Payments for ecosystem or environmental services (PES) are broadly defined as payments (in kind or in cash) to participants (often landowners) who volunteer to provide the services either to a specific user or to society at large. Payments are typically conditional on agreed rules of natural resource management rather than on delivery of the services. The rules range from protection of native ecosystems to installation of conservation practices. The earliest proponents of PES were economists who argued that they are a cost-effective way to conserve forests, manage watersheds, and protect biodiversity. Political support for PES rests on the claim that these programs can alleviate poverty among participants as well as protect the environment. More recent literature and experience with PES reveals barriers to achieving cost-effectiveness and poverty alleviation, including many related to the distribution of participation. The Costa Rican experience illustrates the choices that must be made and the potential for innovation in the design of PES programs.