Watershed Valuation - The Nature Conservancy · 2010. 11. 22. · Several Sites Using Watershed...

Watershed Valuation as a Tool for Biodiversity Conservation

Lessons Learned from Conservancy Projects

January 2007

Watershed Report 02_02_07 final 2/2/07 11:04 AM

Author & EditorKarin M. Krchnak, Senior Freshwater Policy Advisor, The Nature Conservancy

Secondary Authors and ContributorsThis report draws directly on six case studies prepared by Marcia B. Brown and Caroline Stem, Foundationsof Success, for The Nature Conservancy (TNC) that detail TNC and partner project experiences in Bolivia,Ecuador, Guatemala, Honduras and Mexico. The full case studies are available at www.fosonline.org. It alsoincludes sections from a paper prepared by Marcia Brown and Caroline Stem on Lessons Learned AcrossSeveral Sites Using Watershed Valuation as a Conservation Strategy. In addition, this report uses studiesprepared by ESG International Inc. for The Nature Conservancy Indonesia Program entitled The Value ofWater Resources in Berau Regency, East Kalimantan and The Value of Water Resources in Lore LinduNational Park, Central Sulawesi. The author would like to thank these authors without whom this summaryreport would not be possible as well as Marlou Church, TNC’s former Senior Advisor for International WaterPolicy, who had the vision to urge TNC to pursue this type of work over a decade ago. Special thanks toRandy Curtis, Jose Yunis, Marie Claire Paiz, Marcia Brown, Sandra Mendoza, Paul Hartman, Lorena Calvo,Ricardo Aguilar, Monica Ostria, Oscar Nunez, Ian Dutton, Karen Luz, Marta Echavarria, Aurelio Ramos,Martha Martinez for translation, and Sarah Bolton and Jennifer McKnight who reviewed and commentedon this report.

Acknowledgments The production of this report has been supported by a grant from the U.S. Agency for InternationalDevelopment. Special acknowledgment is due to the individuals and organizations who have dedicatedthemselves to promoting freshwater conservation and sustainable livelihoods.

The individual case studies and this summary report document work carried out by countless organizations.The Nature Conservancy has tried to document these efforts to help further dialogue and discussion amongorganizations about how to use lessons learned to augment existing projects and replicate these projectsacross the globe. We apologize for not listing each and every individual who made these projects possiblebut want to recognize the organizations that have both implemented and funded these efforts.

It is important to emphasize that a number of the projects have achieved results that are not detailed in theindividual case studies or this summary report. Readers are encouraged to contact the organizationsinvolved in the projects to obtain more information on all the work underway to help further watershedconservation.

DisclaimerThis study is made possible by the generous support of the American people through the United StatesAgency for International Development (USAID). The contents are the responsibility of The NatureConservancy and do not necessarily reflect the views of USAID or the United States Government.


TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Protecting the Water Source for People & Biodiversity . . . . . . . . . .2Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Summary of Project Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Quito, Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Sama Biological Reserve, Bolivia . . . . . . . . . . . . . . . . . . . . . .10Sierra de las Minas, Guatemala . . . . . . . . . . . . . . . . . . . . . . .14Chiapas, Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18Quintana Roo, Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Lake Yojoa, Honduras . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Lore Lindu, Central Sulawesi, Indonesia . . . . . . . . . . . . . . . . .29Berau District, East Kalimantan, Indonesia . . . . . . . . . . . . . . .33

Lessons Learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45


INTRODUCTION1

One of the challenges in moving toward ecosystemsecurity-preserving the natural functions of ecosystemgoods and services for all future generations-isconvincing policymakers that protecting ecosystemgoods and services will promote social and economicdevelopment. The Millennium Ecosystem Assessmentgives an in-depth look at the range of ecosystem goodsand services and their current state. However, there is alack of economic data to convince national leaders to“invest” in ecosystem conservation. The United NationsEconomic Commission for Europe notes that thedegradation of ecosystem services represents loss of acapital asset. Despite this, the methodologies forestimating the value of these capital assets vary widelyin terms of type and quality.

Reaching the Millennium Development Goals willrequire greater investments by countries as well asimproved laws and regulatory systems. However,market-based mechanisms may offer a way to helpmove a step closer to conserving ecosystems. Paymentfor environmental services (PES) in the water sector, inessence, promotes the conservation of upstream areasand, thus, ultimately entire watersheds throughcompensation for ecosystem friendly land use practices.A challenge for exchanging lessons learned with PESapproaches is one of terminology. In some instances,“recompense”, “compensation” or “reward” are utilized.PES projects are also referred to as “improvedmanagement of hydrological resources” or “reciprocalarrangements.” Payments for ecosystem services maybe called “incentive-based cooperative agreements,”“stewardship payments” or economic incentives,”“compensatory schemes” or even “performancepayments.”

Environmental service fees have been established in anumber of places across the globe, with Latin Americabeing one of the most advanced in experimenting withdifferent approaches. These systems offer valid lessonslearned on how to create new mechanisms thatencourage governments-including national, regionaland local governments, individuals, communities, andbusinesses to recognize the value of ecosystemservices.

Over the past ten years, The Nature Conservancy hasexperimented with using watershed valuation as a toolfor biodiversity conservation in Latin America and Asia-Pacific. The reader should take note that this report isnot a description of how to carry out watershedvaluation studies. Rather, the focus is on the role ofwatershed valuation as a tool in biodiversityconservation.

The case studies reveal the different ways in whichwatershed valuation can serve as a catalyst forwatershed conservation. This report provides asummary of several projects in Latin America andIndonesia, where the Conservancy has been involved tosome extent over the past decade. It also offers somelessons learned from the compilation of detailed casestudies on the projects through site visits and interviewswith a broad group of individuals. As with any effort, thisis a work in progress as the Conservancy continues towork with partners in developing these programs,sharing information and obtaining more data andinformation on the impacts of these efforts in the longterm.

INTRODUCTION

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This paper is not aimed at providing a comprehensivestudy of freshwater ecosystem goods and services.However, a short description of the current thinking onthe linkages between maintaining protected areasystems and supplying water to people can help provideadditional background to the Conservancy’s efforts.

To provide the range of services on which humansdepend, including water purification, freshwatersystems depend on the cycling of water and onfunctioning ecological processes and speciesassemblages. Quantity and quality issues areinterlinked, as sufficient flows not only sustain thesocial, ecological and hydrological functions ofwatersheds and wetlands, but also offset pollution. Inaddition, groundwater and surface waters areinterlinked; thus, degradation or diminution ofgroundwater may affect surface waters and theassociated ecosystems.

Water management traditionally has focused onmeeting the needs and desires of a growing andchanging human population without due considerationto the needs and limits of our freshwater systems. Asmore people move to cities, government officials seekways to meet the water needs of the growing humanpopulation but often fail to adequately consider thelong-term health of freshwater ecosystems to supportthe growing urban areas. Currently, 47 percent of theworld’s people reside in towns and cities, a percentagethat is expected to increase to 55 percent by 2015. Latin

America already tops the list of regions with highurbanization with 77 percent living in urban areas as of2003, making it comparable to the European Union.

Globally, there are few standards or guidelines forecological uses of water. Thus, water treatment mayoccur near and around cities, but little attention may bepaid to protecting the upstream watershed. New YorkCity is an example of a city that opted for watershedprotection measures in place of spending billions ofdollars on water purification and treatment.

As noted in the Millennium Ecosystem Assessment, a study carried out by the World Bank and WWFInternational in 2003 found that of the worlds’ 100largest cities, more than 40 percent rely on runoffproducing areas that are fully or partially protected fortheir drinking water. The study also pointed out thatmost of the world’s population lives downstream offorested watersheds. It is critical, therefore, thatmanagement of protected areas include improvingwatershed conservation practices and approaches andthat payment for ecosystem service schemes take aholistic approach.

Some studies have concluded that watersheds withsignificant areas of protected or managed forests offerwater purification services. Better water quality meanslower treatment costs borne by cities and communities(see Table 1).

