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There is increasing interest in using payments to promote sound watershed management. Schemes range from small pilot projects involving just five families to a massive Chinese project that aims to reach 15 million farmers. The expectation is that such schemes will help to resolve problems such as declining water flows, flooding and deteriorating water quality by bringing in new funding from water users, the private sector in particular, and by providing incentives for sustainable management to those closest to natural resources. A review of active and proposed schemes in developing nations shows, however, that most schemes still depend on donor or government funding, and few are driven by water users. Meanwhile, evidence of benefits remains patchy.