A large carbon sink in northern land surfaces inferred from global carbon cycle inversion models led to concerns during Kyoto Protocol negotiations that countries might be able to avoid efforts to reduce fossil fuel emissions by claiming large sinks in their managed forests. The greenhouse gas balance of Canada's managed forest is strongly affected by naturally occurring fire with high interannual variability in the area burned and by cyclical insect outbreaks. Taking these stochastic future disturbances into account, we used the Carbon Budget Model of the Canadian Forest Sector (CBM-CFS3) to project that the managed forests of Canada could be a source of between 30 and 245 Mt CO(2)e yr(-1) during the first Kyoto Protocol commitment period (2008-2012). The recent transition from sink to source is the result of large insect outbreaks. The wide range in the predicted greenhouse gas balance (215 Mt CO(2)e yr(-1)) is equivalent to nearly 30% of Canada's emissions in 2005. The increasing impact of natural disturbances, the two major insect outbreaks, and the Kyoto Protocol accounting rules all contributed to Canada's decision not to elect forest management. In Canada, future efforts to influence the carbon balance through forest management could be overwhelmed by natural disturbances. Similar circumstances may arise elsewhere if global change increases natural disturbance rates. Future climate mitigation agreements that do not account for and protect against the impacts of natural disturbances, for example, by accounting for forest management benefits relative to baselines, will fail to encourage changes in forest management aimed at mitigating climate change.