PROTECTING THE WATER SOURCE FOR PEOPLE & BIODIVERSITY

Table 1. Forest Cover and Predicted Water Treatment Costs Based on 27 U.S. WaterSupply Systems

PROTECTING THE WATER SOURCE FOR PEOPLE AND BIODIVERSITYTY

Share of Water- Treatment Costs Average Annual Cost Increase OverShed Forested per 3,785 m3 Treatment Costs 60 % Forest Cover

60% $37 $297,110 --50% $46 $369,380 24%40% $58 $465,740 57%30% $73 $586,190 97%20% $93 $746,790 151%10% $115 $923,450 211%

1Based on treatment of 22 million gallons (83,270 m3) per day, the average productionof the water suppliers surveyed.Source: Postel and Thompson, 2005, adapted from Ernst, 2004.


PROTECTING THE WATER SOURCE FOR PEOPLE AND BIODIVERSITY3

The 2003 study by the World Bank and WWFInternational drew on analysis that showed that there isa link between forests and the quality of water arisingfrom a catchment, a more sporadic link between forestsand quantity, and a variable link between forests andconstancy of flow. Generalizations are difficult as thestudy noted that the services that forests providedepends on individual conditions, species, soil types,climate, management regimes and needs from thecatchment.

However, it is clear that protected or managed forestedareas alone cannot provide safe water to people.Studies conducted by The Nature Conservancy in LoreLindu National Park in Central Sulawesi, Indonesiaindicated that there is a strong correlation betweenforest clearing, increased runoff and heavier sedimentloads in rivers. Increased sediment loads resulting fromhigh erosion rates of slash-and-burn agriculture in theupper catchments, in some cases, have caused mainriver channels to widen and were cited as causal factorsin the alteration of river regimes.

Best management practices are critical to improve landor forest use in or around protected or managed areas.Examples of best management practices described inthis report include:

• Organic agriculture• Sustainable livestock management• Community gardens• Tree nurseries• Soil conservation• Reforestation• Riparian restoration• Certification of private land conservation

In Chiapas, Mexico, for example, Instituto de HistoriaNatural y Ecología (INHE), a TNC partner, has beenpromoting forestry and agricultural best managementpractices in and around a protected area. One activitythey believe has been particularly successful is thepromotion of organic agriculture in Nuevo Paraíso.Community members became interested in organicagriculture after participating in an awareness raisingworkshop hosted by IHNE. Fifteen landownersparticipated in the program and were able to see a

marked improvement in production and in soil quality.These farmers have adopted organic methods and haveceased destructive practices, like burning the land toprepare it for cultivation. This reduction in burningshould decrease sedimentation entering local waters,thereby improving water quality for downstream users.Most of the community members who did notparticipate initially were impressed with the results andalso planned to use organic methods in the comingyears.

In the Cuxtepec watershed in Chiapas, another TNCpartner, Comisión Nacional de Áreas NaturalesProtegidas (CONANP) has been promoting restorationof the Rio Grijalva’s riparian vegetation. The agency hashelped establish community nurseries with fruit andornamental plants and trees. Because the plants andtrees hold economic value, they have served the dualpurposes of helping to restore riparian vegetation andproviding people with additional food and income.CONANP also has promoted restoration work in otherregions, such as the watershed feeding into LaEncrucijada. Prior to this work, the high levels ofsediment and the heat-due to lack of vegetative cover-prevented shrimp from inhabiting the lowland fishingareas. Now, shrimp catches have increased, andfishermen have noticed the change. Although thefishermen are not yet willing to pay for environmentalservices, they are starting to realize the importance ofconserving the mangroves and the watershed.

Integrated water resource management requires theengagement of all stakeholders. As the examplesdescribed in this report show, farmers, forest ownersand other private landowners must play a critical role inecosystem service protection and management.


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The objective of watershed valuation projects is to helplocal actors recognize the importance of natural areasand take action to protect them, in order to ensure theintegrity of the critical environmental services theyprovide. When people are motivated to take action toprotect their water resources, they also are contributingto biodiversity conservation.

Over the past ten years, the Conservancy and itspartners have developed watershed valuation projectsto increase forest and watershed conservation inspecific sites to advance biodiversity conservation. Theresults chain (see Figure 1) outlines the approachadopted by the Conservancy. Phase I focuses on initialcapacity development, planning and alliance-building.Phase II involves the implementation of specificconservation strategies or tools.

Efforts in Phase I focus around technical assistance inwatershed valuation, which contributes to buildingawareness and interest in water issues and the capacity

to address them. Increased interest and capacityenables partners to produce initial outputs or productssuch as analyses of threats. It also helps them developa watershed valuation action plan and select keystakeholders that need to be involved in implementingit. A “silent phase” of information-sharing, awarenessand capacity-building among key actors is necessary to

achieve consensus about what conservation strategiesto undertake and to build trust among the key actors.During this period, a water valuation process is usuallyconducted, and the key actors may form a watershedgroup. All of the products of the silent phase contributeto increased recognition by the key actors of the valueof watershed environmental services, which contributesto their involvement in the implementation ofconservation strategies in Phase II.

Phase II focuses on the implementation of one or moreof the following three conservation strategies: (1) publicawareness campaigns, (2) water user fees and (3)

Cons Strategies Increased use ofBMPs

“Silent Phase” ofAwareness and

Capacity-buildingAmong Key Actors

Trustingrelationships,alliances built

BiodiversityConservation

Forest andWatershed

Conservation

Watercontamination

decreased

Water usedecreased

(surface +groundwater)

Increasedland cover(forest cover,

riparian habitat,permanent crops)

Increasedwater quantity

for aquatichabitat

Increasedwater qualityfor aquatic

habitat

Flooding,drought

decreased

TNC TA inwatershedvaluation TNC + partner

awareness /interest in

water issues

TNC + partnercapacity to

address waterissues

Analyses ofthreats,policies,

stakeholders

Plandevelopedwith consstrategies

Keystakeholders

selected

Phase I: Initial Capacity Development, Planning and Alliance-building

Consensusabout

strategies

Socioeconvalue of water

defined byusers

Formaltraining

workshops,site visits

Informalmentoring,facilitation,assistance

Publicoutreach andawareness-

building

Policies, laws,governancestructuresproposed

Water userfees designed

Public supportfor watershedconservation

Phase II: Implementation of Conservation Strategies or Tools

Water feessupport

watershedmgmt actions

Best mgmtpractices to

reduce wateruse

Inputs Outputs or Products

Water feescollected

Water userstake direct

mgmt actions

Forestry / agbest mgmtpractices

Policies, laws,governance

structuredeveloped

Policies andlaws enforced

Key actorsinvolved in

strategyimplementation

Watertreatment best

mgmtpractices

Results of Threat Reduction Conservation Impacts

Best mgmtpractices for

timing ofwater use

Timing ofwater use lessconcentrated

More min/maxflows within

range naturalvariability

Key actorsvalue water

environmentalservices more

Engagementof

policymakers

METHODOLOGY

Figure 1. Causal Chain Defining How TNC Watershed Valuation Projects Are Intended to Contribute to BiodiversityConservation

METHODOLOGY


METHODOLOGY5

policy development and enforcement. For each of thesestrategies, a short chain explains expected results.Public outreach and awareness-building can increasepublic support for watershed conservation. This willencourage water users to take action to improvewatershed conservation. The design of a water user feewill result in collection of water fees that are used tosupport watershed management actions. Engagementof policymakers will result in the development of newlaws, regulations or governance structures.Enforcement, however, is key if the new laws andregulatory systems are to change behavior.

If these conservation strategies are well executed, thenthey should result in increased adoption of bestmanagement practices related to forestry andagricultural activities, reduction of water use, and thetiming of water use or water treatment. Bestmanagement practices depend on the conditions in thespecific site.

Although the results chain is presented as a linearsequence of actions and results, results often are notachieved in the order presented by the chain. TheConservancy’s experiences to date have shown thatsome sites may jump directly to working on thedevelopment of water user fees, while others postponewater user schemes indefinitely. These differences helpus to learn about the advantages and disadvantages ofdifferent approaches and their relative effectivenessunder different conditions.


