• In Kuhan, Himachal Pradesh, India, saplings and grass have been provided by downstream communities, in exchange for upstream communities limiting livestock access to degraded areas to reduce siltation.
• In Brantas, Indonesia, PJTI (the management body for the catchment) is making payments to three farmer groups for tree planting and terrace construction to reduce sedimentation.
• In Cidanau, Indonesia, KTI (an industrial conglomerate), is making payments via a watershed forum to two farmer groups for tree planting to reduce sedimentation.
• In Los Negros, Bolivia, beehives are provided by the local municipality to farmers who agree not to extend cultivation into the cloud forest.

What sets these four cases apart from the other six is the existence of processes of negotiation, providing a basis of trust and lowered transaction costs on which to build. Among the reasons why mechanisms have not yet been developed in the remaining six sites are the lack of a clear hydrological rationale (e.g. in Jamaica and St Lucia), and limited demand from potential buyers (e.g. in South Africa).

From the emerging lessons it is evident that although the direct, income benefits of PWS for poverty alleviation may be small or questionable, indirect benefits may be considered of greater significance by the poor – this is true in the cases outlined above. For example, all the Indonesian farmers’ groups involved in the schemes have invested in goat breeding, one side effect of which is planting hedges along terrace lines of dryland fields – providing both fodder and control of soil erosion. One farmers’ group invested revenue from the scheme in a successful fodder store while the Brantas farmers have also found the tree nurseries necessary for the scheme to be viable small businesses. The Cidanau farmers’ groups have developed small enterprises in manufacture of vegetable crackers and vegetable oils.

Above and beyond the cash payments, it is the indirect benefits of collective action and engagement that have helped strengthen the community and with it, their sense of rights and responsibilities. In Los Negros, payment in the form of beehives allowed for a diversification of livelihoods through honey production, and helped create employment opportunities for landless people.

Given that payment arrangements are often associated with land use or ownership rights, another important indirect benefit in some cases has been the clarification or definition of rights and the responsibilities that underlie any form of agreement between buyers and sellers.

A further emerging lesson is that actual situations tend to defy some of the theory about PWS. As seen above, transactions between water consumers and land managers are rarely direct. Instead they reflect complex relationships between different stakeholders and intermediary organizations, as well as the unique conditions in which they occur. Watershed management requires collective action in a context where buyers’ and sellers’ choices are limited by their geographic ties to particular places – these factors are often overlooked. Therefore, it may be necessary to question preconceived notions in the design of payment initiatives, and to regard the rules of the game as work in progress. This is particularly true if the goal is to support livelihoods and alleviate poverty.

Whilst the project in general concludes that payments have limited applicability - and work more for conservation than poverty alleviation - it is clear that they can be useful in some circumstances. As part of an adaptive learning approach, the emphasis has been on getting the foundations right, by building trust and gathering the necessary information to anticipate outcomes. Two key ‘rules of thumb’ stand out: start at small scale; and keep management adaptive. An approach based explicitly on adaptive management – on trying, sometimes failing, sometimes succeeding but always learning - develops trust and capability to make uncertainty explicit, to support locally-valued services, to consider trade-offs and conflicts among multiple uses and to negotiate actions.

In looking ahead, IIED calls for more ‘buyers’ to step forward, and for the shapers of PWS schemes to put hard-learned lessons from experience into practice at larger scales and ensure buyers get what they pay for, sellers get a decent price - and watersheds get a fair deal.

