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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 …