It is argued in this paper that two fundamental economic processes prevent resource-poor farmers in tropical countries from managing soil carbon in a sustainable manner. The first process is related to the fact that soil carbon and tropical forests are part of the natural capital of these countries and of the world community. As a consequence, the interests of resource-poor farmers in tropical countries, of these countries themselves and of the world community conflict. This implies that levels of adoption of sustainable soil carbon management practices which are optimal from the perspective of resource-poor farmers are sub-optimal from a regional and global perspective. The second process regards the nature of sustainable soil management practices. These practices are investments in natural capital which bring about net benefits to farmers only after four to six years. Absolute poverty levels in tropical countries make it very difficult for farmers to undertake such investments. It follows that even perfectly informed and rational resource-poor farmers will not voluntarily adopt socially optimal levels of soil carbon management in tropical countries. Policy interventions are a means of ensuring that soil carbon is managed in such a socially optimal and sustainable fashion in these countries. Two principles are proposed for developing effective, equitable and appropriate policy options. The first is the beneficiary-compensates principle, which requires that society in tropical countries and in industrialized countries should compensate resource-poor farmers in tropical countries for adopting soil carbon management practices. The second principle is that international and national policy options need to be well articulated and that sets of complementary policies should be put in place for greater effectiveness. Policies alleviating rural poverty and pressures to deforest are as necessary as policies specifically targeted at soil carbon management. Finally, research priorities for soil and biological scientists are derived from the analysis. These priorities necessitate the creation of interdisciplinary teams of soil, biological and social scientists. This is perhaps an even greater challenge for the scientific community than the achievement of the research agenda itself.