March 22, 2013

Payment for Watershed Services: A Win-Win Strategy for Climate Change and Development?

Happy World Water Day! Celebrating the 20th anniversary, the day is observed annually to focus attention on sustainable management of freshwater resources. Agriculture is also a critical piece of the puzzle, both relying heavily on rainfall or irrigation for production and impacting the quality and quantity of surface and below-ground water supplies. This year’s theme of ‘water cooperation’ highlights the importance of aligning objectives of all actors in society to protect water, and is particularly telling of the key ingredients for integrated watershed management and today’s blog post. Kevin Green, Manager of Conservation Research and Monitoring at Rare, shares some insight on payment for watershed services as a mechanism to achieve sustainable use of water resources, and introduces a new collaborative research effort the organization is undertaking.

Across the globe, communities are struggling with radical changes in local climatic patterns, degradation of critical natural resources, and significant loss of biodiversity. Solutions to these challenges are multi-faceted, but often rely on interventions from individual sectors in development, public health, or environmental policy. Although some of these interventions may be successful in achieving relevant outcomes, few of these can simultaneously address the diversity of impacts we face on the ground today. Given the pace and magnitude of climate change threats, it will be critical to identify solutions that will provide significant benefits to people and ecosystems

Payments for watershed services (PWS) schemes offer an exciting opportunity to achieve that vision. The PWS model emerged as an alternative to top-down approaches, focusing more on the connection between downstream users and upstream landowners. In an ideal scenario, the downstream water users who benefit from a clean and regular supply of water pay upstream landowners to adopt more environmentally-friendly land use practices. This results in clean, consistent water provision and supplementary income. In addition, because PWS agreements protect natural areas, with many focused explicitly on forests, projects have the potential to contribute to mitigation through carbon sequestration. Finally, improved land management practices can promote climate adaptation by protecting water supplies and reducing the vulnerability of agricultural systems to climate variability.

Receiving considerable attention for their potential to deliver water quality services in addition to other co-benefits, PWS schemes have been implemented widely across countries and continents, from Bolivia and Ecuador to South Africa and China. Moreover, the success of PWS has also prompted interest in how it can contribute to ‘Climate Compatible Development’ (CCD), a construct designed to identify strategies that deliver climate change mitigation, climate adaptation, and human development outcomes. But how to define these benefits in way that can be measured and monitored? That is where the ‘Payments for Watershed Services as a Driver of Climate Compatible Development: What Works and Why’ project comes into the picture.

As with most approaches to conservation and natural resource management, there’s more than one way to get things done. PWS projects vary considerably in their scale, payment types, landscape-contexts, and financial and institutional mechanisms. Initial experiences from across Latin America suggest that large-scale government-driven schemes, small-scale locally-led agreements, and everything in between have varying levels of success reaching intended outcomes and contributing to climate compatible development. At the one extreme are national programs, such as Mexico’s PSAH program or Ecuador’s Socio Bosque, that are governed centrally and distribute standardized payments to participating landowners across the country. At the other end are small-scale, locally-led programs known as “reciprocal water agreements” that use in-kind payments to promote norms of reciprocity amongst service users and providers. Understanding how these schemes may differ in their ability to provide climate compatible development benefits will be critical for ensuring the best solutions are being applied in areas most vulnerable to climate change impacts.

Researchers at Rare and Fundación Natura Bolivia (FNB), along with partners such as Lykke Andersen at Bolivia’s Institute for Advanced Development Studies and Luis Gamez from the Heredia municipality in Costa Rica, are trying to evaluate whether various watershed conservation schemes clearly differ in their ability to achieve climate compatible development goals. To do so they have devised a practical tool, a ‘Climate Compatible Development Index’, that is being applied to PWS projects of different types in Mexico, Costa Rica, Bolivia, Colombia, and Ecuador. Eight indicators for development, mitigation, and adaptation (including socioeconomic status, livelihood diversity, forest connectivity, and CO2 emissions from land uses) make up the core of the Index. The pilot evaluation process is currently being rolled out and will take a critical first look at the performance of each of the CCD indicators. A simplified index score based on these will allow practitioners, communicators, and policymakers to evaluate the respective contributions to CCD across projects and over time in order to inform decision-making, communicate results, and ultimately improve the practice of conservation and development.

The project is led by researchers at Rare, Fundación Natura Bolivia, and partners throughout Latin America, and supported by Climate & Development Knowledge Network (CDKN). Stay tuned for more updates as the project progresses.

Related Reading:
State of Watershed Payments
Building ‘Green Infrastructure’ in a Watershed
Water Beyond Borders
Landscape of the Week: Sasumua Watershed

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