Background A mechanism for emission reductions from deforestation and degradation (REDD) is very likely to be included in a future climate agreement. The choice of REDD baseline methodologies will crucially influence the environmental and economic effectiveness of the climate regime. We compare three different historical baseline methods and one innovative dynamic model baseline approach to appraise their applicability under a future REDD policy framework using a weighted multi-criteria analysis. Results The results show that each baseline method has its specific strengths and weaknesses. Although the dynamic model allows for the best environmental and for comparatively good economic performance, its high demand for data and technical capacity limit the current applicability in many developing countries. Conclusion The adoption of a multi-tier approach will allow countries to select the baseline method best suiting their specific capabilities and data availability while simultaneously ensuring scientific transparency, environmental effectiveness and broad political support.