References and further information

International Institute for Environment and Development
www.iied.org/NR/forestry/projects/water.html
Ivan Bond, ivan.bond@iied.org

Bolivia
Fundacion Natura Bolivia
Maria Teresa Vargas, mteresavargas@yahoo.com

Caribbean
The Caribbean Natural Resources Institute (CANARI)
Sarah McIntosh, sarah@canari.org

China
Centre for Humanities and Development (COHD)
Jin Leshan, jinls@cau.edu.cn

India
Winrock International India
Chetan Agarwal, chetan@winrockindia.org

Indonesia
LP3ES (Institute for Social and Economic Research, Education and Information)
Munawir, psdal@lp3es.or.id

South Africa
CSIR Environmentek
Russell Wise, rwise@csir.co.za

Project reports:

Fair deals for watershed services in Bolivia. 2007. Asquith and Vargas. http://www.iied.org/pubs/display.php?o=13536IIED (English version)
http://www.iied.org/pubs/display.php?o=13546IIED (Spanish version)

Fair deals for watershed services in the Caribbean. 2007. McIntosh and Leotaud. http://www.iied.org/pubs/display.php?o=13541IIED

Fair deals for watershed services in Indonesia. 2007. Munawir and Vermeulen. http://www.iied.org/pubs/display.php?o=13539IIED (English)
http://www.iied.org/pubs/display.php?o=13545IIED (Bahasa Indonesia)

Fair deals for watershed services in India. 2007. Agarwal et al. http://www.iied.org/pubs/display.php?o=13538IIED

Silver bullet or fools’ gold: A global review of markets for forest environmental services and their impact on the poor. 2002. Landell-Mills and Porras.
http://www.iied.org/pubs/display.php?o=9066IIED

Briefing papers:

• Watershed services: who pays and for what? 2007. Porras and Grieg-Gran. http://www.iied.org/pubs/display.php?o=17009IIED
• Payments for watershed services: opportunities and realities: 2007. Bond. http://www.iied.org/pubs/display.php?o=17010IIED

Forthcoming reports:

• Fair deals for watershed services in South Africa
• Fair deals for watershed services in China
• Fair deals for watershed services: Lessons from a multi-country action-learning project
• All that glitters: A review of payments for watershed services in developing countries.

To be informed of the publication of these forthcoming reports please subscribe to IIED’s New Books e-bulletin at http://www.iied.org/pubs/newsletters.html

New Resources

Bishop J. and Timberlake L. 2007. Markets for ecosystem services: new challenges and opportunities for business and the environment. Market approaches for ecosystem conservation. World Business Council for Sustainable Development.
http://www.eldis.org/go/home&id=34365&type=Document

Ecosystem Services Council. (2007). “National Ecosystem Services Council formed to promote expansion of environmental trading practices.” 12-30-07, Press release posted to: http://www.flowsonline.net/blog/?p=11.

Kerr, J. (2007). “Watershed Management: Lessons from Common Property Theory.” International Journal of the Commons 1(1) 89-109.
http://www.thecommonsjournal.org/index.php/ijc/article/view/8/1

Kosoy, N., M. Martinez-Tuna, R. Muradian and J. Martinez-Alier (2007). “Payments for environmental services in watersheds: Insights from a comparative study of three cases in Central America.” Ecological Economics 61(2-3) 446-455.
http://econpapers.repec.org/article/eeeecolec/v_3A61_3Ay_3A2007_3Ai_3A2-3_3Ap_3A446-455.htm

Pagiola, S., A. R. Rios and A. Arcenas (2007). Can the Poor Participate in Payments for Environmental Services?: Lessons from the Silvopastoral Project in Nicaragua.MPRA Paper No. 3705, Munich Personal RePEc Archive.
http://mpra.ub.uni-muenchen.de/3705/

Ruhl, J. B., S. D. Kraft and C. L. Lant (2007). The Law and Policy of Ecosystem Services. Washington, DC, Island Press.

R.L. Goldman, B.H. Thompson, G.C. Daily. Institutional Incentives for Managing the Landscape: Inducing Cooperation for the Production of Ecosystem Services. Ecological Economics 64, 2: 333-343. (2007)

http://dx.doi.org/10.1016/j.ecolecon.2007.01.012

New electronic journal: International Journal of the Commons http://www.thecommonsjournal.org/index.php/ijc

Click here to download this bulletin as a pdf file.

