This article reports on the incremental cost of carbon sequestration in forestry and agroforestry systems, calculating the potential and cost of carbon storage with the tropical tree species Paraserianthes falcataria. The authors use an economic model in the Manupali Watershed of the Bukidnon Province in the Philippines that takes into account the opportunity cost of converting land from annual cropping systems to tree-based systems. They find that the cost of storing carbon through reforestation ranges from $3.30 / ton for conversion of fallowed land to $62.50 / ton for conversion of highly productive crop land. They suggest that the lower marginal cost of conversion to agroforesty supports a preference towards agroforestry systems rather than pure forestry.