The IUCN Water and Nature Initiative supported the development of a study in Ecuador, which aimed to identify national experiences in the creation and implementation of financial instruments as mechanisms to pay for water-based environmental services. Three case studies are analysed in this report: Water Fund (FONAG) in Quito, the water fee in Cuenca and the water fund for protecting environmental services in Pimampiro. The report begins with a brief description of the state of water in Ecuador followed by an analysis of the framework in which financial mechanisms are developed. The report then presents and analyses the three cases, and presents a conclusion on the appropriateness of using payment for environmental services schemes in Ecuador, highlighting the main factors that allow their implementation.