Payments for watershed services (PWS) are an increasingly popular conservation and water management tool in developing countries. Some schemes are thriving, and are pro-poor. Others are stalling or have only mixed success. Most rely on public or donor finance; and other sources of funding are unlikely to play a significant role any time soon. In part, financing PWS schemes remains a challenge because the actual evidence for their effectiveness is still scanty — it is hard to prove that they actually work to benefit both livelihoods and environments. Getting more direct and concrete data on costs and benefits will be crucial to securing the long-term future of PWS schemes.