The economics of two selective logging systems were investigated in Sabah, Malaysia. Both logging systems employed chainsaws and bulldozers to extract timber. Reduced impact logging (RIL) differed from conventional logging (CL) in that it included comprehensive preharvest planning, pre-harvest climber cutting, stock mapping, tree marking, directional felling, and a set of environmentally-friendly skidding guidelines. RIL has been widely recognised as the logging technique to achieve sustainable utilisation of tropical forest. The main objective of this research was to compare the immediate and long term (60 years) economic costs and benefits of RIL with those of conventional logging (CL) practice in terms of timber and nontimber values. The suit of non-timber benefits included carbon, soil, non-timber forest product namely, rattan, water and wildlife values. The study was carried out in Sabah, Malaysia within the Sabah Foundation forest concession. The primary source of data for this research came from a commercial project that was initiated between Innoprise Corporation Sdn Bhd (Malaysia) and the New England Electric Supplies (USA). The RIL project was aimed at reducing logging damage using RIL, hence, increase carbon sequestration potential in forest biomass. The economic analysis comprised two parts, namely (i) an assessment of the logging impacts on the ecological parameters, and (ii) carrying out an economic cost-benefit analysis. Primary data were collected for the timber, carbon, soil values and rattan values using a system of rectangular plots. The water and wildlife values were based on secondary data from published information. To determine the timber harvest for the second cut, a forest growth model (DIPSIM) was adopted for this purpose. Similarly, the potential future carbon in the logged forest was projected using a carbon recovery model (C-REC). The valuation of the timber and non-timber values was based on the market price and opportunity costs techniques. Future costs and benefits were discounted at rates between 2% and 10 % using standard method except where costs and benefits were not derived on annual basis. The findings of this study showed that using RIL to harvest timber had reduced logging damage on the forest vegetation and soils by 50 % compared with CL techniques. Timber production per area logged was comparable with conventionally logged forest, but differed significantly when compared on per management unit basis. There were fewer skid trails and log landings in RIL forest. In addition, soil disturbances was lower on skid trails and log landings, hence, the negative effects of off-site sedimentation was reduced. The lower disturbance in the RIL forest resulted in higher timber stock for timber and non-timber product such as rattan. The timber yield for the second harvest from RIL forest was also higher compared with CL forest. However, RIL was more expensive than CL techniques under some assumptions and constraints. Non-timber benefits other than carbon in the cost-benefit analysis were relatively unimportant. Carbon prices were variable, ranging from negative prices, through prices quite comparable with other results, to very high prices. The study concluded with justifications to relax the RIL harvesting guidelines that were pertinent to the area left unlogged in RIL. There was also a case for exploring alternative logging technologies such as helicopter logging to harvest the unlogged area. These airborne technologies were conceivably costlier than ground based logging system, but the international community could share this burden in a united stand to strive towards sustainable utilisation of tropical forests.