Payments for watersheds services in developing countries

1
Payments for watersheds services in developing
countries

• Maryanne Grieg-Gran
• International Institute for Environment and
  Development
• Payments for Ecosystem Services
• From Local to Global
• Heredia, Costa Rica 8-16th March 2007

2
Aim
Present findings from a review of 52 ongoing and
42 proposed payments for watershed services
schemes in developing countries
3
Background

• Global review 2002 (Silver Bullet Fools Gold)
• 62 PWS initiatives ongoing and proposed
• 41 in developing countries
• Follow up action research project on PWS
• Testing of PWS in Caribbean, India, Indonesia,
  South Africa
• Diagnostics in Bolivia and China
• Updated review of PWS in developing countries
• Web-based resource of case profiles and review
• www.watershedmarkets.org (from end March)

4
What counts as PWS?

• Voluntary transaction especially for sellers
• Otherwise no different from regulation
• Between a minimum of one seller and one buyer -
  that are distinguishable
• Otherwise no externality
• Conditionality

5
Status of PWS Schemes
6
Geographical breakdown
Ongoing PWS schemes
7
Geographical breakdown
Proposals
8
Scale of PWS schemes

• 10 national programmes
• Costa Rica, El Salvador, Guatemala, Mexico,
  Colombia,
• China (2), Philippines
• South Africa (2)
• 42 local schemes
• 54 independent
• 46 linked to national programme or international
  project

9
Watershed services demanded
10
What is being sold in PWS?

• All schemes not the service directly but an
  undertaking to do activities to enhance or secure
  service delivery
• Reforestation for commercial plantations
• Conservation of ecosystems eg forests
• Rehabilitation of degraded ecosystems
• Improve land management practices

11
Payment mechanism

• Contractual arrangements rather than trading
  mechanisms
• Mostly through an intermediary (87)
• Price for sellers determined
• Administratively (23 of local schemes, all
  national schemes)
• Through negotiation
• Direct with buyers (12 of local schemes)
• With intermediary (65 of local schemes

12
Payment Mechanism
13
Who is paying?
14
Environmental impacts

• Delivery of watershed services?
• Positive perceptions but little scientific
  evidence
• Lack of baseline data
• Complex relationships between land use and water
• Schemes too small to achieve threshold levels
• Strongest case for beneficial effect on water
  quality eg China (reduction in sediment)
• Forest conservation?
• Problem of additionality in Mexico only 28 of
  land in PWS in 2004 at high risk of deforestation

15
Access of the poorest to PWS

• Landless not able to sell services except
• Sukhomajri, India not replicable
• Working for water South Africa borderline PWS
• Communal land not well represented
• except Mexico
• Small farmers inclusion case-specific
• In existing schemes more by accident than design
• Targeting of poor in 2nd generation PWS
• eg RUPES, Cuencas Andinas.

16
Do sellers benefit?

• Financial benefits Mixed evidence
• 30 of income Pimampiro (Ecuador)
• Low of income Nicaragua, Honduras
• Low of opportunity costs Nicaragua, Honduras,
  Bolivia
• Not considered fair by sellers Nicaragua,
  Honduras, Pimampiro (Ecuador)
• Non-financial benefits some evidence
• Strengthened property rights, social organisation
  capacity building

17
Impact on domestic water users

• No evidence of adverse effects of PWS but little
  awareness
• In 5 cases, payments are
• Low of users income
• Considered acceptable
• 4 cases have mechanisms for poorest users
• Lifeline tariff system Cuenca
• Payment through labour Esteli, Nicaragua
• Voluntary contributions Fidecoagua, Zapaliname

18
Conclusions

• Downstream users are slow to commit funds
• government major source of funds.
• Little use of valuation in scheme design
• Multiple instigators
• often not the water users or water authorities
• More integration needed with water resource
  policy and allocation
• More evidence is needed of PWS impacts
• Service delivery
• Livelihood impacts

19
Thank You! For more information
visit www.iied.org
www.watershedmarkets.org (from
19/3/07)www.watershed