Water Funds - Natural Capital Project

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AuthorsRebecca L Goldman, Silvia Benitez, Alejandro Calvache, Aurelio RamosSecondary Editors and ContributorsDavid Albert, Sarah Davidson, Peter Kareiva, Pilar Herrera, Karin Krchnak, Cristina Mestre,Emily McKenzie, Karen Poiani, Brian Richter, Susan Ruffo, Stacey Solie, Robert Taylor.AcknowledgementsThe authors would like to thank the numerous partners of the water fund projects throughoutthe Northern Andes Region: Pablo Lloret, Fondo para la protección del Agua – FONAG; CarlosCabrera, Fondo para la protección de la Cuenca del Paute – FONAPA; Pedro Moreno, Agua Porla vida y la sostenbilidad; Claudia Calero, ASOCAÑA; Oscar Rojas, Fondo para Manejo dePáramos y Lucha contra la Pobreza; Sara Usme, Empresa de Acueducto de Bogotá; WilsonGuzmán, Fundación Arcoiris; Antonia García, Major Espíndola Municipality; Marta Echavarría,Ecodecision; Andy Jarvis, Centro Internacional para Agricultura Tropical (CIAT); Heather Tallis andDriss Ennanay, the Natural Capital Project. We would also like to thank The Nature ConservancyExternal Affairs Team, in particular Jose Yúnis and Verónica Arias, the marketing staff, inparticular Elizabeth Ward, Andrew Simpson, and Amanda Davies for helping us get this reportprinted, and the ecosystem services team, in particular Kari Vigerstol.DisclaimerThis report is focused solely on water fund projects initiated by The Nature Conservancy andpartners in the Northern Tropical Andes region of South America. This is not meant to be anexhaustive study of all watershed service markets and finance mechanisms but rather areview of the water fund projects of which The Conservancy is a part. The contents are theresponsibility of The Nature Conservancy.CitationSuggested citation for this report: Goldman, R.L., Benitez, S., Calvache, A., and Ramos, A.2010. Water funds: Protecting watersheds for nature and people. The Nature Conservancy,Arlington, Virginia.Abbreviations and AcronymsCIAT: Centro Internacional para Agricultura Tropical (Center for Tropical Agriculture)ECOSAUT: A model for the Economic, Social, and Environmental Evaluation of Land UseEEQ: Empresa Eléctrica Quito (Quito Elecrtic Company)EMAAP-Q: Empresa Metropolitana de Alcantarillado y Agua Potable de Quito (Quito Water Utility)FIESTA: Fog Interception for the Enhancement of Streamflow in Tropical AreasFONAG: Fondo para la Protección de Agua (Quito water fund)FONAPA: Fondo del agua para la conservación de la cuenca del río Paute (Paute water fund)GTZ: German Technical CooperationInVEST: Integrated Valuation of Ecosystem ServicesPES: Payments for ecosystem/environmental servicesSWAT: Soil and Water Assessment ToolTNC: The Nature ConservancyUSAID: United States Agency for International Development
IntroductionEcosystem services, the benefits to people that nature can provide (Daily 1997), are rapidly gaining traction as aninnovative and practical approach to advance conservation goals and engage a wider variety of stakeholders in conservationefforts (Goldman et al. 2008; Tallis et al. 2009). These approaches can take a wide variety of forms and serve a variety offunctions (Tallis et al. 2009). For example, payment for ecosystem services (PES) projects are widely touted as aninnovative finance mechanism for conservation (Salzman 2005; Wunder 2007; Jack et al. 2008). While there is stilluncertainty about what factors are likely to contribute to successful ecosystem service projects (Perrot-Maître 2006;Asquith and Wunder 2008; Engel et al.2008; Jack et al. 2008; Daily and Matson 2008), these approaches continue toproliferate. Payments for watershed service projects make up a significant portion of implemented ecosystem servicesschemes (many others relate to carbon). These schemes often involve water users paying “suppliers” for the delivery ofclean, consistent water supplies (Brauman et al. 2007; Krchnak 2007; Asquith and Wunder 2008; Porras et al. 2008).Over the last decade, The Nature Conservancy’s (TNC) Northern Tropical Andes (Northern Andes) program (ageography covering the northern parts of the Andean Mountain countries), in collaboration with numerous partners, hasinitiated a series of ecosystem services projects called water funds. Water funds are based on the premise that naturalecosystems and conservation management practices by people living upstream in the watershed can help provide a clean,regular supply of water and that downstream service users (including water utility companies, hydropower companies, andother industries) who depend upon these services should pay for their maintenance and persistence.Given the relatively simple nature of a water funds approach, there is potential for this model to be implemented in othergeographies. Water fund projects in the Northern Andes have increased 7 fold (from 1 to 7) in 8 years with another 6 in thedesign phase within the same time period. In this report, we highlight the major characteristics and components of existingwater funds in the Northern Andes. Understanding the region’s biophysical characteristics, the history of the water fundprojects, and the funds’ common features may provide insight into the effectiveness of these projects. We also highlight thechallenges to replicating water funds and identify improvements that can enhance them as a conservation mechanism.1
Page 1: Protecting watersheds for nature an
Page 5 and 6: Context and History of Water FundsT
Page 7 and 8: Watershed orWater fund nameAssociat
Page 9 and 10: The end users of the water services
Page 11 and 12: Component 4: Water Funds and Conser
Page 13 and 14: Replication: Challenges and Obstacl
Page 15 and 16: ReferencesAsquith, N. and Wunder, S

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