-In many cooperatively breeding birds, the primary reason that helpers remain on the natal territory rather than disperse to breed independently may be to gain an advantage in competing for high-quality habitat. We hypothesized that cavities excavated in living pines, because they require much time to construct, are the critical determinant of habitat quality that has led to cooperative breeding in Red-cockaded Woodpeckers (Picoides borealis). These woodpeckers rarely colonize sites that lack existing cavities. To test our hypothesis we drilled cavities in 20 unoccupied sites. Eighteen were occupied subsequently, but none of 20 control sites were used. The manipulation added 12 new social units (breeding pairs or unpaired territorial males) to the population. New groups mostly comprised previous helpers and dispersing first-year birds. These results support our contention that variation in habitat quality dependent on the presence or absence of cavities is the ecological basis of group formation in Red-cockaded Woodpeckers. Cavity construction may be used to increase the number of groups in a population, and to prevent territory abandonment when bird-constructed cavities are lost. Received 3 October 1990, accepted 24 June 1991. COOPERATIVE breeding refers to a social system found in birds and mammals in which some reproductively mature individuals (helpers) assist others in raising young (Brown 1978, 1987, Emlen and Vehrencamp 1983, Emlen 1992). Understanding the evolution of cooperative breeding involves two interrelated but distinct issues (Emlen 1982a, b, 1992, Brown 1985, 1987, Ligon and Stacey 1989): (1) determining what leads individuals to remain with their natal groups or form groups rather than disperse to breed independently; and (2) determining why such individuals engage in helping behavior such as feeding young. Altruism evolved through kin selection is an accepted explanation of helping behavior (issue 2; Emlen and Wrege 1988,1989). In contrast, remaining in the natal group (issue 1) and thereby delaying reproduction and altering dispersal behavior generally is viewed as producing direct benefits to the individual under certain conditions (Emlen 1982a, Woolfenden and Fitzpatrick 1984, Brown 1985, 1987, Stacey and Ligon 1987). Emlen (1982a) outlined two conditions under which remaining with the natal group may result in greater lifetime reproductive success than early dispersal and breeding. One condition involves a harsh, unpredictable environment. In I Present address: RD1, Box 27, Spring Mills, Pennsylvania 16875, USA. poor years, inexperienced birds reproduce poorly, so that living with the natal group is favored over independent reproduction. This hypothesis may apply to species that inhabit the dry regions of Africa and Australia (Reyer 1980, Emlen 1981, 1982a, Clarke 1984). The second, perhaps more common condition has traditionally been termed habitat saturation, because it is thought to result from a shortage of vacancies in breeding habitat (Selander 1964, Brown 1969, Stacey 1979, Emlen 1982a). An apparent lack of unoccupied territories has been noted in many cooperative breeders (e.g. Selander 1964, Ridpath 1972, Woolfenden 1975, Ligon and Ligon 1978, Walters and Walters 1980, Zack and Ligon 1985, Koford et al. 1986), but not all (Rabenold 1985). In species to which the habitat-saturation hypothesis has been applied, helpers remain on their natal territory and compete for breeding vacancies on and in the immediate vicinity of the natal territory (stay-andforay, abbreviated SAF), rather than dispersing after fledging to wander in search of a breeding vacancy (depart-and-search, DAS; Brown 1987). Those practicing SAF appear to have an advantage in competing for positions in their vicinity over those practicing DAS (Zack and Rabenold 1989), perhaps because they can monitor the availability of those positions much more effectively. The demographic conditions under which SAF may be selected over DAS have been mod-