In this article the authors contend that the constraints to including reduced emissions from avoided tropical forest deforestation and degradation in international carbon markets stem from problems associated with: (1) correctly measuring emissions savings from avoided tropical forest deforestation and degradation; (2) the permanence and ‘leakage’ of tropical forest conservation regimes; (3) ensuring economic incentives for the avoidance of tropical forest deforestation and degradation are sufficiently effective; (4) the exclusion of reduced emissions from avoided tropical forest deforestation and degradation from critical international climate change policy agreements; and (5) the behaviour of investors in carbon markets. Case analysis of the ‘Emissions Biodiversity Exchange Project for the 21st Century’ (EBEX21) program of Landcare Research New Zealand is used to examine how a government-supported market-based forest conservation initiative can be used to address these constraints, particularly in the context of small-scale forestry conservation.