Payments for Ecological Services (PES) has rapidly emerged around the world as a key environmental governance approach. This paper is concerned with Agricultural Environmental Schemes (AES) as a particular form of PES to improve the environmental performance of agriculture particularly in relation to water quality in Sweden. Win-win descriptions prevail in AES policy discourse to describe the simultaneous achievement of environmental goals and economic outcomes for farmers. AES are underpinned by an instrumental assumption that farmer behaviour can be influenced towards adopting better environmental practice by providing monetary incentives (or at least compensation). This paper has touched on a number of contentions in the PES literature, including: doubts about how well standardised PES schemes link with local conditions; how and whether PES schemes can engender local innovation; procedural and distributive equity concerns; claims that monetary incentives may ‘crowd out’ socially derived sources of motivation (local norms); and doubts about whether PES schemes, disembedded from local institutions, can deliver ‘sufficient’ environmental behavioural change. Given the relatively recent emergence of AES schemes, it is important that we learn more from the experience of implementation. Critically oriented empirically-based research then has the capacity to work as a circuit breaker between ideologically driven arguments that side either for or against the use of market mechanisms, such as AES for environmental governance. Such insights may be useful to help focus research on farmer engagement with AES that subjects it to greater empirical scrutiny and validation.