Volcanic CO2 emissions are an important element of the carbon cycle, but they are very poorly constrained. This is due to the great challenge posed by the quantification of a potentially small volcanic CO2 signal against a strong background atmospheric signal. There is therefore great interest in developing and applying novel, sensitive techniques which may be able to remotely quantify trace volcanic CO2 amounts. Differential Absorption LIDAR (DIAL) is one such technique which may allow remote monitoring of volcanic CO2 emissions. CO2 is typically the second most abundant volcanic gas, the first being H2O, which can condense upon emission, producing dense aerosol clouds. These aerosols will strongly affect absorption and backscattering of the probing DIAL light. We employ Mie's equations to calculate their scattering and extinction properties. We consider two extreme droplet number densities. We find that both backscattering and extinction coefficient increase by more than 4 orders of magnitude with respect to the case without any liquid water in the volcanic plume. The fraction of light scattered back to the DIAL instrument in a single scattering event increases by a factor of 100 relative to the clear atmosphere. For the LIDAR signal this implies a relative increase in backscattered light by up to 4 and 5 orders of magnitude for the low density and high density cloud scenario, respectively. The results suggest that a condensed water cloud within the plume region may act as a strong reflector, and greatly enhances the signal strength and hence sensitivity of a DIAL system compared with backscattering in the clear atmosphere.