Over the years, policy makers have explored various mechanisms, which address environmental management and poverty alleviation. Payments for environmental services (PES) is a relatively new concept which is now recognized as a way to address both of these goals. In a PES system, those who benefit from the environmental services (ES) compensate those who provide these services in order to secure ES provision. This paper investigates the value that domestic water users in Tuguegarao City place on watershed protection. Using the Contingent Valuation Method (CVM), this study established the willingness to pay of domestic water users in Tuguegarao City. Payments would contribute to a fund that would provide for the watershed protection of the Penablanca Protected Landscape and Seascape (PPLS). This would help to ensure the provision of a reliable water supply for their households. This local fund may lead to funding for a possible
watershed management program. This would generate solutions to forest problems by directing funding support to upstream communities to implement measures protecting the PPLS.