Conversion of tropical forests reduces biodiversity and releases stored carbon. Although a part of tropical deforestation resulting from slash-and-burn is linked to poverty of people living at the forest margins, the conditions necessary for increased productivity of agroforestry and other land use systems to reduce poverty and reduce deforestation are not well understood. The key hypothesis underlying Phase II of the ASB research project in Indonesia can be summarized as: Intensifying land use as an alternative to slash-and-burn simultaneously can reduce deforestation and reduce poverty. This research problem was identified at the conclusion of Phase I of the project and has remained the focus of research through Phase II. The research programme in Phase II was designed to better understand how the Government of Indonesia and donor agencies could balance global environmental objectives with economic development and poverty reduction. While conversion of primary forest has the major effect on biodiversity and carbon stocks, the resulting land uses also matter a great deal for the supply of these global public goods. Measurement of differences among environmental consequences of the various land uses provides the basis for quantifying major tradeoffs involved in land use change.