An alliance of business, environmental and government leaders in Oregon are joining forces to form the Ecosystem Services Council. These organizations represent the nation’s first not-for-profit efforts to establish an ecosystem services marketplace—with the goal of organizing market-based efforts that promote clean air, clean water, land protection and habitat restoration. The work of the Council takes market initiatives beyond the frenetic energy of carbon markets to support investment in whole ecosystems.

Market-based efforts that encourage environmental restoration are growing rapidly at all levels. Globally, the World Bank estimates that $30 billion moved through carbon markets in 2006. In Oregon, an unmet demand of $30 million persists for the wetland mitigation credits necessary for future development. Locally, Clean Water Services, a public water-resources utility in Oregon, used market-based approaches to restore 35 miles of streams for $6 million instead of spending $60 million on industrial-engineering to meet water quality standards.

To unify these global, state and local initiatives, business and government leaders at last week’s Oregon Leadership Summit prioritized the formation of an ecosystem services marketplace. They viewed it as a key green-enterprise that the state should pursue. The Ecosystem Services Council is ideally-suited to follow through on their conclusion.

In the same way the U.S. Green Building Council has successfully advanced sustainable building practices through its certification program, the Ecosystem Services Council will advance the scope, pace and effectiveness of the nation’s investments in environmental restoration. The Council is focused on environmental gains, creating a marketplace that meets the business sector’s environmental compliance needs, and the needs of those seeking to voluntarily offset their own environmental impacts.

Allen Alley, Governor Ted Kulongoski’s Deputy Chief of Staff and Bill Gaffi, General Manager of Oregon’s Clean Water Services presented the Ecosystem Marketplace Initiative to the Oregon Leadership Summit on behalf of the Council. They made the case that a marketplace anchored in Oregon can increase the pace of investment in ecosystems, create jobs, and export new ideas.

Bill Gaffi, who also heads the board of the Willamette Partnership noted, “Whether you talk to local government, environmental organizations, or business, there are nodding heads saying ‘yes!’ we need an organization to make sure that these growing markets are of the highest quality, look at our environment as a whole, and operate in a way that is completely transparent. The Council is an exciting convergence of the momentum springing from lots places in Oregon’s sustainability community.”

Duncan Wyse, president of the Oregon Business Council added, “Demand for ecosystem service markets seems to be growing faster than the development of markets themselves. With support, Oregon can help build the markets necessary to meet demand. The Ecosystem Services Council is bringing those people together and leading the charge to export these concepts to like-minded efforts around the world.”

The Ecosystem Services Council will be pivotal in developing this new robust, economic market that will serve as a global model. Early leaders include:

Cascadia Region Green Building Council
City of Portland
Clean Water Services
Defenders of Wildlife
Earth Advantage, Inc.
Ecotrust
Ecosystem Economics, LLC
Institute for Natural Resources
Oregon Business Association
Oregon Economic and Community Development Department
Parametrix
Portland State University
Sustainable Northwest
The Nature Conservancy
Willamette Partnership

# # # # #

These kinds of generalizations also support rigid land use policies, and conveniently eliminate nuances that can be better addressed with a more flexible place-based approach which is necessary to manage an ecosystem. The tremendous interest in payments for watershed services is driven in part by the popular appeal of this generalized model, in which the flow of water that links upstream practices to downstream consequences also provides scientific justification for a market-based approach to conservation. As an added benefit, payments for watershed services would also contribute to poverty alleviation in marginal upper watershed areas. In practice, there are often trade-offs between meeting these diverse objectives, and implementation is never as elegant as the model.

A set of ICRAF (2006) policy briefs that synthesize two decades of research in this field, assert that what matters is not the presence or absence of trees but the types of tree and where they are located. Also of importance, is what happens to land after forests are removed (Bruijnzeel, 2007). These factors all have implications for the amount of water trees consume, and the extent to which they control erosion. It is also important to keep in mind the pathways of water and sediment flow, some of which have created today’s fertile land. Rivers may be muddy because of landslides, erosion of banks during peak flows, or sediment from roads and paths – rather than due to open fields.

