Faced with deplorable ecological and economic conditions in the Acacia caven dominated ‘Espinales’ of the Mediterranean-climate zone of central Chile, we have undertaken a long-term project aimed at combining sustainable resource development of the region with ecological rehabilitation of Espinal ecosystems and landscapes. The central hypothesis in this project is that the introduction of compatible and appropriate legume/N 2-fixing microsymbiont ‘couples’ can (1) optimize the amount of atmospheric nitrogen fixed in a degraded arid or semiarid land ecosystem, (2) promote the development of associated plants, and (3) improve soils and enhance possibilities for the spontaneous or assisted return of native plants and animals. A schematic model is presented of ecosystem degradation in the Chilean Espinales together with three alternative responses to it (restoration, rehabilitation and reallocation). The roles of ‘artificial negative selection’ and ‘positive selection’ in these processes are discussed. Finally, we compare the landscape of a typical farming village in south-central Chile as seen today, and as it could become when bio- and agro-ecological diversity are recognized as the best guarantors of ecosystem stability, resilience, and long-term productivity.