The Payments for Ecosystem Services (PES) program is an innovative approach that provides economic incentives directly to natural resource exploiters in order to shape their behavior. Although the implementation of PES programs and the context in which these programs are implemented are often different across space, the spatial heterogeneities in the impacts of PES programs are often neglected in studies. In this study, we demonstrate the spatial and temporal dynamics of the Normalized Differential Vegetation Index (NDVI) in the grassland where China’s Grassland Ecological Compensation Program (GECP) has been implemented, and we evaluate the impacts of the GECP on the NDVI. We found that most of the grassland in the GECP area showed small changes in NDVI between 2000 and 2010. On average, the GECP only had a marginal positive effect on the NDVI of grassland. Although the magnitude of impacts of the GECP was relatively small in most places where the program is implemented, we detected substantial heterogeneities in the impacts of the GECP on the NDVI. The impact of the GECP on the NDVI differed substantially, particularly between Inner Mongolia, Sichuan, and other provinces. Our findings suggest that there can be substantial heterogeneities in the impacts of PES programs across space, which can be leveraged to promote the efficacy of the GECP and many other PES programs around the world.