This presentation will highlight USDA policies and programs that address the economics of managing greenhouse gases and sequestering carbon the agriculture and forestry sectors. Three key components of these policies and programs are described below. First, USDA has expanded the criteria for enrolling lands in its conservation programs to include consideration of greenhouse gases and carbon sequestration issues. For example, in 2002 USDA modified the Environmental Benefits Index (the criteria used to rank land for enrollment in the Conservation Reserve Program) to allow up to 10 points to be awarded to bids that included adoption of land uses or practices that sequester carbon. A second key component of USDA's GHG management activities is its partnership with the Department of Energy in developing revised the rules and guidelines for the 1605b voluntary GHG reporting program. The revised guidelines - recently released for public comment - encourage farmers and forest land owners to report GHG emissions inventories, emissions reductions, and carbon sequestration associated with their land management activities and to provide them a means the establish a documented record of voluntary emissions reductions. Finally, through the Conservation Innovation Grants Program, individuals and groups with innovative approaches to reducing GHG emissions can obtain partial funding (up to $1 million) to demonstrate the applicability and feasibility of their ideas and related technologies.