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The SiteThe Condor Biosphere Reserve (CBR) is made up ofseveral protected areas and their areas of influence thattogether form an ecologically functional site comprisingmore than one million hectares (see Figure 2).

Conservation of this area will guarantee theconservation of the headwaters and biodiversity of theNapo and Aguarico watersheds, two of the mostimportant Amazon basin watersheds. With about 7percent of the surface of the country, the CBR holdsalmost half the species of birds and mammals found inEcuador. The region’s extraordinary biodiversity is afunction of its large variety of habitats: sixteen differentvegetation types have been identified within the CBR,providing habitat for more than 760 species of birds,150 species of mammals and 110 species ofamphibians. Scientists consider this number to beconservative as several areas remain unexplored.

The high plateaus of the Condor Biosphere Reserveinclude the headwaters of more than 20 rivers in 6 largewatersheds that provide water for many uses, includingurban and rural drinking water, irrigation, electricitygeneration, recreational activities such as fishing andhot springs, and other activities such as aquacultureand navigation. Of all these activities, urban drinkingwater and electricity generation use the most water at

specific sites and generate the greatest economic value.

The Condor Biosphere Reserve is the source of waterfor more than 1.8 million people who live in the city ofQuito, Ecuador. Every month, Quito residents andbusinesses drink and wash with about 4.5 billion gallonsof water from the rivers of the CBR. The Quito MunicipalWater and Sewage Agency (EMAAP-Q) managesseveral large water projects that pump waters from theCBR rivers, while Quito’s Electric Company (EEQ) relieson CBR waters for electricity generation.

Threats to BiodiversityDespite their hydrologic value, the watersheds thatprovide drinking water and generate hydroelectricpower for Quito residents are being degraded at analarming rate. The main threats include advance of theagricultural frontier, inappropriate agricultural practicesand poorly planned infrastructure projects. Ruralresidents convert paramo and montane forests to cattleand sheep pastures, and fields are used for subsistenceand commercial agriculture. Residents use pooragricultural practices, such as overgrazing and burningof the paramo, that seriously degrade the high plateaus.

The water and electric companies, municipalities andprivate companies have taken environmental criteriainto account only partially when planning andconstructing roads, dams, water distribution systems, oiland gas pipes and other infrastructure projects. As aresult, all of these factors are contributing to soil erosionand compaction and reductions in dry season flow andwater quality.

As the quantity and quality of water available for humanconsumption, electricity generation and other uses isdecreasing, demand for water and conflicts betweenwater users are increasing. EMAAP-Q estimates thatthe population of the Quito metropolitan area will nearlydouble by 2025, growing from 1.85 to 3.61 millioninhabitants and causing maximum daily water demandto rise from 7.67 cubic meters to 13.33 cubic meters. To

SUMMARY OF PROJECT SITES

Figure 2. Condor Biosphere Reserve, Ecuador

QUITO, ECUADOR

QUITO, ECUADOR


QUITO, ECUADOR7

help meet this demand, the company is planning theRíos Orientales Project that will draw drinking waterfrom 28 rivers in the Amazon basin.

Project ActivitiesFor over 10 years, the Conservancy has been workingwith Fundación Antisana, a local partner, the UnitedStates Agency for International Development (USAID)and others in establishing a water-based financemechanism as a long-term source of financing for theconservation of the Condor Biosphere Reserve,particularly the Antisana and Cayambe-Coca EcologicalReserves, which are the primary source of drinking

water for Quito (see Box 1). In April 1998, theConservancy proposed to the Municipality of Quito thedevelopment of the Water Conservation Fund (Fondopara la Conservación del Agua-FONAG).

In determining the appropriate finance mechanism todevelop to help protect the Condor Biosphere Reserve,the Conservancy and its partners evaluated variousoptions (e.g. taxes, incentives) according to thefollowing criteria:

• Ecologically sustainable - promoting long-termwatershed conservation

• Legally feasible - based on the local regulatory

environment • Politically viable - likely to be accepted politically • Multidisciplinary - allow the participation of public

and private organizations • Efficient - should not create more organizations, and

no bureaucracy • Participatory - ensure and promote multi-

stakeholder participation, in particular at thecommunity level.

It was determined that a water user fee was the mostappropriate tool to help achieve conservation goals inthe area. Early in the process of developing a waterfund, TNC and Fundación Antisana chose to focus onthose water users with the greatest economic andpolitical weight. EMAAP-Q, the water utility, wasidentified due to its role in providing water to urbanresidents. Urban growth in Quito over the last threedecades has created demand for water, and thegrowing supply of untreated wastewater has affectedthe water quality of local rivers, which prompted waterspecialists to look beyond the Pacific slope watershedsand existing groundwater resources. This has placedgreat pressure on the company to expand their serviceand exploit rivers in the Amazon Basin, often with littleattention given to the environmental impact particularlyof water diversion projects from one watershed toanother. Furthermore, little is being done to address theloss of approximately 38.5 percent of Quito’s municipalwater supply due to unreported sales, illegalconnections and water leaks in the infrastructure.

The Quito Electric Company (EEQ) was also identified asa key stakeholder as it has been providing electricitygenerated by hydropower for the past 40 years to Quitoand the region. The government has given EEQconcessions to exploit hydropower in specific locationswithout requiring the company to pay for the right touse the water. EEQ’s data show that stream flow hasdecreased in the San Pedro River over the past 40 years,and the company attributes this to poor watershedmanagement. Thus, EEQ became interested in workingwith other institutions to maintain existing stream flowlevels through reforestation and other watershedmanagement activities.

FONAG was created in January 2000 as a trust fund,

Box 1. Dates for the Condor Biosphere Reserve WatershedValuation Project

1997 Water: Together We Can Care For It! Developed1998 TNC and Quito Municipality officially launched the

Water Conservation Fund (FONAG) initiative, agreeing to collaborate on the design and development of the waterfund.

1999 TNC facilitated an ad-hoc committee to design and develop the water fund

2000 Development of FONAG bylaws that defined its financialstructure (as a trust fund) and governance structure.

2001 EEQ signed the FONAG trust fund contract, committingto an annual contribution of 0.5% of profits.

2002 FONAG developed a process for presentation and review of proposals and approved its first proposal.

2003 Quito Mayor pressured FONAG to finance more projects.2004 FONAG hired a new Technical Secretary with strong

capacity in watershed management. FONAG Board approved new policies, procedures and criteria for project selection. TNC and FONAG conducted a general technical analysis of the river basins and water demand in Quito’s area of influence (Hoja de Quito).

Key Dates for the Condor BioreserveWatershed Valuation Project


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under an Ecuadorian law allowing companies that handlepublic funds to put money into a trust fund designated fora specific purpose. As a Fideicomiso, a contract throughwhich assets are transferred to a fiduciary agent, FONAGreceives resources from the EMAAP-Q (1 percent of itsmonthly water sales or approximately $360,000 per year),EEQ ($45,000 per year), a private beer producer($6,000 per year) and the Swiss Agency forDevelopment and Cooperation ($10,000 per year fortwo years).

The governance structure of FONAG includes a Boardof Directors and a Technical Secretary. The FONAGcontract defined that the funds could be used foractivities in the following areas:

• Legalization of land tenure and land acquisition • A system of patrols to control illegal activities such as

fires, fishing and hunting • Hydrologic protection measures such as installing

fencing around springs and erosion control • Promotion of sustainable agricultural production

systems• Monitoring and evaluation of project results.

During the start-up phase of FONAG, FundaciónAntisana conducted a simple economic valuation studyin the Cayambe-Coca Ecological Reserve. It estimatedthe cost of maintaining park guards to effectively patrolthe upper parts of the Papallacta, Chalpi Grande andOyacachi watersheds and divided this cost by theamount of water extracted from the area for urbanwater supply. These studies provided a preliminaryestimate of the level of a user fee that could beconsidered. In addition, the Conservancy supportedhydrologic research and research on aquaticbiodiversity that has provided baseline informationabout certain watersheds in the CBR. While watershedand other studies were used to help develop FONAG,most project work focused on developing the politicalsupport necessary to create and make operational afund financed by user fees.

