Policymakers and practioners worldwide are increasingly interested in the use of markets and payments for environmental services. In the developing world, Costa Rica has led efforts to experiment with these mechanisms. This paper examines the Costa Rica experience to see what has been learned - how technical, scientific and economic information on environmental services has fed into these initiatives, and to what extent they are being monitored and evaluated. The principal objective of the literature review is to identify and review material that addresses among other things the local origins and development of the concept of payments and markets for environmental services, the types of existing initiatives and who is participating in them, the knowledge base underpinning market development, and the monitoring and evaluation of the initiatives to date, and the extent to which the literature assesses these initiatives in terms of economic efficiency, environmental effectiveness, and social equity and/or poverty reduction.