Table 3. Examples of some aspects of PES design that may be modified in order to address local institutional constraints. Potential design characteristics Criterion/consideration Example PES studies that raise these design characteristics Other studies that examine these characteristics  Incentive type positive incentive cash vs. in-kind Wunder 2005, Asquith et al. 2008, Engel et al. 2008 Currie 1994, Currie and Ghavari 2008 Contract type conditionality formal contract vs. implied agreement Levin 2003 Payments based on conditionality defined actions vs. state of system CREC and CJC Consulting 2002, Musters et al. 2001, Engel et al. 2008 Baker et al. 1988, Holmstrom and Milgrom 1991 Size of payment based on conditionality performance relative to others vs. individualized specific criteria Nalebuff and Stiglitz 1983, Malcomson 1984 Monitoring (personnel) conditionality local agents vs. hired agents Pagiola 2008 Holmstrom 1979, Frey 1993, Cowen and Glazer 1996, Gibson et al. 2005 Monitoring (method) conditionality/ additionality on-ground vs. remotely Payment time horizon conditionality/ additionality annually vs. end of agreement Marland et al. 2001, Wunder 2005, Peskett et al. 2008   Openness of incentives (spatial) additionality inclusive vs. targeted Watzold and Dreschler 2005, Barton et al. 2008, Wunscher et al. 2008   Openness of incentives (participation) additionality inclusive vs. targeted Ferarro 2008 van de Walle 1998