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Hainan, the largest tropical island in China, belongs to the Indo-Burma biodiversity hotspot. The Changhua watershed is a center of endemism for plants and birds and the cradle of Hainan’s main rivers. However, this area has experienced recent and ongoing deforestation and habitat fragmentation. To quantify habitat loss and fragmentation of natural forests, as well as the land-cover changes in the Changhua watershed, we analyzed Landsat images obtained in 1988, 1995, and 2005. Land-cover dynamics analysis showed that natural forests increased in area (97,909 to 104,023 ha) from 1988 to 1995 but decreased rapidly to 76,306 ha over the next decade. Rubber plantations increased steadily throughout the study period while pulp plantations rapidly expanded after 1995. Similar patterns of land cover change were observed in protected areas, indicating a lack of enforcement. Natural forests conversion to rubber and pulp plantations has a general negative effect on biodiversity, primarily through habitat fragmentation. The fragmentation analysis showed that natural forests area was reduced and patch number increased, while patch size and connectivity decreased. These land-cover changes threatened local biodiversity, especially island endemic species. Both natural forests losses and fragmentation should be stopped by strict enforcement to prevent further damage. Preserving the remaining natural forests and enforcing the status of protected areas should be a management priority to maximize the watershed’s biodiversity conservation value.
