Exposure of plants to ozone inhibits photosynthesis and therefore reduces vegetation production and carbon sequestration. Simulations with the Terrestrial Ecosystem Model (TEM) for the historical period (1860-1995) show the largest damages occur in the eastern U.S., Europe, and eastern China, with reductions in Net Primary Production (NPP) of over 70% for some locations. Scenarios through the year 2100 using the MIT Integrated Global Systems Model (IGSM) show potentially greater negative effects in the future. In the worst-case scenario, the current land carbon sink in China could become a carbon source. Reduced crop yields resulting from ozone damage are potentially large but can be mitigated by controlling emissions of ozone precursors. Failure to consider ozone damages to vegetation would by itself raise the costs over the next century of stabilizing atmospheric concentrations of CO2 by 3 to 18%. But, climate policy would also reduce ozone precursor emissions, and ozone, and these additional benefits are estimated to be between 4 and 21% of the cost of the climate policy. Tropospheric ozone effects on terrestrial ecosystems thus produce a surprisingly large feedback in estimating climate policy costs that, heretofore, has not been included in cost estimates.Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).This study was funded by the Biocomplexity Program of the U.S. National Science Foundation (ATM-0120468), the Methods and Models for Integrated Assessment Program of the U.S. National Science Foundation (DEB-9711626) and the Earth Observing System Program of the U.S. National Aeronautics and Space Administration (NAG5-10135). We also received support from the federal and industrial sponsors of the MIT Joint Program on the Science and Policy of Global Change.