This book addresses the ability of market-based instruments to improve the sustainable provision of environmental services. The author combines field research and insights from the multi-stakeholder dialogue at the FAO to analyze the gap between the predictions provided by theory and the corresponding outcomes in practice. In particular, the author challenges the theory behind Payments for Environmental Services (PES), a concept derived from neoclassical welfare economics, by demonstrating that PES projects often lack financial sustainability unless local entrepreneurs make use of the resulting new networks to create innovative markets for environmental goods. The author calls for a shift of focus from regulation to innovation in projects and policies designed to improve the provision of environmental services. Its spotlight on the positive social impacts of companies that engage in hybrid PES schemes will make the book appealing to practitioners and policymakers alike. "This book is a refreshing challenge to conventional approaches to payments for environmental services. It offers a more realistic framework that accounts for human creativity and innovation in environmental management." Professor Calestous Juma, Harvard Kennedy School,Cambridge, MA, USA (Author of the "The New Harvest: Agricultural Innovation in Africa", Oxford University Press 2011) "Philipp Aerni offers a most useful critical assessment of the theory and practice of payments for ecosystem services. His book helps us understand why such payments sometimes fail to reach their objectives, and what could be done about it, particularly in less developed countries."  Professor Thomas Bernauer, ETH Zurich, Switzerland.