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Payments for Watershed Services (PWS), a subset of Payments for Environmental Services (PES), are being promoted as a market-based alternative to traditional conservation programs. True PWS programs require: (1) a well-defined watershed service, (2) at least one buyer for the service, (3) at least one seller, (4) voluntary transactions between buyer(s) and seller(s), and (5) payments that are conditional on receipt of the contracted hydrologic services. In addition, poverty alleviation is an objective in many donor-driven PWS schemes. This study involved a global review of PWS and PWS-like activities in Africa, Asia, and Latin America. Most PWS activities reviewed were actually proposals or scoping/research studies, and a significant number of proposed PWS schemes had been abandoned. Most PWS programs reviewed did not satisfy all five PWS criteria, and poverty alleviation was often an additional stated goal. PWS programs were found to be the most advanced in Latin America and the least advanced in Africa, which currently has only two watershed services programs with PWS-like elements. Identified factors that tended to promote successful PWS programs included secure land tenure, technical capacity to design and manage programs, higher standards of living, countries with high urban populations and a need for improved water resources, countries in which commercializing rights to land management is culturally and politically acceptable, countries with PES enabling legislation, and countries with good governance. These factors are generally most positive in Latin America and least positive in Africa.