Patagonia was one of the last regions in the Americas to be settled by Europeans. It was not until the mid-1880s that the Argentine government secured effective control over the region, after which settlement and economic development were based on sheep ranching. Virtually free of domesticated animals in 1885, by 1910 Patagonian rangelands supported some 12 million sheep. This growth was sustained until 1952, when the sheep population of the region peaked at approximately 22 million, but the number of sheep in Patagonia has since declined to about 13 million. Numerous factors have been implicated in the collapse of sheep ranching, one of great significance being the very poor state of Patagonian rangelands. Soil erosion is widespread, and the flora has been so heavily modified that it is extremely difficult, if not impossible, to determine what the composition and characteristics of Patagonia's pre-European vegetation were. This paper reviews the evolution of Patagonia's sheep industry and the nature and extent of environmental degradation caused by livestock. Although researchers have long called for a response to the environmental and socio-economic dimensions of the crisis, only in the past decade have initiatives to assess, monitor, and reverse degradation in Patagonia been launched. These initiatives often promote the diversification of land-use and alternative production strategies. Case study evidence from the upper Percey River watershed in western Chubut province indicates that ranchers may view alternative livelihoods with suspicion. It is suggested that measures to restore and protect Patagonian ecosystems would gain greater acceptance if local producers were seen as equals in the conservation and development process. This could be achieved by replacing more-traditional top-down models of policy design and implementation with measures based on genuine consultation and participatory, community-based approaches to natural resource management.

The proposed Clean Development Mechanism (CDM) of the Kyoto Protocol paves the way for financial and technological transfers to support forestry projects that sequester carbon or protect carbon stocks. From its inception, the concept has been highly controversial. It has been enthusiastically supported by those who believe that conservation of tropical forests will be difficult unless forest owners and managers are compensated for the environmental services of their forests. Others believe that financial transfers supporting ‘carbon farming’ would ignore social concerns and the full range of goods and services of forests. This paper examines the implications of CDM for forest conservation and sustainable use, by drawing on recent literature and the results of a policy dialogue with CDM stakeholders. We conclude that initial estimates of the contribution tropical forestry could make to both climate change mitigation and to forest conservation need to be scaled down. CDM payments for tropical forestry are likely to be received in a far more limited area than initially expected. The cost-effectiveness of forestry projects relative to projects in the energy sector may have been overestimated. In particular few estimates have adequately accounted for the likelihood that the duration of CDM forestry projects is unlikely to be as long as the residency time of carbon in the atmosphere. Also political realities and investor priorities may not have been sufficiently understood. CDM funding for forestry may also decline in future as economically viable clean technologies are increasingly developed in the energy sector. Tropical forests are likely to be an intermediate climate change mitigation strategy for buying time, until more permanent options become available. The most important justification for including forests in CDM may lie in the contribution CDM could potentially make to forest conservation and sustainable use. An analysis of the implications of CDM for forests reveals the importance of involving forest stakeholders more closely in the CDM debate. To prevent perverse outcomes and reduce the risk of ‘leakage’ of emission reduction to areas outside project boundaries, CDM projects may need to be limited to niches which meet certain political and institutional preconditions and where sufficient understanding of local decision-making and the broader context is available. CDM may be more effective if used to remove non-economic impediments to forestry activities that are economically viable and meet local needs. Lessons from the forestry sector in relation to plantations, natural forest management, forest conser- vation and non-timber forest products are discussed to illustrate the dangers of misusing CDM and also to give examples of how CDM could be harnessed for better use of forests. CDM should be seen as one more tool for enhancing the effectiveness of more conventional ways of promoting forest conservation and sustainable use.