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More than three-quarters of Mexico’s coffee is grown on small plots shaded by the existingforest. Because they preserve forest cover, shade coffee farms provide vital ecological services includingharboring biodiversity and preventing soil erosion. Unfortunately, tree cover in Mexico’s shade coffeeareas is increasingly being cleared to make way for subsistence agriculture, a direct result of theunprecedented decline of international coffee prices over the past decade. This paper summarizes the keyfindings of a three-year study of deforestation in Oaxaca, one of Mexico’s prime regions for growingshade coffee. First, we find that deforestation during the 1990s was significant. Second, the loss of treecover can likely be slowed by promoting coffee-marketing cooperatives and “green” certification,providing coffee price supports, and specifically targeting areas populated by small, indigenous farmersfor assistance. Finally, to be effective, such policies must be implemented quickly after price shocksoccur.