Participation in the Kyoto process correspond the purposes of Ukraine economic development. Investments into our national projects such as energy efficiency, renewable energy and fuels with lower carbon content, preservation, restoration and establishment of forest trapping greenhouse gas emissions, reducing greenhouse gas emissions from landfills and others could be involved on the basis of the full-scale implementation of the Kyoto Protocol. Ukraine can attract $1-10 billion due to greenhouse gases emission reduction, i.e. the use of flexible mechanisms can lead to economic growth.

By investing in the restoration and protection of forests, one must be sure that the investments are efficient. If capital is invested in the restoration and protection of forests in the national forest enterprises, the projects providing maximum volume of economic, environmental and social effects should be chosen from among the many possible ones. Evaluating the efficiency of program activities to determine the feasibility of their implementation is carried out by comparing total operating costs and capital investments with possible acquisitions, reduced to the same dimension , taking into account the time factor .

The object of evaluating the forestry production investments under the of the Kyoto Protocol mechanism implementation is Central (Zhytomyr) Polissya. Since the area of the region was highly contaminated in Chernobyl disaster, the only way to use erosion and radiation  contaminated land is reforestation . Owing to favorable conditions all these lands can recharge forest reserve area and Ukraine. According to the report of Italian company Agrotech, the area of the territory provided for its withdrawal from agricultural use for further forestation in this area is 1934.4 ha.

Calculation of capital expenditures was conducted on the basis of price of the 1 ha of forest plantations. Having considered that the Central Polissya conditions are suitable for growing pine and birch plantations we have made the comparative calculations for both breeds. In addition, operating costs like taking care of plantations and other forestry activities, major harvesting were taken into account. Accepted Schemes of forest crops establishment, based on the requirements of maximum accumulation and storage of carbon in plantations, eliminating the thinning of up to 15 - 20 years of age (period of payments for carbon absorbed  are developed.

According to the log structure and price assortment we calculate possible payment for after receipt of wood from thinning and final felling in plantations of pine and birch hung .

Defining benefits from forestation of degraded lands requires considering the deposited carbon increase as well. In determining the revenue from the sale of quotas for greenhouse gas emissions we take into account the equilibrium price range of 25 to 150 U.S. dollars per ton of carbon, which is predicted by Stanford Energy Modelling Forum (Weyant 2000). Calculations on three scenarios like under minimum price, maximum price per 1 ton of carbon and the lack  of demand for quotas for greenhouse gas emissions are compared.

To make grounded decisions on the efficiency of investment projects of degraded lands reforestation with pine and silver birch these projects were evaluated on the following criteria:

- Internal rate of return;

- Net  value;

- Profitability index (the benefit /cost ratio);

- Payback period .

The project in which the net value is the highest should be chosen for consideration in the evaluation of the efficiency of investments in forestry under the Kyoto Protocol mechanism implementation. In this case, it concerns the project of degraded lands forestation with pine under different scenarios. Indexes of implementing the project of forestation with silver birch under scenario 3 gives grounds to reject it.

Key words: Kyoto process, investments, efficiency of forestry measures.