Payments for ecosystem services (PES) are strongly criticized by political ecology scholars. Predominantly, their critique is rooted in notions of distributive justice, as they focus on the negative impact (e.g. land rights distribution) of PES for indigenous and other local communities. Many liberal supporters of PES do not deny that these problems are real. However, they put more emphasis on procedural justice and claim that PES may trigger an institutionalization of more inclusive dialogic procedures. As of yet, both strands of literature underestimate the impact of the postcolonial conditions in which many Pes projects are situated. This is where our article steps in. We investigate initial PES politics in Mato Grosso do Sul, a Brazilian province dominated by ongoing settler colonialism. Our research results indicate that the implementation of inclusive procedures in PES projects may partially mitigate the consequences of ongoing settler colonialism but that this more frequently fails because of its being embedded into the structures of a colonially shaped political economy. Although PES occasionally empower indigenous actors to confront local elites more effectively and strengthen the rights of indigenous women, the resulting transformations within the communities themselves are likely to weaken their political self-organization.