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The Kyoto Protocol established the use of forest carbon sinks as one way of compensating for forest ecological values. Forest carbon sinks can promote sustainable economic development and help developed nations reduce their GHG emissions. But without proper legal regulation they may influence the local ecological environment and, in particular, they may harm biodiversity. States need to make laws that regulate forest carbon sinks and protect biodiversity. Environmental law urgently needs to strike a balance between forest carbon sinks and biodiversity conservation. Carbon farming and protecting the biodiversity can be regulated through three legislative stages: previous control, process control and subsequent action. In the first stage, the environmental impact of carbon farming can be assessed and any effect on the biodiversity determined. In the second stage, legislation has to provide tools to supervise the dynamic effects of forest carbon sinks on biodiversity. And in the third stage, some sort of mechanism to sanction the destruction of biodiversity must be established.