Tropical forests supply us with timber, food, fuel and fibre. They also provide a range of environmental services. For example, they soak up the greenhouse gases which cause global warming. Lose the forests, and we lose far more than the trees. CIFOR's Environmental Services and Sustainable Use of Forests Programme seeks to improve the way we use forests and to provide the knowledge needed to ensure that forests deliver a range of goods and services. The programme works at many different levels, from the local to the global, from the village farm to the city boardroom.

One of the highlights of the year was 'Forest Day', a side event at the Bali climate conference organised by CIFOR and its partners. Do Trees Grow on Money?, which was launched at a press event prior to the conference, analyses past research on deforestation and assesses its relevance to the development of schemes that help Reduce Emissions from Deforestation and Forest Degradation (REDD). These schemes are likely to be a major component of a future global climate-protection regime. In the pages which follow we also describe CIFOR's contribution to the Indonesian Forest Climate Alliance, which highlighted the scale and significance of carbon emissions released by the conversion of Indonesia's peatland forests to other uses.

As natural habitats shrink, the environmental services they provide become scarcer and more valuable, hence the interest in the role that Payments for Environmental Services (PES) could play in safeguarding the environment and improving the livelihoods of rural communities. In an essay published in Conservation Biology, a CIFOR scientist provides an overview of our current knowledge. PES schemes clearly have considerable potential - they have proved particularly useful when protecting watersheds - but the essay points out that putting too great a focus on poverty reduction goals could jeopardise the ability of PES schemes to deliver environmental services.

In 2005, CIFOR published Life after Logging, which explored the way mammals and birds react to industrial logging in Indonesian Borneo. The book provided logging companies with guidelines regarding how to reconcile timber production with conservation. Logging for the Ark, an Occasional Paper published in 2007, has taken the research one step further, providing biodiversity guidelines for tropical forestry in South-east Asia, with a particular focus on Indonesia and Vietnam. The research suggests that it should be quite possible for logging companies to achieve profitable yields and at the same time maintain conditions which enable wildlife to flourish.