Until now forest carbon trading has been possible only through the Clean Development Mechanism (CDM) of the Kyoto Protocol of the United Nations Framework Con-vention on Climate Change (UNFCCC). But CDM is limitedto afforestation and reforestation projects. The option for reducing rates of carbon emissions by improved forestmanagement and by avoided deforestation is not eligible,despite the fact that the Intergovernmental Panel on Cli-mate Change (IPCC) estimates that 20–25% of currentannual carbon emissions result from loss of tropical forest(IPCC, 2007). The contribution of tropical deforestation to global carbon emissions has prompted re-negotiation of climate change policy to include Reduced Emissions from Deforestation and Degradation (REDD). This would allow tropical forest nations to claim for compensation, if they reduce national rates of deforestation and degradation through management of natural forests.