Stripped bare: a profit motive might be the best way to convince poor farmers to leave the trees alone.

It's shaping up to be a banner year for bad environmental news from Latin America. The destruction of the Amazon jungle has reached its highest level in a decade. Thirty-six million hectares of South American forests vanish a year, while Central American forests are being reduced by 2.4 million hectares annually, according to the United Nations.

While deforestation is a global problem, Latin America's rate of loss--0.5% annually--is twice that of the world's average, according to a recent study by the Economic Commission for Latin America and the Caribbean (ECLAC). Brazil leads the list at about 1.5 million hectares a year, followed by Mexico, which loses more than 1 million hectares a year. ECLAC also notes that Latin America is unlikely to meet U.N. goals of guaranteeing environmental sustainability by 2015, which is hardly surprising in a region where only Chile and Mexico spend more than 1% of gross domestic product on the environment.

In Mexico, however, an innovative program aims to tackle one of the most pernicious threats to forests: The onslaught of poor families who have few economic alternatives. Two years ago, the federal government launched a novel project in the rugged mountains of central eastern Mexico that pays residents to conserve their land and water. Eventually, managers hope to charge those downriver for clean water. "The main principle is to recognize the environment's worth, put a value on it and then pay the forest's owners," says Carlos Gonzalez Vicente, who oversees a US$30 million annual fund established by the Mexican national forest commission, Conafor.

Conafor is concentrating its efforts in the Sierra Gorda Biosphere Reserve, one of Latin America's least-known but richest ecological regions. Within its more than 383,000 hectares one finds all climatic conditions--arid, mountain temperate, and tropical--and more than 1,800 species of plants, 700 types of butterflies, 23 species of amphibians, 71 of reptiles, 360 of birds and 131 different mammals. Exotic fauna includes jaguars, black bears, the bearded wood partridge and the world's last remaining military macaws.

Like many pristine forests in Latin America, the human inhabitants of this forest are poor farmers who lack electricity and indoor plumbing, rip up forests to grow crops, throw garbage, pollute rivers, denude hillsides for firewood and hunt endangered species. Once Sierra Gorda landowners sign a five-year contract with the government, they agree to leave their land and watersheds alone. If satellite and on-the-ground monitors report forests and water sources are intact by year-end, they are paid $30 to $40 a hectare.

Paying struggling farmers will keep them from searching for work in factories or illegally entering the United States as migrant laborers. About 1.5 million Mexican farmers have already lost their land because of cheap farm imports, according to U.S. government watchdog Public Citizen. In Mexico, three-quarters of plots are planted to grow food for the families that own or rent the land. These folks earn nowhere near the nation's per-capita income of $9,400 a year.

The inspiration for the Mexican plan came from Costa Rica, which has been paying farmers to protect 350,000 hectares since 1997. But Mexico's program has gone much farther, thanks to a nonprofit group called The Sierra Gorda Ecological Group. Its members visit area primary and secondary schools, talking up ecological awareness and promoting the use of solar ovens to reduce the cutting of trees for fuel, and the adoption of dry latrines. Such simple toilets keep rivers uncontaminated, are inexpensive to install inside or outside the house and don't require water. Best of all, the waste dries up and becomes fertilizer.

In coming years, says Gonzalez, the challenge will be finding buyers downriver who will pay for clean water and thus take over most of the financing. The Sierra Gorda Ecological Group has identified 300 potential customers, including an electric utility, a wood processor and a mine. Gonzalez says he is looking for consumers in the Mexican cities of Guadalajara and Colima.

The Sierra Gorda project could become a model for Latin American governments, which must find ways now to slow deforestation before there is nothing left to protect. Major lending institutions should be standing in line to fund such ventures.

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