Payments for Environmental Services (PES) programs are widely promoted to secure ecosystem services through incentives to the landowners of land from which they are derived. Furthermore, they are increasingly proposed to foster ecosystem conservation and poverty alleviation in the global South. In this article, we analyze the social relations that have shaped the design, implementation and outcomes of a watershed PES scheme in Pimampiro, Ecuador, focusing on resource control within the upstream peasant community paid for watershed management, and those between the community and external actors. While previous studies describe this case as successful, we find show that the PES scheme reinforces existing social differences, erodes community organization, undermines traditional farming practices, and perpetuates inequalities in resource access in the ‘working’ landscape inhabited by the upstream peasant community paid for watershed managements. We argue that PES schemes are thus not neutral initiatives imposed upon blank canvases, but intersect with existing development trajectories and power relations. We conclude that PES analyses of PES programs need to should look beyond conservation to critically examine local resource management and distribution effects.