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Indonesia, like many countries, faces growing problems with water. Concerns include floods, low dry-season flows, sedimentation, contamination from run-off, and rising demand among competing end-users. Concerned suppliers and users of water at various localities around Indonesia are now experimenting with new approaches for managing watersheds. One such approach is payments for environmental services, in which water users compensate watershed land managers for land management that protects or improves water quality and flows. This report describes action research in Indonesia to take forward local environmental service payment initiatives at two sites, Brantas and Cidanau, and to spread learning more widely among interested people across the country.