Payments for ecosystem services make good sense. In the case of watershed ecosystems, downstream beneficiaries of wise upstream land and water stewardship should compensate these upstream stewards. These 'payments for watershed services' (PWS) should contribute to the costs of watershed management and, if upstream communities are also characterised by poverty, these payments should contribute to local development and poverty reduction as well. Debates about both conservation and development have seen a wave of excitement about payments for watershed services in recent years. But on the ground an equivalent surge of action is harder to see. IIED and its partners have been building on earlier international case study work to set up new PWS schemes - to 'learn by doing' and to improve our understanding of the opportunities and the challenges. This report is about the complex business of trying to put a simple conservation and development idea into practice. The idea is that watershed degradation in developing countries might be better tackled than it currently is if downstream beneficiaries of wise land use in watershed areas paid for these benefits. There are some examples around the world of this idea being put into practice - this report reviews these and describes what happened when teams in six developing countries set about exploring how the idea works on the ground.