insecurity, due to the loss of customary agricultural land and hunting grounds available to poor households (Ibarra et al. 2011).

Spatial targeting of payments for ecosystem services may be one way of both reducing costs of implementation and also ensuring that more benefits reach the rural poor, as programs and studies in Costa Rica, Ecuador, Guatemala and Madagascar have shown (Southgate et al. 2009; Wendland 2010; Wünscher et al. 2008). Even in a poor African economy, such as Tanzania, a correctly designed payment for ecosystem services (PES) program can provide an important source of funding for sustainable land use practices in agriculture while leading to greater watershed protection (Branca et al. 2011). In the upstream catchment area of the Ruvu River, poor farmers face financial and technical obstacles to adopting sustainable land management that reduce soil erosion and enhance downstream water quality. By providing institutional, technical and financial support to farmers, a PES scheme for watershed protection delivers on these environmental goals while at the same time boosting crop productivity from improved soil conservation and fertility and thus raising farm incomes. The PES scheme is now trying to enhance sustainability by investing in an appropriate legal and institutional framework for long-term financing and expansion of sustainable land management among farmers to improve watershed management.

A second objective is to target investments directly to improving the livelihoods of the rural poor in remote and fragile environments. For example, in Ecuador, Madagascar and Cambodia poverty maps have been developed to target public investments to geographically defined sub-groups of the population according to their relative poverty status, which could substantially improve the performance of the programs in term of poverty alleviation (Elbers et al. 2007). A World Bank study that examined 122 targeted programs in 48 developing countries confirms their effectiveness in reducing poverty, if they are designed properly (Coady et al. 2004). A review of poverty alleviation programs in China, Indonesia, Mexico and Vietnam also finds evidence of “the value in specifically targeting spatially disadvantaged areas and households”, although the benefits are larger when programs, such as PROGRESA in Mexico, were successful in employing second-round targeting to identify households in poor locations and thus reducing leakages to non-poor households (Higgins et al. 2010, p. 20).

Research, extension and agricultural development has historically been oriented towards major commercial and export-oriented crops in developing economies, not targeted for improving low-productivity agricultural systems or farming in less favorable environments. In other words, these efforts have been targeted toward increasing overall income growth and thus increases in per capita income, but not targeted toward reducing poverty. Yet such improvements with appropriate targeting can substantially improve the livelihoods of the poor, increase employment opportunities and even reduce environmental degradation (Barbier 2005; Carr 2009; Caviglia-Harris and Harris 2008; Coxhead et al. 2002; Dercon et al. 2009; Maertens et al. 2006). Empirical evidence of technical change, increased public investments and improved extension services in remote regions indicates that any resulting land improvements that do increase the value of homesteads can have a positive effect on both land rents and reducing agricultural expansion (Bellon et al. 2005; Coxhead et al. 2002; Dercon et al. 2009; Dillon et al. 2011; Maertens et al. 2006; Sills and Caviglia-Harris 2008).

Targeting the rural poor is even more urgent during major economic crises, which occur frequently in developing economies (Ravallion 2008; Ruel et al. 2010). Under-investment in human capital and lack of access to financial credit are persistent problems for the extreme poor, 15