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We evaluated the intention, implementation, and impact of Costa Rica's program of payments for environmental services (PSA), which was established in the late 1990s. Payments are given to private landowners who own land in forest areas in recognition of the ecosystem services their land provides. To characterize the distribution of PSA in Costa Rica, we combined remote sensing with geographic information system databases and then used econometrics to explore the impacts of payments on deforestation. Payments were distributed broadly across ecological and socioeconomic gradients, but the 1997–2000 deforestation rate was not significantly lower in areas that received payments. Other successful Costa Rican conservation policies, including those prior to the PSA program, may explain the current reduction in deforestation rates. The PSA program is a major advance in the global institutionalization of ecosystem investments because few, if any, other countries have such a conservation history and because much can be learned from Costa Rica's experiences. [ABSTRACT FROM AUTHOR]