The concept of payment for ecosystem services (PES) has garnered substantial international interest as a cost-effective means to improve environmental management and improve livelihoods by rewarding people for their efforts in providing ecosystem services, such as watershed protection, soil stabilization etc.

PES was originally defined as a voluntary transaction for a well-defined ecological service, with at least one buyer, at least one provider, and based on the condition that the buyer(s) only pay if the provider(s) continue to deliver the defined ecosystem service over time (Wunder 2005). While not specifically designed for poverty alleviation, PES has been acclaimed for the role that payments can have in lifting offering service providers towards alternative and higher-order economic activities diversified livelihood opportunities and greater opportunities for improving their well-being (Pirard et al 2010).

The key to finding such a win-win outcome is a conditional offer of the right mix of incentives in exchange for an alteration in the behaviour or activities of specific land-users. In this way, PES as a social negotiation market-based and voluntary approach may be more acceptable to potential participants than traditional laws or regulations implemented by government, since both parties can perceive gains from the outcome.