Land use change is a key requirement for improving rural incomes and making a significant reduction in poverty levels globally. Over 70% of the world’s poor are located in rural areas, with land use as a major source of subsistence. Improving the productivity of their land use systems is essential for increasing incomes and food security among them. Land use change is also a relatively low cost and rapidly implementable means of climate change mitigation. To the extent that the land use changes required for poverty alleviation coincide with that required for carbon sequestration, significant synergies can be harnessed in meeting both objectives. Estimates of predicted supply costs and demand prices indicate that several types of land use change appropriate for small and low income landusers will be a competitive source of emission reduction credits, although again there is considerable uncertainty in the final form of the market. However, even where there is significant potential for sequestration payments to contribute to poverty alleviation, considerable effort will be required to move from the objectives to the reality. In some cases this may be made through the structure of carbon sequestration payment programs, to address the investment and insurance needs of poor producers and provide adequate incentives for participation. In other cases larger institutional and policy reforms may be necessary in order to create the conditions necessary for poor landusers to benefit from carbon sequestration payments.