Targeting criteria and payment levels for the program have changed over time. Over the course of the program, targeting has encompassed an increasingly complex set of criteria (see **Appendix Table A1)** . Targeting of the program to states or zones within states that experience the most deforestation has been the most common way to try to counter the potential adverse selection created by voluntary application. CONAFOR uses a combined system of eligible zones and point scores to determine priority among applicants. Past work (Sims et al., 2014) illustrates the improvement in targeting from 20032010 in order to reach both environmental and social objectives, as measured by the characteristics of applicants and enrolled lands in Mexico’s program.

In addition, CONAFOR has used differentiated payments by type of ecosystem and deforestation risk. From 2003 to 2010, payments were differentiated only for a limited number of forest types, with a small premium for cloud forest. Initial payment amounts were based on estimates of the opportunity cost of cultivating maize. Since 2010, CONAFOR has introduced substantial payment differentiation: there are now six levels of payments determined by the type of ecosystem and deforestation risk. Thus, prices now incorporate aspects of both the potential value of the services and the opportunity costs of production. **Table 1** shows changes in the payment scheme over time for the two largest payment modalities – hydrological services and biodiversity conservation. Currently, the average payments are 525 Mexican pesos (MXN) per hectare per year (approximately 30 USD in 2016 exchange rates), while payments per hectare now range from 280 to 1,100 MXN (CONAFOR, 2010-2014) (approximately 16-80 USD depending on the exchange rate for the year). Rising incomes in Mexico and the depreciation of the peso mean that the real value of the payments has eroded by approximately 15-20% compared to earlier program cohorts.

Despite substantial heterogeneity in the amount of payments compared to the number of landowners--depending on how many people benefit from a given payment stream and how large the submitted parcel is--the total amount of the payments tends to be important in relation to income. Within the study sample, PES payments, if they were distributed to full-rights households, would represent an average of 6,138 MXN pesos ($350 USD), equivalent to approximately six weeks of the average pay for a day’s agricultural labor (140 MXN pesos or US$8). In the 2011-2014 cohorts, program recipients must use a proportion of the funds for land management activities (rising to 40% in 2014). They may then use remaining funds for community purposes or distribute them to individual households. Most communities use the payments to fund supplies needed for land cover management (such as fencing), to improve community infrastructure. Some also distribute funds directly to households (see **Appendix Figure A1** ). Thus, it is important to note that only a fraction of payments actually go directly to households within communal properties, and that increasing mandates to use funds specifically for forest management by definition decrease flexibility for recipients in their choices of how to spend the funds.

The program accepts applicants every year; **Figure 2** shows the total area enrolled by state between 2004 and 2015. Many program participants re-apply to the program after the contract ends, as do rejected applicants. While it is impossible to ascertain how many applications are repeated among the private properties, by matching the common property application polygons with RAN’s (National Agrarian Registry) ejido database, we are able to approximate how many applications are repeated among the common properties. In particular, we find that between 2004 and 2015, 4,676 unique _ejidos_ and _comunidades_ applied to the program. Among these, the average number of applications over all years was 2.5, with a maximum of 10 applications. However, the average number of times an applicant ejido benefitted from the program was 0.83. Forty-two percent of applicants never receive benefits from the program. Those who do ever receive benefits do so on average 1.4 times. The state 8