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All that glitters: A review of payments for watershed services in developing countries. A growing international debate calls for downstream beneficiaries of wise upstream land and water use to dig into their pockets and pay. IIED stimulated the debate several years ago with a ground-breaking review of the scene. Now we have gone further - with this in-depth international review and analysis of all accessible ongoing initiatives and advanced proposals for market mechanisms for watershed services.
Silver bullet or fools’ gold? A global review of markets for forest environmental services and their impacts on the poor. This publication is also available on a CD Rom of the series ‘Instruments for sustainable private sector forestry’. To request a free copy of the CD Rom please contact forestry@iied.org
Other publications
Negotiating watershed services. In response to the disappointing results of many regulatory or public investment approaches to watershed management, payments for environmental services has emerged as a new mechanism to maintain socially optimal environmental services by compensating people for the services they provide. However, without adequate understanding of stakeholders’ willingness to modify or maintain land use or water resource decisions, market-based mechanisms may prove to be unsustainable, with uncertain social and environmental outcomes. Negotiating resource use patterns is a process that requires an understanding of the type, level and duration of incentives for stakeholders to co-operate meaningfully. In this paper, we describe a negotiation support framework that has been developed from the literature and field experiences in Costa Rica and India. The framework then serves to critically examine a case study from each country to draw empirical lessons from the process of watershed management.
Impacts of payments for watershed services in Ecuador: emerging lessons from Pimampiro and Cuenca, The Payments for environmental services (PES) is a topic of increasing interest in Ecuador, particularly as a way to leverage funding for environmental protection. Payments systems are emerging, but as Ecuador’s experience of PES is only recent, the implications for national and local welfare are not yet clear. Thus, the objective of this study was to provide guidance in order to ensure that policies support payments systems that are beneficial to the poor, as well as to the environment. This report focuses on two case studies - Pimampiro and Cuenca. The report recommends inter alia that further understanding of the hydrological functions provided by particular ecosystems is needed, further information is required on the value of watershed services, a tax managed by the municipalities should be levied on water for agricultural use based on consumption, and that household surveys may not be the most effective way to gather information to evaluate social impacts of a compensation mechanism.
Briefings
Paying for watershed services: an effective tool in the developing world Payments for watershed services (PWS) are an increasingly popular conservation and water management tool in developing countries. Some schemes are thriving, and are pro-poor. Others are stalling or have only mixed success. Most rely on public or donor finance; and other sources of funding are unlikely to play a significant role any time soon. In part, financing PWS schemes remains a challenge because the actual evidence for their effectiveness is still scanty — it is hard to prove that they actually work to benefit both livelihoods and environments. Getting more direct and concrete data on costs and benefits will be crucial to securing the long-term future of PWS schemes.
Payments for watershed services: opportunities and realities Many nations have found that regulatory approaches to land and water management have a limited impact. An alternative is to create incentives for sound management – under mechanisms known as payments for ecosystem services. It is a simple idea: people who look after ecosystems that benefit others should be recognised and rewarded. In the case of watersheds, downstream beneficiaries of wise upstream land and water use should compensate the stewards. To be effective, these ‘payments for watershed services’ must cover the costs of watershed management. In developing countries, they might also aid local development and reduce poverty. But new research shows that the problems in watersheds are complex and not easily solved. Payments for watershed services do not guarantee poverty reduction and cannot replace the best aspects of regulation.
Watershed services: who pays and for what? There is increasing interest in using payments to promote sound watershed management. Schemes range from small pilot projects involving just five families to a massive Chinese project that aims to reach 15 million farmers. The expectation is that such schemes will help to resolve problems such as declining water flows, flooding and deteriorating water quality by bringing in new funding from water users, the private sector in particular, and by providing incentives for sustainable management to those closest to natural resources. A review of active and proposed schemes in developing nations shows, however, that most schemes still depend on donor or government funding, and few are driven by water users. Meanwhile, evidence of benefits remains patchy.
Fair deals for watershed services: Lessons from a multi-country action learning project Fair deals for watershed services in South Africa Fair deals for watershed services in India Fair deals for watershed services in Indonesia Fair deals for watershed services in the Caribbean Fair deals for watershed services in Bolivia
Lake Matters: Paying to protect watersheds
Project reports and activities: The Plan Vivo experience with carbon service provision and the potential lessons for watershed service Jessica Orrego
This report, by IIED's India country-partners, Winrock International India, documents the communications strategy put in place to encourage water users in Bhopal to make voluntary payments for watershed services.
Challenges to establishing markets for watershed services: Learning from country diagnosticsTighe Geoghegan This paper synthesises a set of diagnostic studies carried out by IIED and local partners in 2001-2002 to explore the potential of market-based approaches for watershed protection. The studies responded to concerns raised in earlier work by IIED that markets for watershed services were being promoted without adequate consideration of their costs and benefits. Studies carried out for four countries or regions - the Caribbean, India, Indonesia and South Africa - included an assessment of key watershed management issues and needs; potential market actors; the policy and institutional context; and interest in and demand for market-based approaches.
Implementation Phase Findings Discussion Workshop In December 2005, a findings discussion workshop was held in London to discuss the interim lessons learned by the project and to share learning with other interested partners. A summary report of the workshop can be downloaded and copies of presentations can be requested by email from forestry@iied.org
Project Planning Workshop
The project has an advisory group which meets at key stages in the project, and whose members keep in contact throughout the project. The advisory group comprises two advisers selected by the country team leaders (Peter Frost and Bhaskar Vira), the country team leaders themselves, and the international project’s manager, Ivan Bond. The advisory group aims to increase communications and learning opportunities between country teams, and to document, peer review and disseminate lessons from the multi-country approach. The project advisory group has been proposed as the most effective way of increasing the communication and the options to learn from the experiences of each country partner.
The Caribbean: South Africa: Bolivia: China:
IIED Sustainable Markets Group: Environmental Economics IIED Natural Resources Group: Water and Ecosystems The Katoomba Group is an international working group composed of leading experts from forest and energy industries, research institutions, the financial world, and environmental NGOs dedicated to advancing markets for some of the ecosystem services provided by forests. The Ecosystem Marketplace seeks to become the world’s leading source of information on markets and payment schemes for ecosystem services; services such as water quality, carbon sequestration and biodiversity . The RUPES project aims to Reward the Upland Poor in Asia for the Environmental Services they provide (RUPES) Television Trust for the Environment (TVE): Is an independent, non-profit organisation, TVE's mission is to act as a catalyst for the production and distribution of films on environment and development. TVE, in collaboration with IIED, has produced a 26 minute film on watershed services broadcast on BBC World on 10 September 2005. This short documentary looks at the potential and problems for payments for watershed services in Africa, Asia and The Americas. Center for International Forestry (CIFOR) and Center for Development Research (ZEF) (Bonn): In partnership with CIFOR and ZEF, the project hosted a 3 day workshop on watershed services. The workshop examined the lessons learned from the development of payments for watershed services in developed countries that can be applied to developing country situations. Selected papers from the workshop will be published in a special edition of Ecological Economics.
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