Preliminary OutcomesThe Conservancy, the Municipality of Quito, EMAAP-Q,EEQ and the Andean Beer Company have achievedsignificant results in the design and development of a

water fund financed solely by local Ecuadorianinstitutions. As of the end of 2004, FONAG had$2,112,000 in capital, which provided a budget of$301,000 for projects in 2005. The design of the fundallows the capital and funds available for projects toincrease each year, and by 2011, it is projected to haveover $7 million in capital and generate over $800,000 forprojects each year.

The interest generated by the Fund began to fundwatershed protection projects in 2003 in the riversconsidered to be of key importance for water provisionand biodiversity protection for the city. FONAG iscurrently funding a host of activities in the San Pedro,Pita, Antisana, Oyacachi and Papallacta rivers. Inparticular, in the last two rivers, FONAG is evaluatingcommunity needs for micro-credit to determine possibleproduction activities that would generate income forland owners in the area, replacing or reducing activitiesthat negatively affect the area’s hydrological andbiological integrity. Currently, community developmentactivities such as cattle and potato farming deterioratewater quality and reduce land cover.

It is too soon to evaluate the full impact of these projectsin terms of improving watershed management. Some ofthe other projects funded to date include:

• A study of hydrologic resources, forestry planning,reforestation and river cleaning will contribute tothe recuperation of the lower parts of the San Pedroand Pita watersheds.

• Clean-up of clandestine solid waste dumps andrecuperation of the river banks in the San Pedro andPita basins.

• An environmental education and restoration project inthe Pita watershed was conducted by ThePáramo Foundation.

• Reforestation in critical zones, supported by FONAGin collaboration with Vida para Quito.

• Improved cattle ranching practices in the Cayambe-Coca Ecological Reserve and the Papallacta andOyacachi watersheds, that have reduced conflictsbetween cattle and the Andean bear and reduced the environmental impact of cattle ranching on thewatersheds.

• Salary and expenses of nine community park guardsin Condor Biosphere Reserve.

QUITO, ECUADOR


QUITO, ECUADOR9

In September 2004, the Conservancy and FONAGcompleted a general technical analysis of the riverbasins and water demand in Quito´s area of influence(Hoya de Quito). This study represents the largest effortto date to consolidate information about thesewatersheds and provide a strong technical basis formanagement. Over the past two years, FONAG has beenconducting a series of workshops to share the findingswith key actors, create a common understanding of thecritical situation of these watersheds and facilitatecollaboration on watershed management.

Overcoming Challenges: The FutureFONAG has faced countless challenges, includingconstant pressure from local government to showresults. With limitations on fundraising due to its statusas a trust fund, FONAG has faced the added hurdle oftrying to increase financial resources to bring aboutconcrete results. The FONAG Board is interested inincreasing the operating budget of FONAG, either byincreasing membership, developing strategic alliancesthat generate matching funds, or fundraising. Of thesethree options, matching funds have the greatestpotential to increase the money available for watershedmanagement projects over the short term. Beginning in2004, the Conservancy has provided matching funds toco-financed projects with FONAG, increasing the fund’soperating budget by 18 percent.

FONAG also has begun to collaborate with theCorporación Vida para Quito, an initiative of the QuitoMunicipality. In Ecuador, all taxpayers can decide todedicate 25 percent of their income tax to a specificcause of a public entity. Under this program, the QuitoMunicipality formed this corporation to address pressingenvironmental and social needs. Quito could receiveapproximately $100 million through this program overthe next five years. Currently, the corporation is focusingon the restoration of the three rivers that flow throughthe city. Because FONAG’s priority areas include two ofthese rivers, the San Pedro and Pita rivers, the objectivesof the two organizations overlap, and they both havesupported small hydrologic research and reforestationprojects. Although the city has many needs, includingthe need to invest a substantial amount in sewagetreatment, this municipal corporation has the potential tobe a valuable partner for FONAG.

FONAG was created by an 80-year contract signedinitially between TNC and EMAAP-Q and later by EEQand the Andean Beer Company and, recently, the SwissAgency for Development and Cooperation. EEQ andEMAAP-Q are municipal companies, and on threedifferent occasions over the past eight years, changes incity leadership have required TNC to invest in lobbying anew mayor to continue honoring this contract. TNC andthe FONAG Technical Secretary believe that it importantto institutionalize FONAG through a municipalordinance, and they are taking steps toward this.

The ultimate goal of FONAG is the conservation andmanagement of the watersheds that provide water toQuito. This will require, however, a fundamental culturalchange in key agencies such as EMAAP-Q, EEQ andthe Municipality of Quito. It requires both the creation ofa culture of integrated watershed management and theimprovement of the environmental practices of theprincipal water-using agencies and industries in Quito.Decision-makers in these agencies recognize that thereis growing demand for drinking water and other wateruses. Their investment in FONAG demonstrates thatthey also recognize the need to address threats such asovergrazing and deforestation. They are slow torecognize the need for integrated watershedmanagement (i.e., for integrated planning andmanagement of all activities that affect water resourceswithin each watershed). Gradually, they have come torecognize how the actions of their agencies contributeto watershed degradation. For example, EEQ drains theSan Pedro river completely and leaves the river bed dryfor several kilometers. Although EMAAP-Q contributesto FONAG, the construction of its water infrastructurecontinues to represent one of the biggest threats tobiodiversity conservation and a major threat towatersheds in the Condor Bioreserve. Although thecompany wants to apply environmental best practicesin its planning and construction, EMAAP-Q and theMunicipality of Quito promote large infrastructureprojects such as Ríos Orientales as the only way to meetthe city’s growing demand for water. Demandmanagement practices are overlooked even thoughsignificant water savings could be achieved by fixingleaks, controlling illegal connections and chargingunpaid connections in the city’s water system. Fundingfrom the Inter-American Development Bank is beingsecured for the development of a Water ResourcesManagement Plan, which will include demand sideissues.


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The SiteThe Sama Range Biological Reserve is located in thewestern part of the Department of Tarija in southernBolivia. The reserve covers 108,500 hectares ofmountainous terrain that extends from 2,020 to 4,706m. The higher altitude (3,600-4,700 m.) portion of thereserve includes part of the High Andes Ecoregion,Puna Ecoregion and Prepuna Ecoregion and the lowerportion (2,000-3,600 m.) includes part of the Inter-Andean Dry Valleys Ecoregion and the BolivianTucuman Forest Ecoregion.

The reserve was created in 1991 to protect theprincipal sources of water for the city of Tarija andnearby communities, to conserve the biodiversity ofthe area and to protect valuable archeological sites.Important biological assets include the Tajzarawetlands, a group of a seasonal, semi-permanentand permanent lakes, high altitude streams,marshes and high Andean pastures declared aRamsar Convention Wetland of InternationalImportance in 2000. These wetlands provide habitatfor 40 species of birds indigenous to high Andeanaquatic systems. The wetlands also are importantfor migratory shorebirds, including three of theworld’s six flamingo species: the Chilean flamingo,the Andean flamingo and the James flamingo. Other

species of particular importance to conservationinclude the condor, the Andean goose, numerousspecies of ducks, mountain lion or puma, Andeancat, vicuna, Andean deer and Andean fox.

The city’s water comes from the La Vitoria and Tolomosawatersheds (see Figure 3). During the rainy season,Tarija gets 70 percent of its potable water from the LaVitoria watershed and 30 percent from groundwater.During the dry season, approximately 50-60 percentof the city’s water comes from groundwater, 20-30percent from the La Vitoria watershed, and amaximum of 10-20 percent from the San Jacintoreservoir in the Tolomosa watershed.

Threats to BiodiversityDespite their hydrologic value, these watersheds arebeing degraded by current land use practices.Deforestation and fires have reduced groundcover andincreased soil erosion. Overgrazing of watershedrecharge areas (especially in the Tolomosa watershed)has compacted soils and caused significant soil erosion.Although site managers have not documented changesin the hydrologic regime, they believe that thedeforestation, fires and overgrazing have increasedrunoff and decreased infiltration, thus decreasing dryseason flow.

