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This paper proposes a sender-driven peer selection scheme, including estimation of packet loss propagation, evaluation of peers' contributions, and peer selection based on child-peers' contributions, for mesh-based peer-to-peer (P2P) video streaming systems. The proposed packet loss propagation model takes into account the link packet drop rate, peer dynamics, and forward error correction protection to capture the heterogeneous packet loss behavior of individual substreams transmitted over a mesh network. The evaluation of candidate peers' contributions is modeled through Markov random fields to significantly reduce complexity. Simulation results demonstrate that our peer selection scheme significantly mitigates packet loss in a mesh-based P2P network, compared to other state-of-the-art schemes.