Costa Rica’s pioneering programme of payments for environmental services (PES) which began in the 1990s was a unique experiment in developing countries at that time. Under the PES programme, economic recognition of forests moved from a ‘timber-only’ approach to a wider concept of ecosystem services that feeds directly into human and industrial functions of production or consumption. Farmers who owned forests could receive payments for the benefits their forests produced, and people who benefited from those services were expected to pay for them. But who really benefits and loses from these programmes? A clearer understanding of distributional issues in PES-type projects is becoming increasingly important for the design of largescale projects such as REDD+, in Costa Rica and elsewhere.

This study looks in detail at the social impacts of the programme, and addresses issues related to equity and poverty on the basis of long-term data from all the PES contracts signed. Results show that the payments tend to go to areas with lower opportunity costs, relatively large farms and private companies and suggest that more needs to be done for PES to have genuine social and economic benefits for the poor. The report concludes by recommending steps that could be taken to help make this happen.