Water quality also has decreased. Inadequatemanagement of agrochemicals and wastewater arethe main sources of water pollution. While thequantity and quality of water available from thesewatersheds for human use in Tarija have decreasedover the last few years, the population hasincreased dramatically. Between 1992 and 2004, thepopulation increased by over 50 percent, from90,000 to 145,000. When demand for water exceedsthe capacity of these watersheds, groundwater isexploited. The water company and governmentauthorities have no information about currentgroundwater reserves or recharge rates. No oneknows, therefore, whether current groundwaterextraction rates are sustainable.

Figure 3. La Vitoria and Tolomosa Watersheds, BoliviaSource: Blanco, A. and R. Aguilar. 2004.

SAMA RANGE BIOLOGICAL RESERVE, BOLIVIA

SAMA BIOLOGICAL RESERVE, BOLIVIA


SAMA BIOLOGICAL RESERVE, BOLIVIA11

Project ActivitiesInitial watershed valuation work involved conductinghydrologic research on the Bermejo River in the TariquíaReserve. With guidance from TNC, PROMETA (theAssociation for the Protection of the Environment ofTarija) organized a series of four watershed valuationworkshops in which key stakeholder groups analyzedwater use and threats to water quantity and quality.After the second watershed valuation workshop, all ofthe participants determined that PROMETA’s watershedvaluation work should focus on the Sama Reservebecause of its importance in providing water to the cityand surrounding communities.

PROMETA identified the goal of the watershedvaluation project for the Sama Reserve as thedevelopment of a strategy to provide the resourcesnecessary to implement conservation, environmentaleducation and watershed management programs thatwill guarantee the long-term sustainability of theTolomosa and La Vitoria watersheds’ environmentalservice provision to nearby communities and the cityof Tarija (see Box 2). PROMETA has used severalstrategies to reach its goal. First, the organization hasconducted an outreach campaign to raise awarenessof the importance of watershed conservation. Second,specialists have conducted hydrologic and economicvaluation research to help reserve managersdetermine what actions need to be taken to conservewatersheds and build stakeholder support for thoseactions. Third, PROMETA has worked with key

stakeholder institutions to develop a governancestructure for improved watershed management.

In 2001, PROMETA signed an agreement to initiatewatershed conservation activities in the Sama Reservein collaboration with the Municipality of Tarija, thegovernor’s office (Prefectura), the water company(COSAALT, Cooperativa de Servicios de Agua Potable yAlcantarillado de Tarija), and SERNAP Servicio Nacionalde Areas Protegidas (National Protected Areas Service).PROMETA collected hydrologic and geographic dataabout the Tolomosa and La Vitoria watersheds in theSama Reserve, organized it into a database and used itto map vegetation cover, current land use and land usecapacity. PROMETA then analyzed the hydrologic valueof these watersheds and reported the results back tothese agencies. At the same time, they initiated anoutreach campaign and an economic valuation study.

In 2001-2002, PROMETA used the information in thedatabase to conduct a hydrologic valuation study thatincluded four components. First, they mapped currentland use in the watersheds and modeled future land usescenarios, including a “no protection” and a “protection”scenario. Second, they estimated water availability anddemand for water for irrigation. Third, they estimatedthe effect that changes in land use could have onerosion rates and, fourth, the effect land use changescould have on streamflow.

Box 2. Key Dates for the Sama Watershed Valuation Project

1996 Governments of Bolivia and Argentina propose dam on Bernejo River2000 PROMETA attended Conservation Training Week and learned about other

sites’ experiences2001 PROMETA received technical assistance from Marlou and conducted watershed

valuation workshops2001 PROMETA decided to focus on the watersheds in the Sama Reserve and signs a

cooperative agreement with the Municipality of Tarija, COSAALT, SERNAP and the Governor's office

2001 PROMETA initiates educational campaign2002 PROMETA completely hydrologic and economic valuation research2002 Fire in La Vitoria and Tolomosa watersheds2003-4 Design and development of PRO-AGUA

Key Dates for this Watershed Valuation Project


12

While conducting this hydrology research, PROMETAalso undertook an economic valuation study of thewatershed environmental services that the Samamountain range provides to the city of Tarija andsurrounding communities. This study included twocomponents: a contingent valuation study toestimate how much urban and rural residents valuethese watershed environmental services, and anestimate of the costs that the water company andhydroelectric company would incur if the Samareserve were not protected, based on the results ofthe hydrology research.

In 2002, a fire burned 15,000 hectares of the La Vitoriaand Tolomosa watersheds, including themicrowatershed that provides water to the city. From thecity, people could see the forests burning for severaldays. This disaster dramatically increased people’sconcern about water supply and interest in watershedconservation. Suddenly, watershed conservation becamea topic that the local media discussed and local policy-makers were expected to address.

PROMETA organized a workshop to share the results ofthe hydrology and economic valuation research withrepresentatives of the Municipality of Tarija, COSAALT,the Tarija Departmental government, SERNAP and otherkey stakeholder groups. The presentation of theseresults coincided with very strong government concernabout watershed management, due to the public outcryafter the fire in 2002. Government officials expressedconcern about these rather alarming hydrologic andfinancial projections and interest in working onwatershed management.

PROMETA also used the results of the hydrologyresearch as one of the inputs in developing a siteconservation plan for the two watersheds. PROMETAorganized a series of three workshops to involve localorganizations in the development of the siteconservation plan. These organizations included thedepartmental government, the Municipalities of Tarijaand San Lorenzo, COSAALT, SERNAP, the SanJacinto hydroelectric project and local non-governmental organizations.

SERNAP signed a co-management agreementwith the communities around the reserve. Thesecommunities are very involved in forest fire preventionand control, reforestation, sustainable cattle ranchingand other activities.

Beginning in 2001, PROMETA hired a communicationsprofessional to organize an educational campaign aboutwatershed conservation oriented toward secondaryschool students and adults in the city of Tarija andsurrounding communities. The campaign has focusedon helping water users to understand where their watercomes from and the need to conserve the watershedsthat provide water to the city.

Preliminary OutcomesThere is broad public consensus about the importanceof protecting the watersheds that provide water to thecity. PROMETA believes that this is the result of thecombined impact of the outreach campaign and the fire.

The 2002 forest fire demonstrated that institutions wereoperating independently, with little or no inter-institutional coordination. The fire provoked a massiveresponse on the part of ordinary citizens, as well as alllocal and national institutions. This resulted induplication of efforts, inefficient use of existingresources and even increased risk, due to the lack ofadequate security measures. After the fire, severalinstitutions expressed interest in working together andcoordinating their individual actions. As a direct result ofthe disaster, PROMETA facilitated the development of aninter-institutional program for the prevention, detectionand control of forest fires in the Central Valley of Tarija.

To address watershed conservation needs in anintegrated and coordinated fashion, PROMETA helpedcreate a coalition to coordinate the efforts of existinginstitutions-The Association for the Protection of theWater Sources of the City of Tarija and the Communitiesin the Tolomosa and La Vitoria Watersheds (PRO-AGUA). This coalition includes representatives of bothgovernmental agencies and civil society. It facilitatesfundraising, helps to avoid the duplication of efforts andincreases fiscal accountability and transparency.

SAMA BIOLOGICAL RESERVE, BOLIVIA


SAMA BIOLOGICAL RESERVE, BOLIVIA13

The member organizations recognize the value ofworking together and believe that PRO-AGUAincreases their collective capacity to manage thewatersheds effectively. Although the Departmentalgovernment has primary responsibility for themanagement of water resources, it has little experienceor expertise in watershed management. PRO-AGUAmembers have the needed expertise in watershedmanagement and can help the Departmentalgovernment identify and fund priority actions.

