The long-term success of payment for environmental services (PES) schemes depends on adequate demand for services and sustainable financing. We examine the viability of using locally financed payments to protect watershed services in rural eastern Costa Rica. Using dichotomous choice contingent valuation, we measure households' willingness to pay higher water bills for a local PES programme to adjust upstream land use practices to protect downstream water quality. We found that every income segment of the local population of water-users exhibited significant demand and willingness to finance the PES programme to protect local water quality.
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Ortega-Pacheco et al. (2009) studied this question.
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