Tropical forest felling can be for the purpose of traditional shifting cultivation, after which forest is re-established, or for permanent land-use change, which is defined as deforestation. Recent decades have seen a dramatic increase in tropical deforestation caused by slash-and-burn clearing for the establishment of more permanent agriculture, plantations and pastures, which often result in degraded grasslands or degraded fallows. The net CO2 balance in shifting cultivation is near zero if the forest returns to its original biomass and soil organic carbon status, although there is a small net release of other greenhouse gases during the cropping cycle. Deforestation by contrast normally causes large losses of CO2 from the soil and vegetation. Greenhouse gas (GHG) emissions are still difficult to quantify. Deforestation may lead to changes in evapotranspiration, runoff and local climate but there are few data. If it occurs in large continuous areas, the rainfall may be decreased, according to modelling studies. There is now no doubt that human activities are substantially increasing the atmospheric concentrations of the greenhouse gases, and that these increases will enhance the greenhouse effect (IPCC, 1990. Climate Change : The IPCC Scientific Assessment). The questions we address in this paper are to what extent slash-and-burn of forest is responsible, and how land conversion of this type will affect the climate system, including its impact on local and regional hydrology.