The development of a new carbon economy has the potential to offer win–win outcomes for environments and economies. Large‐scale tree plantations are expected to play a major role in carbon economies but could have negative ecological and economic consequences when key environmental values such as biodiversity conservation are not considered. We discuss three potential “bio‐perversities”—negative outcomes for biodiversity—that could result from inappropriate plantation tree programs aimed solely at reducing atmospheric carbon dioxide and mitigating rapid climate change effects. These are: (1) clearing native vegetation to establish tree plantations, (2) planting trees that become invasive taxa, and (3) tree plantations negatively affecting key ecosystem processes such as fire and hydrological regimes. These bio‐perversities may result from common mistakes in environmental management: (1) too narrow a focus on a single environmental value, (2) failing to adequately quantify ecological uncertainty, and (3) failing to anticipate how different groups of people respond to an environmental problem. We highlight ways to prevent possible bio‐perverse outcomes in large‐scale plantation programs. These include requiring that risk assessments precede project establishment, full carbon accounting is undertaken, incentives used to stimulate tree plantation establishment are rigorously examined, and rigorous compliance and ecological monitoring is undertaken.