Payments for ecosystem services (PES) is a conservation mechanism that aims to commodify ecosystems based on the services they provide. PES programs represent a neoliberal approach to conservation by expanding the economy into environmental management. The successful creation of markets in which ecosystem services are valued and sold is thought to ensure their future sustainability. This market-based approach to conservation is considered to be more efficient, transparent, simple, and apolitical than alternative conservation mechanisms. However these benefits are contingent upon the successful establishment of free markets for completely commodified ecosystem services. As PES programs have been implemented, they have consistently failed to create free markets. In this thesis I argue that the requirements of markets and the process of commodification are incompatible with the characteristics of ecosystems. Due to this incompatibility, policymakers are forced to alter the design of PES programs in such a way that they are not demand generating, self-sufficient free markets as anticipated by theory. The success of PES programs in maintaining or increasing the provision of ecosystem services is unclear, as is the claim that they will simultaneously reduce rural poverty. In this thesis, I provide a critical analysis of Costa Rica's PES program to demonstrate the translation of neoliberal economic theory to state environmental policy
