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Carbon sequestration, the conversion of greenhouse gas CO2 to organic matter, offers a powerful tool with which to combat climate change. The enlargement of carbon sinks stored in soil and biota is an essential tool in buying time while mankind seeks means to reduce emissions of greenhouse gases and to reduce the elevated levels of atmospheric CO2. Carbon sequestration within the context of the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) also has great potential as an incentive for combating land degradation and desertification and restoring fertility to degraded land. Decisions regarding carbon sinks during finalization of the operational details of the Kyoto Protocol in 2001 fit well the needs of countries facing land degradation and desertification. However, incentives for such mitigation through the Clean Development Mechanism of the protocol are limited to forestry issues. Iceland provides a good example of the multiple role of carbon sequestration in meeting national commitments to UNFCCC, conserving and restoring biological diversity, combating soil erosion, revegetation of eroded land and reforestation. Linking carbon sequestration with such goals has resulted in increased funds for soil conservation and restoration of degraded land in Iceland.