Log in to your PayPal account. Click "Merchant Services tab. Click the "Shipping calculator" link.
(It isn't exactly a shipping calculator!). It is where you assign regions that you are going to ship to and assign a shipping price for that region.
(Example would be to divide the US up into time zones at state border, then assign a price to ship to those states.)

Whenever someone purchased and wanted it to ship to those states; PayPal would list that price on the purchase at checkout. You can make many regions, called "shipping methods" by PayPal.