The Kyoto Protocol accepts terrestrial sinks for greenhouse gases (GHGs) as offsets for fossil fuel emissions. Only carbon sequestered in living biomass from re- and afforestation is presently considered, but the Protocol contains a provision for the possible future inclusion of other land uses and soils. As a result, the possibility of sequestration of carbon in wetlands, and particularly peatlands, is being discussed. Natural peatlands are presently a relatively small sink for CO₂ and a large source of CH₄: globally, they store between 400 and 500 Gt C. There are large variations among peatlands, but when the “global warming potential” of CH₄ is factored in, many peatlands are neither sinks nor sources of GHGs. Some land-use changes may result in peatlands acting as net sinks for GHGs by reducing CH₄ emissions and/or increasing CO₂ sequestration (e.g., forest drainage), while other land uses may result in large losses of CO₂, CH₄, and N₂O (e.g., agriculture on organic soils, flooding for hydroelectric generation). Other land uses, such as peatland creation and restoration, produce no net change if they are replacing or restoring a previous level of GHG exchange. These are analogous to reforestation of deforested areas. On closer examination, the inclusion of peatlands in a national greenhouse gas strategy as sinks, despite their large role in the terrestrial carbon cycle, may not significantly reduce net greenhouse gas emissons. If the sinks are to be considered, it is reasonable that terrestrial sources associated with all land uses on peatlands also should be considered. If peatlands are not considered explicitly, but soils in forest and agriculture systems are included in the Kyoto Protocol in the future, then those peatlands impacted by these land uses will be incorporated implicitly.