EDMONTON, Alberta—Nyungwe National Park in Rwanda is one of the largest expanses of montane rainforest in East Africa. It is also one of the most endangered: poaching, forest fires, mining and human settlements are all threatening to tear apart this key water catchment in one of the continent's most densely populated countries.

Last year, a group of ecologists at the University of East Anglia (U.E.A.) began a radical experiment: offering cash payments to communities who help conserve it. Week by week, rangers patrol the area and count snares, tree-felling, mining and other destructive activities; the communities with the fewest infractions will grow richer in the next two years.

Sounds like an ethical minefield? Payments for environmental services, or PES, is one of the most controversial areas of conservation. Large environmental organizations have been criticized for long ignoring, and sometimes exacerbating, the plight of the world's poor. But over the last decade, The Nature Conservancy, the World Wildlife Fund (WWF) and other organizations have helped launched PES projects to protect, for instance, watersheds in South America and Africa. Furthermore, PES is going to play an even bigger role as the international community debates schemes to pay countries for the carbon stored by avoiding deforestation, an approach taken by the U.N. Development Programme called REDD (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries).

The issue took center stage this week here at the International Congress for Conservation Biology when Neil Burgess, a conservation biologist at the University of Copenhagen who has worked with the WWF in Tanzania, projected a cartoon that conservationists there used depicting a montane landscape with and without PES. "When you have a payment scheme in place where industries are providing money back to resources and catchments, everything is nice and the sky is blue and everybody is smiling," he said facetiously, describing the cartoon. Without PES, the forest is being cut down and the topsoil is running off hills. "Everything is going to shit, basically."

Well, that's the theory. The ReDirect Rwanda project is unique in that it is a controlled experiment to test the effectiveness of PES. "The promise of PES is a big promise," says Nicole Gross-Camp, a U.E.A. ecologist monitoring the project, "and there has not been a rigorous examination of it to achieve both its conservation and development objectives." One of Gross-Camp's colleagues had calculated that the forest around Nyungwe provides about $25 worth of forest products to every household each year.

Armed with a $1.25-million research grant from the European Research Council, the ReDirect Rwanda team calculated they could afford to pay about four "cells" surrounding the park that contain between 300 and 2,000 households each. Then, each of those "cells" is paired with a control "cell" that is not getting paid; by comparing the adjacent forests, Gross-Camp and her colleagues hope to assess whether the payments are actually working. "The question is whether we can reduce people's impact on the park without making their situations [economically] worse," she says.

But no matter how successful ReDirect is, there are still enormous hurdles to scaling up PES schemes and finding voluntary partners that purchase their environmental services through direct payments or development efforts. Burgess has seen how a deal brokered by the WWF has Coca-Cola and a municipal water company in the Tanzanian capital, Dar es Salaam, paying local communities to protect their watershed, but he doubts such schemes can be self-supporting, especially in areas with few downstream users. "You can't have two or three vehicles going up and down mountains to distribute $200," he says, referring to the transaction costs of manually distributing payments in regions where bank accounts are uncommon.

There are even concerns that PES could backfire. Josh Donlan, a conservationist with Advanced Conservation Strategies, points out that a sudden influx of cash can disrupt local community structures. In Papua New Guinea some communities were paid several thousand dollars to protect leatherback turtles, but individuals left off the dole ended up killing the animals out of spite. Donlan and his colleagues have proposed "conservation mortgages" (pdf)—essentially microfinance loans or equipment loans whose terms are directly linked to biodiversity outcomes, such as endangered birds' hatching success.

Indeed, fairly compensating indigenous communities is going to be the most challenging aspect for REDD, which could effectively become the world's largest PES project. According to Barry Ferguson of the U.E.A., some conservation organizations are already in hot water with locals. For instance, the Wildlife Conservation Society (WCS) is involved in a pilot effort to market carbon credits in Madagascar via the Makira Carbon Co., yet Ferguson complains that the organization has never sought consent from indigenous communities living in the forests and has no mechanism to distribute revenues. However, James Deutsch, director of WCS's Africa Program, said that Ferguson was "not well-informed" and “the project is, and always has been, a deep partnership between the communities of Makira and WCS” with proceeds going to fund development projects. At the moment, however, scaling up of the Makira project has stalled due to a change in government.

Despite the challenges ahead, Michael Mascia, a senior social scientist at WWF and founder of the Social Science Working Group for the Society of Conservation Biology, finds the new links between conservation and human development promising. "Ten years ago," he says, "conservationists didn't know how to talk about this."