Recent attention has focused on the high rates of annual carbon sequestration in vegetated coastal ecosystems – marshes, mangroves, and seagrasses – that may be lost with habitat destruction (‘conversion’). Relatively unappreciated, however, is that conversion of these coastal ecosystems also impacts very large pools of previously-sequestered carbon. Residing mostly in sediments, this ‘blue carbon’ can be released to the atmosphere when these ecosystems are converted or degraded. This article provides the first global estimates of this impact and evaluate its economic implications.