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The climate benefit and economic cost of an international mechanism for reducing emissions from deforestation and degradation (REDD) will depend on the design of reference levels for crediting emission reductions. This paper compares the impacts of six proposed reference level designs on emission reduction levels and on cost per emission reduction using a stylized partial equilibrium model. The results of this analysis support a growing consensus that a well-designed REDD mechanism can be an effective component of an overall agreement to avoid dangerous climate change and provide cost-efficient climate change mitigation benefits under a broad range of reference level designs. It furthermore shows that the most effective reference level designs balance incentives to reduce historically high deforestation emissions with incentives to maintain historically low deforestation emissions. Therefore and quantitative economic models can help climate negotiators design reference levels for a REDD mechanism that is effective, efficient and equitable.