Global concern over rising atmospheric concentrations of carbon dioxide is stimulating development and implementation of policies aimed at reducing net greenhouse gas emissions by enhancing carbon sinks. One option for reducing net emissions is to lessen damage to residual forests during selective logging thereby retaining carbon in biomass. A pilot carbon offset project was initiated in Malaysia in 1992 in which a power company provided funds to a timber concessionaire to implement guidelines aimed at reducing logging damage; in doing so, the utility gained potential credit towards future emissions reduction requirements. To quantify the reduction in soil disturbance resulting from the implementation of harvesting guidelines, I measured soil disturbance associated with ground-skidding in the two areas. To quantify the carbon retained due to this effort, I compared the biomass both before and after logging of dipterocarp forests logged according to reduced-impact logging guidelines with forests logged by conventional methods. Prior to logging, the forest stored approximately 400 Mg biomass ha. High volumes of timber were removed from both logging areas (meanusd\rm\sb{\sc{CNV}}usd = 154, meanusd\rm\sb{\sc{RIL}}usd = 109 m ha). About 17% of the conventional logging area was covered by roads and skid trails; in contrast, 6% of the reduced-impact logging area was similarly damaged. Skid trails in reduced-impact logging areas were less severely damaged than those in conventional logging areas; the proportion of skid trails with subsoil disturbance was less than half that in conventional logging areas. Forty-one percent of the unharvested trees <60 cm dbh were severely damaged from logging in conventional logging areas in contrast to 15% in reduced-impact logging areas. One year post-harvest, reduced-impact logging areas held about 42 Mg C ha more than conventional logging areas. To investigate the consequences of reductions in logging damage for ecosystem carbon storage, I constructed a model to simulate changes in biomass and carbon pools following logging. Simulation results indicate that the relationship between fatal stand damage and ecosystem carbon storage is not linear and, at 50-60% fatal stand damage, biomass recovery following logging is severely limited. Reducing fatal damage from 40 to 20% is associated with a 20% increase in mean carbon storage over 60 years.