Agricultural crops and pasturelands cover 24–38% of the global land area, and thus the ecological services that agricultural systems provide are of utmost societal importance. An important determinant of ecosystem services provision from European farmland is the amount and spatial arrangement of trees, shrubs and woodlands that are integrated into the respective land-use systems. This paper uses an institutional economics framework for the analysis of payment schemes for ecosystem services (PES schemes) that enhance the establishment, conservation and management of farm trees and woodlands, elaborating on the reasons for the often very reluctant participation of farmers in these schemes. PES schemes in Saxony (Germany) were selected as a typical example. Obstacles identified included high production costs and opportunity costs for land use, contractual uncertainties, land-tenure implications and heterogeneous societal preferences for ecosystem services of farm trees. Further, since scheme adoption has been relatively low compared with the total area covered by the respective farm tree types in Saxony, the PES schemes alone could not explain the substantial increase in number and size of some farm-tree types, in particular hedgerows. Regionalized premiums, result-oriented remuneration and cooperative approaches are options to improve participation in PES schemes for farm trees. The example of PES schemes for farm trees highlights one of the major challenges for the protection and preservation of cultural landscapes: they are man-made and thus need to be preserved, managed and maintained continuously.