Mosaics of mixed land use – combining forestry, agroforestry and upland cropping – are typical of traditional upper watershed systems and can support denser populations than forested areas. However, they generally don’t fit into the discrete classifications found in land use policies, in which land is designated for either forested or agricultural use. As a result, farmers are often excluded from access to traditionally used land areas causing conflict with states.

Controversies aaabout forest and water relationships are deeply rooted, going back at least as far as the late 1800s during the promotion of settlement to the arid American west. Following what had been a wet period, Ferdinand Hayden claimed that, if trees were planted across the Great Plains, “aridity would give way to well-watered fertility” and rain would follow the plow (Worster, 2001). Based on the results of an extensive survey, John Wesley Powell doubted these claims in his prophetic 1878 Report on the Lands of the Arid Region of the United States He had, however, observed an association between increased streamflow and upland deforestation, which became a justification for more centralized authority over land use and resource management (Worster 2001). Eventually this resulted in policies of state control over forests to assure the steady flow of water for irrigation and other downstream uses, and for efficient management of timber resources (Hays 1959). It also reinforced existing European land use policies rooted in the feudal period, and became a model for colonial and exclusionary resource management and state ownership of forests elsewhere in the world (Fay and Michon, 2003).

Under this historical context, scientists can no longer play the role of disinterested bystanders. Instead, they need to engage interactively with the public and be aware of the potential uses of their findings in the policy arena. According to Jasanoff (2007), interactive engagement by scientists can help the public think critically about science and bring a healthy skepticism to its claims – instead of accepting it as an arbitrary set of well-established facts. As with climate change, greater public appreciation of the scientific process can help reduce manipulation of the facts in the policy arena, where scientific uncertainty is often cited as justification for arbitrary or delayed decisions.

Given the inherent uncertainties of watershed processes – particularly in the context of highly diverse upland environments, participatory processes are essential for assessing the science and establishing policy-relevant facts. Place-based assessments can also support more nuanced messages that enable mutual learning and more flexible approaches to management. As a more interactive approach to communication, this mutual learning can help broaden the frame of reference for decision-making and enable consideration of trade-offs between the various kinds of ecosystem services and the multiple ways they support human well-being.

References, further information, and new resources are listed below the jump.

References and further information

ICRAF policy briefs:

Rumley, R. and C. Ong (2006). The right tree for a dry place. Synthesis 1 Nairobi, Kenya, World Agroforestry Center (ICRAF).

van Noordwijk, M., B. Verbist, et al. (2006). Muddy Rivers - Lack of Trees? Synthesis 2 Bogor, Indonesia, World Agroforestry Centre (ICRAF).

Swallow, B. and R. Rumley (2006). Rooting Policy in Science. Synthesis 3 Nairobi, Kenya, World Agroforestry Centre (ICRAF).

Rumley, R., C. Muthuri, et al. (2006). More Trees with Less Water Nairobi, Kenya, World Agroforestry Centre (ICRAF).

Other sources:

Bradshaw, C. J. A., N. S. Sodhi, et al. (2007). Global evidence that deforestation amplifies flood risk and severity in the developing world. (abstract/subscription required for access to article) Global Change Biology 13.

Bruijnzeel, L.A., 2004. Hydrological functions of tropical forests: not seeing the soil for the trees? Agriculture, Ecosystems & Environment, 104 (1): 185-228.

Bruijnzeel, L.A., van Dijk A.I.J.M., van Noordwijk M., Chappell N.A. and Schellekens J. 2007 Tropical deforestation, people and flooding: A recent global analysis claiming that tropical deforestation amplifies flood risk and severity proves less than solid.