One of the initial results of PRO-AGUA has beenCOSAALT’s decision to dedicate part of its budget towatershed conservation. Historically, COSAALTinterpreted its responsibilities as management of thesprings and water collection area and the provision ofwater from the springs to the city, through extensivewater infrastructure. The institution had never investedin watershed conservation, which they considered to bethe job of foresters and agronomists, not engineers. Asof January 2005, however, COSAALT created aDepartment for the Protection of Water Sources and theEnvironment, with an annual budget of $25,000 forwatershed conservation activities. This represents afundamental change in the goals of the institution.

Overcoming Challenges: The FutureThe formal creation of PRO-AGUA has taken more timethan anticipated. Many organizations have experiencedturnovers and bureaucratic red tape as well as fears thatpeople will be charged water user fees or that PRO-AGUA may privatize the water. Water has become apolitically sensitive topic throughout Bolivia since 2000,when there were riots in Cochabamba after thegovernment privatized the city’s water supply, and thenew company doubled and tripled water rates for morethan half a million people, including many poor families.

PRO-AGUA still faces to the challenge of establishingwatershed conservation as a high priority on the agendaof government agencies. Some point out that Tarija’spopulation has grown dramatically over the past twodecades, primarily due to development associated withthe exploitation of gas reserves (approximately 90percent of Bolivia’s gas reserves are located in this

department). During this period, the Departmentalgovernment has received gas royalties and has investedin the construction of roads and irrigation systems, butthey have done little to ensure the protection of scarceand highly threatened water resources, because they donot consider it to be a top priority. Last year, theDepartmental government even returned money to thecentral government, because it did not have thecapacity to spend all of its budget. Meanwhile, theSama Reserve did not have adequate staff or resourcesto adequately protect critical watersheds. PROMETAhas asked the Departmental government to includemoney for PRO-AGUA activities in its annualoperational plans.

When PROMETA began working on watershedvaluation, they were interested in implementing awater user fee as a payment for environmentalservices. Although the organization is still interestedin this innovative conservation tool, they believe thatit may not be politically viable at this time. Their goalis watershed conservation, and to achieve this goal,they need to increase financial support forwatershed conservation activities, but water usersare only one potential source of funding. For theimmediate future, they are working to convince thePRO-AGUA member institutions to dedicate more oftheir budgets to watershed conservation.

PROMETA believes that certain conditions must existbefore it proposes a water user fee. First, PRO-AGUAmust be legally established, and it must develop apositive public image. It should implement someconservation projects successfully, so that the publicsees that the organization has the capacity to getthings done. Second, Tarija needs to achieve a higherlevel of political, social and institutional stability. Forexample, over the last three years, Tarija has had fivegovernors (prefectos). Throughout Bolivia, there hasbeen social tension due to the economic situation. TheCochabamba situation remains on the mind of manyBolivians. Relative to other parts of the country,people in Tarija pay a substantial sum for water andelectricity. They complain about these charges, asituation which reduces the feasibility of charging forwater use in the near term.


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The SiteThe Sierra de las Minas Biosphere Reserve (SMBR) islocated in eastern Guatemala, in one of CentralAmerica’s oldest and most biologically diversemountain ranges (see Figure 4). The reserve coversapproximately 240,000 hectares and extends from closeto sea level to over 3,000 meters. This altitudinal gradientcreates a large variety of ecosystems that providehabitat for over two thirds of all mammal and reptilespecies registered in Guatemala and Belize, includingendangered species such as the quetzal, yellow-cheeked warbler, jaguar, ocelot, tapir, and others. TheSMBR is considered a very important “gene bank” foreconomically important coniferous species.

Sixty-three permanent rivers originate in the densecloud forest of the core zone of the reserve. Therivers that flow out of the reserve are tapped tosupply domestic water to over 500 impoverishedrural communities (approximately 400,000 people),to irrigate subsistence crops and small-scale cattlepastures through numerous artesanal irrigationsystems built by local residents, for small-scalecoffee and cardamom processing, for drip irrigationsystems constructed by agro-industrial companiesthat grow and export fruits, and to produce energyby hydroelectric plants. In the Motagua Valley,several businesses and industries depend on

groundwater resources, including three bottlingcompanies and a paper mill.

Threats to BiodiversityDespite the socioeconomic and financial value ofthese water resources, current land use practicesare degrading the watersheds of the SMBR. On thenorthern side of the reserve, poor Q’eqchí andPocomchí residents cut down the forest to expandtheir subsistence agricultural areas. On the southernside, inappropriate agricultural and cattle ranchingpractices cause forest fires that reduce forest coverand contribute to soil erosion. Forest diseaseoutbreaks also have contributed to deforestation.Over the last few years, several land invasions haveoccurred that have resulted in deforestation in thecore zone and buffer zone of the reserve.Deforestation, forest fragmentation, soil erosion andsoil compaction all have an impact on water supplyand water quality. Residents throughout the areacomplain that deforestation has led to a decrease inwater supply, particularly during the dry season.Many water users also complain of conflicts overincreasingly scarce water resources.

There are currently no financial mechanisms inplace to charge water users for watershedenvironmental services, channel user fees to themanagers of the SMBR or compensate privateforest owners for protecting their forests andproviding valuable environmental services. A fewmunicipalities and towns have water fees that coverthe maintenance costs of surface water distributionsystems, but in most cases, consumers do not evenpay for maintenance. Where they exist, water feesdo not vary according to consumption levels. Forexample, domestic water users and members ofsome irrigation systems pay fixed monthlymaintenance fees. Users of surface water andgroundwater pay nothing for the right to use theresource or for the protection and management ofthe watersheds and aquifers that provide it.

SIERRA DE LAS MINAS BIOSPHERE RESERVE, GUATEMALA

Figure 4. Sierra de las Minas Reserve, Guatemala © PegKohring/TNC



SIERRA DE LAS MINAS BIOSPHERE RESERVE, GUATEMALA15

Project ActivitiesTo reduce the threats to the reserve and itswatersheds, Fundación Defensores de la Naturaleza(Defensores), a TNC partner, determined that a keylong-term approach was to involve downstreamwater users in supporting upstream forestconservation through the creation of a water-basedfinance mechanism for the Sierra de las MinasBiosphere Reserve. Over the past few years,Defensores has focused primarily on planning andalliance-building (see Figure 1). This has includedstudies and consultations with the principal waterusers around the reserve - all of whom areconsidered important stakeholders:

• Municipalities and community committeesresponsible for domestic water supply

• Farmers who use artesanal irrigation systems • Agro industrial companies that use more complex

drip irrigation systems, some of which draw on groundwater and others surface water

• Small-scale hydroelectric companies that operateor plan to operate in one of the RBSM watersheds

• Beverage companies and other industries that usegroundwater and surface water.

Analysis of Guatemalan legislation related to waterresources determined that the country’s legislationis inadequate. While the nation’s Constitution statesthat “all waters are public goods” and water use isto be regulated by a national water law, this law hasnever been developed. In addition to legaldeficiencies, there are many institutional gaps.Although the Ministry of Environment and NaturalResources (MARN) has the responsibility to overseethe management of the nation’s water resources, ithas limited capacity to exercise this authority andthus different aspects of water use are overseen bydifferent sectors, resulting in overlaps and conflictsbetween different water users. For example,concessions for hydroelectric companies are givenwithout coordination with other sectors, such aslocal irrigation and domestic systems, generallycreating conflicts between these users. In addition,there is no mechanism that prioritizes differentwater uses based on relative socioeconomic value.

The result is that water use by those with strongerpolitical and economic power take precedence overthe needs of poor communities. In 2005, thegovernment adopted a water policy that MARNcoordinates. This should help address some of theseinstitutional gaps and overlaps and ease conflictsbetween water uses.

Other studies included an assessment of domesticwater supply systems in the ten municipalities inand around the SMBR in the departments of ElProgreso, Zacapa and Baja Verapaz. Although manywater users do pay a monthly fee for their water, itis quite low-generally between 1 quetzal and 12quetzals (approximately between 14 U.S. cents and1.60 U.S. dollars)-and usually is not sufficient tocover even the costs of operating and maintainingtheir water systems, much less the cost ofwatershed conservation. Very few communities havewater meters, and those that do have them, do notalways read them. Thus, in almost all cases,payments are not based on consumption levels, andno incentive exists to conserve water.

