As the global discourse on REDD+ (Reducing Emissions from Deforestation and Forest Degradation) continues, it is important for governments, civil society organizations, and forestry stakeholders at and below the national level to build their understanding of REDD+ policy and finance mechanisms. This publication explores the advantages and disadvantages of different mechanisms that will be available to countries for making carbon payments to forest managers. It also gives details on the proposed finance mechanism being used as part of a REDD+ pilot project undertaken in three watersheds in the Hindu Kush Himalayas of Nepal.