Carbon forestry projects have proliferated over last few years on the premise of cost efficient climate mitigation along with co-benefits of biodiversity conservation and livelihood improvement. Multilateral, bilateral, public and private sources have invested billions of dollars in the carbon forestry projects based on these claims. However, there is little empirical evidence to support the enthusiasm. This gap is further accentuated by the insufficient understanding of the governance challenges of these projects. These issues are social, political and ecological in nature and hence require a multidisciplinary political ecology framework for a comprehensive analysis. This thesis explores the multiple benefit claims and governance issues by analysing two forestry-based Clean Development Mechanism projects from India. One, in Haryana state focuses on private lands, the other in Himachal involves three different types of lands viz. community, public and private for plantation activities. This thesis examines the carbon, biodiversity and livelihood benefits of each project, and the governance challenges associated with them.I show that both projects have sequestered substantially less carbon than was originally predicted, which has serious implications for carbon revenues and hence economic viability of these projects. In the case of biodiversity, the results are mixed. In Haryana, the tree and herb biodiversity has improved in the project plots as compared to control plots, whereas shrub biodiversity has marginally declined. In case of Himachal project, biodiversity has declined at tree, shrub and herb levels. I have analysed livelihood impacts in terms of foregone crop, fodder and fuel wood benefits across small, medium and large category of farmers. Both the projects have adverse livelihood impacts on the participants, more so in Haryana because of the plantations on private lands. Although the project has adversely affected the livelihoods of all three categories of farmers, however it has affected small farmers the most due to their low incomes and risk-bearing capacities. Hence, these projects have serious equity implications. This thesis also explores the governance challenges of carbon forestry in terms of their interaction with existing policy mechanisms, especially the Forest Rights Act of 2006, which recognises the ownership and use rights of forest dependent communities comprehensively first time in independent India. The analysis suggests that there are various issues that carbon forestry projects pose for the implementation of the Act due to which civil society groups are opposing these projects.This thesis contributes to our understanding of the multiple benefit claims of carbon forestry projects with empirical evidence and a political ecological analysis. It shows that there is possibility of tradeoffs and many other scenarios in carbon forestry projects rather than just the projected 'win-win-win' outcomes. It contributes to the political economy literature by establishing that changes in global commodity markets can influence land use choices at local level, affecting the sustainability of such efforts. This thesis also advances the literature on governance of carbon forestry projects by reflecting on various policy and implementation level issues related to property rights, community institutions, transparency and accountability.