Payments for Watershed Services

By

Ivan Bond

Forestry and Landuse Programme IIED

What are the services produced by watersheds?

• Water flow regulation

• Water quality control, chemical, biological and solids

• Maintenance of aquatic habitats

• Beware the forest – water myths

Who are the stakeholders?

• Anybody and everybody who is involved with land use and water issues

- Government; P&L, potential buyers- Land managers; large, small, private, communal,

protected- Private sector; buyers of services- Public; water users

What kind of payments have been used?

• Direct negotiations between buyers and sellers• Intermediary facilitated transactions between

buyers and sellers• Pooled transactions that spread the risk among

buyer• Auctions that engender a level of competition• Retail based incentives

Public vs Private Payments

• Public payments:

- use money from the tax payer (no new money)

- politically susceptible

- lower efficacy

- example: China, sloping lands conversion programme

• Private payments

- cost effective solution to core problem

- new source of money for resource management

- potentially more sustainable

- example: HEP companies in Costa Rica

Spatial considerations

• Watershed services are spatially restricted- are bilateral, mutually-negotiated agreements

between ecosystem service users and providers (Wunder and Vargas).

- Water is often highly politicised, terminology becomes important

- Markets, payments, rewards, compensation

What are the key challenges?

• Hydrological basis of PWS

- is there a service?

• Economic basis of PWS

- Is there a deal?

• Policy and legal basis of PWS

- is there a policy and legal framework?

The hydrological basis for PWS

• Highly complex landuse – water relationships

• Need to consider ground water and surface water

• Scale is an important consideration –what can be measured and by whom?

The economic basis for PWS

• Assumes a gradient of wealth – poor landusers live upstream, wealthy downstream

• In many watersheds there will be no buyers of the service

• Landscapes are typically highly complex, multiple landuses and landusers

• Multiple and conflicting objectives

The social basis for PWS

• Organisations: complex organisations with multiple and competing claims over land and water (eg Africa political vs traditional)

• Institutions or rules: typically sectoral based legislation (land, water, wildlife, forestry) that are not integrated and are primarily control based.

• Legislation that stimulates (eg New York)• Legislation that leads (Costa Rica)

Can PWS address poverty?

• Nature of poverty: structural, governance, other• Landless: typically very poor and landless – aim

for a neutral impact.• Complex landscapes are resilient, changes must

not destroy the resilience.• Positive examples - mostly from Costa Rica where

there are very high payments.• Negative examples – China and the impact of

grain to green.