It could be a scene out of a fairy tale.

Nestled deep in the 10,000-foot-high mountains here, millions of monarch butterflies drape the trees and carpet the forest floor.Their fragile black-and-orange wings, recuperating after a six-week, 3,000-mile trek from Canada and the northeastern United States, are soothed by the morning light. The sun slips behind a cloud - and the butterflies flutter into flight, creating the sound of a gently falling rain.

But the monarch's winter wonderland is under siege.

Just a few hundred yards down the slope, the buzz of a chainsaw cuts through the crisp mountain air. Flat-bed trucks laden with pine logs rumble continuously down the rugged roads.

Widespread deforestation is the monarch's single biggest threat. Fueled by poverty, overpopulation, and reckless logging companies, it is already harming the delicate ecological balance in the five small reserves here, the species' only known winter habitat.

"If people continue cutting down trees at the same rate, the monarchs might last only another 10 years here," says Jorge Martinez, a field biologist for the Secretariat of Urban Development and Ecology (SEDUE). "The monarchs can't adjust (to a changing environment) that quickly."

Scientists still puzzle over how the 120 million featherweight migrants know to return thousands of miles to the same "oyamel" trees year after year - especially since the butterflies here are five generations removed from those that left last year.

But one thing is clear: The highland fir forests provide just the right mix of heat and humidity to let the monarchs hibernate without freezing.

Protected from extreme temperatures by the forest canopy, the inert insects spend most of their time hanging from the trees in enormous clusters of up to 500,000 butterflies. During the warmest hours of the day, they float downhill in search of water and floral nectar, with which they store up body fats for the spring trip north.

But indiscriminate logging - sometimes even clandestine cutting within the preserve itself - is making the habitat more vulnerable, according to scientists.

The gaps in forest cover, they say, expose the monarchs to slightly colder nights and warmer days. And with less trees to retain the sporadic rainfall, the damp forest is gradually becoming more arid.

"The water level in the streams has gone down considerably," says Maria Elena Castro, director of the nonprofit Monarca Association, which is devoted to protecting the butterflies. "In some parts of the reserves, there is no water to drink - and that's the thing they need most."

Castro says that loggers and locals have become more sensitive to the need to protect the butterflies' habitat. But the fight to stop deforestation has more to do with economics than ecology.

It's not just that pulp mills pay an average of $150 per tree. It's not just that the forests seem so plentiful that logging companies are reluctant to pay for proper reforesting. But for thousands of peasants who live near the preserves, including nearly 3,000 here in El Rosario, there is no other source of income - or fuel.

Their rocky, hillside plots don't yield enough corn and beans to feed their own families. The local mining industry has laid off workers. And the big commercial flower company in town has been on a rapid decline.

"It's obvious that there's a connection between poverty and deforestation," says Roberto Hernandez, who helps run the monarch preserves for SEDUE. "Our job is not to restrict the people's only source of income but to offer some kind of alternative."