Defensores also conducted several watershedvaluation studies as part of the effort to create awater-based finance mechanism. A contingentvaluation study analyzed the economic value thatlocal residents give to watershed environmentalservices. The study found that most residentsunderstand the role played by the cloud forest at thetop of the watershed in capturing water through fogdrip and regulating stream flow. However, many aredissatisfied with the amount of water available tothem and the inequitable access to the resource. Atthe same time, they perceive of themselves as poorand unable to pay for watershed conservation. Thestudy found that most of these households pay Q20to Q40 per month for electricity. Their willingness topay much more for electricity than for water may bedue to a perception that water always has been andshould be a free resource, as well as their higherlevel of satisfaction with the electric service andtheir perception of equitable access to the service.

Another study involved four different methods toestimate the value of water for different industries,


16

including hydroelectric companies, bottlingcompanies and a paper company. The range ofvaluation estimates-from US $0.38 to US $1.99 percubic meter-formed the basis for discussions withcompanies located in the Motagua Valley to try toestablish voluntary agreements on payments forwatershed services.

As part of this effort, Defensores is organizing keystakeholders at two levels. First, they are creating aMotagua-Polochic System Water Foundation thatwould include representatives from all the differentwater user groups in and around the Sierra de lasMinas Biosphere Reserve and the Bocas delPolochic Wildlife Refuge. Second, they are helpingto create local watershed committees in key micro-watersheds as models of local level decision-making and collaboration between sectors.

In addition, Defensores has designed a WaterResources Research and Monitoring Program toprovide information to support decision-making forthe Motagua-Polochic System. Within this program,Defensores is monitoring water quality and streamflow monthly at approximately 45 sites throughoutthe Motagua-Polochic System. Water qualitymeasures include pH, total dissolved solids (TDS),conductivity, dissolved oxygen, temperature,phosphorus and nitrogen. Defensores also takesmeteorological data monthly and monitors changesin forest cover every five years.

Preliminary OutcomesAlthough the project is aimed at raising awarenessof the value of water and the need to protect andreforest upper watershed areas, Defensores and itspartners recognize that water users are moreconcerned with increasing their water supply andresolving conflicts. By helping the communities toresolve their immediate concerns about watersupply, Defensores hopes to increase communityawareness, interest and involvement in reforestationand forest protection. Since the end of 2003,Defensores has worked to form pilot watershedcommittees in three of the largest and most criticalwatersheds: San Jerónimo, Teculutan and Lato. In

these watersheds, demand for water is high and, insome cases, tension exists between different usergroups and between users in the upper and lowerparts of the basins.

In the Teculután watershed, the largestwatershed on the southern side of the Sierra delas Minas Biosphere Reserve, Defensores hasbeen working with the mayor to broadenparticipation in the Pro-Teculután River Sierra delas Minas Biosphere Reserve Association. Todate, the Association has developed a watershedmanagement plan to guide land use planningand define priorities related to water use,reforestation, environmental education andproductive agricultural activities. They havesupported the establishment of a municipalforest office and collaborated on municipalreforestation projects.

Throughout the process of establishing this andother local watershed committees, Defensores hasworked to raise awareness regarding theimportance of water, freshwater biodiversity andsustainable resource management in the Motagua-Polochic System, through formal and informaleducation programs. Defensores has presentedshort presentations and videos about the reserve,the role of watersheds, the water cycle, the value ofwater and threats such as forest fires. Defensoresprepares conservation-oriented public servicemessages for local radio stations. It has alsoprepared an educational guide for primary schoolteachers that can be adapted for each watershed.

The mayors of the municipalities in and around theReserve have a growing appreciation for theimportance of protecting the watershed. During the2004 dry season, fourteen municipalities provided atotal of 15 municipal park guards to work withDefensores staff and the Guatemala ProtectedAreas Council (CONAP) park guards to addressforest fires and other threats in the SMBR. In 2005,they increased their support to include 30 municipalpark guards and 6 municipal fire brigades. Inaddition, several municipalities opened TechnicalUnits on Environmental Management.



SIERRA DE LAS MINAS BIOSPHERE RESERVE, GUATEMALA17

Overcoming Challenges: The FutureOne of the biggest challenges that Defensoresfaces as it works to build one regional and manylocal governance structures for water resources(the Water Foundation and local watershedcommittees) is the inadequate legal andinstitutional framework for water resourcemanagement in Guatemala.

Another significant challenge in working with localwater committees is to stay on mission and maintainDefensores’ focus on the protection and sustainablemanagement of upper watershed areas. In creatingthese committees, Defensores brings togetherstakeholders with diverse and often very strong water-related interests. The Municipalities would likeDefensores to help them strengthen their capacity tomanage domestic water supply systems. TheAssociation of Irrigation Users of San Jerónimo(AURSA) members would like help resolving theirconflict with the San Isidro-Matanzas hydroelectriccompany so that they will have more water available forirrigation. Other groups of farmers would like help indeveloping more efficient irrigation systems.Hydroelectric companies would like help in improvingtheir relations with local communities. Industrialcompanies would like help in reducing their water use,adopting cleaner technologies and meeting therequirements of new regulations and market trends.

Many of the real costs of conservation andmanagement of the core zone of the Sierra de lasMinas Biosphere Reserve are not visible. Theyinvolve park guards’ salaries, ongoing patrols,participatory planning processes with localstakeholders, inter-institutional collaboration toresolve problems such as illegal land invasions, andothers. Within its training and educationcomponent, Defensores and its partner constantlyreinforce the importance of conserving the SMBRcore zone. Moving forward, one of the challengeswill be to enlist water users to support concrete,visible projects as well as essential, less visiblemanagement actions.

Defensores originally envisioned the water fundpurely as a finance mechanism in which water user

fees and voluntary contributions would be used tocover most or all of the basic ongoing expenses ofconservation and management of the core zone ofthe Sierra de las Minas Biosphere Reserve. Inmeeting with representatives of importantstakeholder groups, however, Defensores found thatthey wanted to be involved in deciding how thatmoney would be used. For this reason, the originalidea of a water fund evolved into the creation of awater foundation and local watershed committeeswith representation from all major user groups. Asdifferent user groups participate in the waterfoundation, Defensores believes that transparencyin decision-making and financial management overtime will build trust and increase contributions. Forthe future, efforts will focus on the development ofa governance structure in which all water usergroups could participate in decision-making.


18

The SiteThe state of Chiapas, located in southwestern Mexico isjust one-third the size of California, but is home to over640 bird species, more than 1,200 butterfly species and17 natural plant communities. Chiapas’ Sierra Madremountain range resides in a transition zone betweenthe Neoarctic and Neotropical biogeographical regionsand, as such, is host to flora and fauna at thenorthernmost and southernmost extension of its range.Initially, the focus was on El Triunfo and the Cuxtepecwatershed. Over time, TNC expanded the geographicscope to include La Encrucijada and the connectingCoapa watershed. Currently, watershed valuationactivities cover three reserves (El Triunfo, La Encrucijadaand La Sepultura) and five watersheds found in thosereserves (Cuxtepec, Coapa, Lagartero, Zanateco andPijijiapan) (see Figure 5).

Nestled in the Sierra Madre mountain range, El Triunfois one of the most biodiverse forest reserves in Mexicoand worldwide, protecting cloud forest, tropical forests,oak-pine forest and hydrologic systems in its nearly120,000 hectare expanse. It provides habitat for 40percent of the birds in Mexico, including the Quetzal. ElTriunfo’s importance to watershed conservation isundisputable. Its drainage captures 10 percent ofMexico’s rainfall, providing water to all of Chiapas’

economically important regions, including the fertileSoconusco plain. It also provides water to the RioGrijalva in the Cuxtepec watershed, a river that is animportant source of hydroelectric energy for Mexico.

