Experience with incentive based interventions indicates that governance issues are likely to be critical to the success of such approaches in terms of reducing carbon emissions. But incentive based mechanisms to address climate change face major corruption challenges. Large flows of money could fuel rent seeking activities, elite capture of REDD benefits, and create new opportunities for forest corruption. In addition, such schemes can generate a pattern of perverse incentives leading to increased corruption and inequitable distribution of benefits, potentially resulting in actual deforestation and forest degradation.