This presentation explains the concept of payments for environmental services (PES) and gives examples of already-implemented PES initiatives. Developing a PES project requires (1) understanding the science and economics involved, (2) developing a mechanism to capture the benefits, and (3) paying the service providers. Using water services as an illustration of this process, Pagiola presents myths and facts about the hydrological effects of forests and the factors involved in developing a successful program of payments for water services. He then addresses the question of how a PES mechanism may be applied to protecting endangered species, distinguishing between different threats to wildlife conservation that would or would not be effectively addressed by PES. It is important to understand the underlying science, such as charateristics of the threatened species, characteristics of access, and the economics of the species. Pagiola describes what a program of payment for wildlife conservation might look like, then explores the many limitations and challenges that remain.