Brock, K. and E. Harrison (2006). Linking research, policy and livelihoods: challenges and contradictions (pdf).Brief Hemel Hempstead, Natural Resources Systems Programme (NRSP.

Eckl, E. 2007. Words that work — and don’t — to dispell myths and counter lies –blog post on Water Words that Work - a blog about water related communication.

FAO-CIFOR. Forests and Floods: Drowning in Fiction or Thriving on Facts? (FAO-CIFOR, Bangkok-Bogor, 2005).

Fay, C. and G. Michon (2003). Redressing forestry hegemony - Where a forestry regulatory framework is best replaced by an agrarian one (pdf). Rural Livelihoods, Forests and Biodiversity, Bonn, Germany.

Funtowicz, S. (2006). Why knowledge assessment? Interfaces between Science and Society. Â. Guimarães Pereira, S. G. Guedes Vaz and S. Tognetti. Sheffield, UK, Greenleaf Publishing.

Hays, S. P. (1959). Conservation and the Gospel of Efficiency. The Progressive Conservation Movement, 1890-1920. Cambridge, Harvard University Press.

Jasanoff, S. (2007). Lecture given to Science Communication Consortium, Columbia University, September 27th, 2007. Based on summary by Kate Seip. Retrieved November 1, 2007, 2007

Kaimowitz, D. (2004). Useful Myths and Intractable Truths: The Politics of the Link between Forests and Water in Central America (abstract). Forests-Water-People in the Humid Tropics. Cambridge, Cambridge University Press. M. Bonnell and L. A. Bruijnzeel. Cambridge, Cambridge University Press.

MA (2003). Ecosystems and Human Well-being: A Framework for Assessment. Washington, DC, Island Press.

Nambiar, S. (2006). Responsibility of scientists for balanced communication. (pdf) Forests in the landscape for wood production and environmental care. Canberra, Australia, Plantations 2020.

Van Noordwijk, M , Poulsen, JG , Ericksen, PJ, 2004. Quantifying off-site effects of land use change: filters, flows and fallacies Agriculture, Ecosystems & Environment 104: 19-34

Woodhouse, C. A., S. T. Gray and D. M. Meko (2006). Updated streamflow reconstructions for the Upper Colorado River Basin. Water Resources Research 42(W05415):doi:10.1029/2005WR004455.

Worster, D. (2001). A River Running West: The LIfe of John Wesley Powell. New York, Oxford University Press.

New Resources

Bond, I. 2007. Payments for watershed services: opportunities and realities. IIED Policy Brief.

Porras, I. and Grieg-Gran, M. 2007. Watershed services: who pays and for what? IIED Policy Brief.

UN FAO (2007). The State of Food and Agriculture: Paying farmers for environmental services Rome, Food and Agriculture Organization of the United Nations.

WatershedMarkets.org - Resources from IIED on markets for watershed services, including several new case studies.

World Bank (2007). World Development 2008: Agriculture for Development. Washington, DC, The World Bank. (includes section on payments for environmental services)

ICRAF, Global Scoping Study on Compensation for Ecosystems Services, Working paper series:

WP No. 32 Swallow-2007-Compensation-and-Rewards-Environmental-Services
WP No. 33 Poats-2007-Latin-American-Regional-Workshop-Report-Compensation
WP No. 34 Raju-2007-Asia Regional Workshop on Compensation-Ecosystem Services
WP No. 35 Ochieng-2007-African-Regional-Workshop-on-Compensation-Ecosystem
WP No. 36 Iftikhar-2007-Exploring the inter-linkages- Environmental-Services
WP No. 37 van-Noordwijk-2007-Criteria-and-indicators-for-environmental-service
WP No. 38 Swallow-2007-Conditions-Effective-Mechanisms-Environmental-Services
WP No. 39 Bracer-2007-Organization-and-Governance-for-Fostering-Pro-Poor
WP No. 40 Scherr-2007-How-important-will-differen- type- of Compensation-reward

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