This report assesses the potential effectiveness of market-based instruments in ensuring that biofuel feedstock development does not expand in detriment of natural forests. We employ a detailed literature review, including a look at select case studies, to evaluate the effectiveness of three main types of instruments: - those governing production practices and access to markets; - those governing the provision of finance for biofuel feedstock production and processing; and - those aiming to safeguard environmental services emanating from forestlands which could be threatened by the expansion of biofuel feedstock. No single instrument is likely to ensure that biofuel development will reduce its potential pressure on forests hence avoiding deforestation. A host of complementary mechanisms will be needed to achieve this aim.