| Gaia: | The management of water resources is one of the most important environmental challenges facing mankind this century. In Mexico, the crises caused by mismanagement of water resources is severe and has been accentuated by high rates of deforestation and the subsequent loss of the hydrological services provided by forests. This essay presents a brief overview of the important hydrological services provided by forests in Mexico including water capture, regulation of flood and drought cycles, as well as soil conservation and the regulation of sedimentation rates and regional climate. The creation of markets for these ecosystem services is proposed as a promising mechanism for increasing forest cover and promoting the sustainable use of natural resources in Mexico. In particular, markets aimed at conserving drinking water and water flow for hydroelectric power, as well as the prevention of natural disasters are discussed and, recommendations provided for decision makers interested in this topic. While Mexico’s hydrological problems are serious and cause for concern, they have also sparked renewed interest in the conservation of forests and their ecosystem services as a way of assuring the well being of future generations of Mexicans.
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