"The State of Food and Agriculture 2007 highlights the potential of agriculture for enhanced provision of ecosystem services that are not usually compensated for by the market. When we think of farmers, we typically think of the food and fibre that they produce and that they either consume or sell on markets to generate an income. But the production processes can also result in impacts on other ecosystem services that are not traded in markets, referred to in this report as 'environmental services'. Some may be positive, such as groundwater recharge and scenic landscapes; others may be negative, such as water pollution by plant nutrients and animal waste, and soil erosion from poorly managed croplands or overgrazed hillsides. As agricultural production expands, these negative effects can develop into increasingly serious problems. A fundamental question concerns how farmers can be encouraged to reduce negative side-effects while meeting the growing demands for food and fibre. At the same time, changes in agricultural practices may also contribute to addressing environmental problems generated outside agriculture, for example, by offsetting greenhouse gas emissions from other sectors. A relevant question, therefore, is how farmers can be induced to increase their provision of this type of service.