In this paper, we examine the role of polarimetry in synthetic apertur
e radar (SAR) interferometry, We first propose a general formulation f
or vector wale interferometry that includes conventional scalar interf
erometry as a special case. Then, we show how polarimetric basis trans
formations can be introduced into SAR interferometry and applied to fo
rm interferograms between all possible linear combinations of polariza
tion states. This allows us to reveal the strong polarization dependen
cy of the interferometric coherence. We then solve the coherence optim
ization problem involving maximization of interferometric coherence an
d formulate a new coherent decomposition for polarimetric SAR interfer
ometry that allows the separation of the effective phase centers of di
fferent scattering mechanisms. A simplified stochastic scattering mode
l for an elevated forest canopy is introduced to demonstrate the effec
tiveness of the proposed algorithms. In this way, we demonstrate the i
mportance of wave polarization for the physical interpretation of SAR
interferograms. We investigate the potential of polarimetric SAR inter
ferometry using results from the evaluation of fully polarimetric inte
rferometric shuttle imaging radar (SIR)-C/X-SAR data collected during
October 8-9, 1994, over the SE Baikal Lake Selenga delta region of Bur
iatia, Southeast Siberia, Russia.