that protect low-biomass native ecosystems. Substantial ecological cobenefits should be conferred under most circumstances, and include the maintenance or restoration of (1) watershed functions, (2) local and regional climate regimes, (3) soils and biogeochemical processes, (4) water quality and aquatic habitat, and (5) terrestrial habitat. Some tools already being developed to monitor, report and verify (MRV) carbon emissions performance can also be used to measure other elements of ecosystem function, making development of MRV systems for ecological cobenefits a concrete possibility. Analysis of possible REDD program interventions in a large-scale Amazon landscape indicates that even modest flows of forest carbon funding can provide substantial cobenefits for aquatic ecosystems, but that the functional integrity of the landscape's myriad small watersheds would be best protected under a more even spatial distribution of forests. Because of its focus on an ecosystem service with global benefits, REDD could access a large pool of global stakeholders willing to pay to maintain carbon in forests, thereby providing a potential cascade of ecosystem services to local stakeholders who would otherwise be unable to afford them.