Located on Chiapas’ southern Pacific coast, LaEncrucijada Biosphere spans over 144,000 hectares andincludes mangrove estuaries, semi-deciduous tropicalforest and seasonally-flooded coastal forest. Thereserve forms one of the largest marine fisheryspawning areas on Mexico’s western coast andprovides critical wintering habitat for migratorywaterfowl, pelicans, wading birds and shore birds. Froma conservation standpoint, La Encrucijada is one ofMexico’s most important wetlands. Of particularimportance are the unique zapotonal (pachira aquatica)forests and spectacular stands of mangroves that canreach over 25 meters in height.

With elevations ranging from 40 to 2550 meters abovesea levels and some gradients as steep as 45 degrees,La Sepultura provides varied habitat that supports awide range of plant and animal species. Its ecologicalzones are equally diverse and include semi-arid, humid,tropical, and temperate regions.

Threats to BiodiversityEach watershed experiences threats unique to itsregion. However, some general threats include: highpopulation density, slash and burn agriculture, cattleranching, coffee production, logging, deforestationassociated with these productive activities, heavysedimentation and forest fires. Social and political strife,including conflicts over land, also have led to violentclashes in the area.

El Triunfo’s main threats include: (1) deforestation fromexpanding coffee plantations, subsistence agriculture,cattle ranching and forest fires; (2) soil and watercontamination from agrochemicals and coffee pulp; and(3) increasing pressure on surrounding naturalresources as a result of social-agrarian problems suchas poverty, marginalization, scarce agriculturalresources and high population growth.

Figure 5. Sierra Madre © Mark Godfrey/TNC

CHIAPAS, MEXICO

CHIAPAS, MEXICO


CHIAPAS, MEXICO19

Most of the major threats to La Encrucijada occuroutside the reserve’s boundaries and include: (1)deforestation in the upper and middle watershed, whichcauses erosion upstream and sedimentationdownstream; (2) hydrologic alteration to increasecultivatable land for farmers and migrants upstream,which also increases sedimentation downstream; and(3) water contamination from heavy use of agro-chemicals. The fact that most of the major threats to LaEncrucijada come from outside of the reserve has beena primary motivator for reserve management to adopt awatershed approach to conservation. Threats within LaEncrucijada include the conversion of forested areas,mangroves and cattail marshes for grazing andagriculture, illegal timber harvesting, wildlife poaching,canal and coastal lagoon contamination, landownership conflicts and a sharp increase in shrimpfarming along the Pacific coast.

One of the main threats to La Sepultura area-and towatershed conservation in particular-is that the city ofTonalá extracts much more water than it returns,causing the downstream lagoons to become more saltyand reducing fish and shrimp catches. Other threats toLa Sepultura and neighboring regions include extensiveranching, slash and burn agriculture and clearing forlogging. These threats have reduced downstream waterflows, resulting in heavy eutrophication andsedimentation.

Project ActivitiesA key approach to ensuring the long-term conservationof Chiapas’ reserves lay in helping people understandand value the connection between their economicactivities and ecosystem services related to water. Themost effective way to maintain water resources was towork in the entire watershed-from the headwaters in ElTriunfo through the agricultural mid-section thatdepends on those waters down to the lowlandmangroves that filter the water before it enters theocean. With this in mind, TNC and its partnersdeveloped project activities to work with stakeholders tocreate awareness of the inter-connectivity of thewatershed. The main focus was on three long-termgoals: (1) determining the value of watershed servicesin the Chiapas Coastal Watersheds and providing the

tools needed to secure long-term financing for thoseservices; (2) building institutional and technical capacityfor watershed management; and (3) informing andcreating awareness about the value of water so thatpeople feel a commitment to watershed conservation.

To achieve these goals, TNC and its partners have beenworking to build institutional capacities in Chiapas bystrengthening a multi-institutional watershed planningcommittee. On-site technical assistance, training,exchanges and guidance have centered onstrengthening the technical capacity of variousstakeholders. Throughout this effort, results have beenshared widely through publications.

TNC also has hosted workshops and training events onwatershed management, project planning and otherrelevant issues for watershed conservation in Chiapas.These events have included participation from manystakeholders, including several local and nationalgovernmental and non-governmental organizations.

TNC and its partners conducted economic andbiological feasibility studies to determine the value ofenvironmental services provided by the watersheds andthe willingness of local users to pay for those services.IHNE carried out these studies in the rural areas ofCoapa and Cuxtepec, while Pronatura carried outstudies in the urban areas of Tuxtla Gutierrez, SanCristobal de las Casas, Arriaga, Pijijiapan, La Concordiaand Tonalá. Based on the results of these studies, themunicipalities of Arriaga and Pijijiapan appeared to beplaces where water user fees might be most feasible.

TNC and its partners developed a draft site conservationplan for the Coastal Watersheds of Chiapas-a platformsite that includes all three reserves and severalwatersheds. These site conservation plans includedanalyses of threats, which have helped inform whereTNC and its partners work and which interventions theychoose. The plan for the Coastal Watersheds of Chiapaswas developed with participation from several actors inthe area, including TNC, Conservation International,Comisión Nacional de Áreas Naturales Protegidas(CONANP), IHNE, Instituto para el DesarrolloSustentable en Mesoamérica, A.C. (IDESMAC) andPronatura.


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Preliminary OutcomesAs a result of these efforts, IHNE established its ownenvironmental services office within the Department ofNatural Areas and hired a full-time investigatordedicated to this area. In addition, Fondo deConservación El Triunfo (FONCET) was created as anew NGO to help manage conservation funds for ElTriunfo. It has developed a strategic plan and abusiness plan and has achieved tax-deduction status.

The partners also have secured US$2 million, whichhas gone into an endowment fund for El Triunfo thatis managed by a branch of the Fondo Mexicano parala Conservación de la Naturaleza (FMCN). The Fondode Conservacion El Triunfo and CONANP’s El TriunfoBiosphere Department receive the interest from thisUS$2 million for management activities at El Triunfo.TNC and partners plan to transfer the $2 million toFONCET in the future.

Bringing together diverse institutional efforts hasresulted in the diffusion and adoption of variousplanning and management methodologies and toolsamong organizations such as CONANP, IHNE,watershed committees and municipalities. For example,the Municipality of Arriaga began a site conservationplanning process for the Lagartero watershed in March2004. Those who have helped develop the plan includeCONANP, personnel from La Sepultura BiosphereReserve and local residents. Arriaga municipalityrepresentatives see local participation as criticalbecause “they are the ones who know the work best.”The plan, which municipal authorities saw as a criticalstep for watershed management, was completed in late2004 and is in the process of being implemented.

CONANP helped facilitate a participatory planningprocess in the Coapa watershed that connects El Triunfoand La Encrucijiada. The planning process involvednumerous stakeholders, including upland residents,fishermen from downstream, government organizations,NGOs and researchers. One key product of this processwas an ecological land zoning plan, which now officiallygoverns land use in the watershed. The CoapaWatershed Community Committee formed as part of thisparticipatory planning process. TNC and its partnersrealized, however, that the watershed needed a strongerforce, and so they helped form the Pigua (Crawdad)

Committee, an inter-institutional committee withrepresentatives from TNC, IHNE, CONANP andIDESMAC. The objective of the Pigua Committee was toconsolidate Coapa’s watershed management.

Overcoming Challenges: The FutureTogether with WWF and the Consejo Civil Mexicano parala Silvicultura Sostenible (CCMSS), TNC conductedstudy of the legal environment for establishing a wateruse fee system. This study did not prove useful forinforming project design, because it was too general andfocused on national level policies. As a result, TNCconduct a local level study in the municipalities ofArriaga (Lagartero watershed) and Tonalá (Zanatecowatershed). The current municipal presidents have beensupportive of watershed work, but TNC and its partnersare concerned because the presidents and themunicipal policies change with each election.Consequently, TNC wants to undertake a legal analysisthat will help ensure that watershed management is alonger term process in which local governments activelyparticipate but changes in governing administrations donot cause drastic negative impacts to ongoingwatershed valuation work.

A key force in watershed planning and management hasbeen the Consejos de Cuenca, or Watershed Councilsand the Watershed Committees within them thatrepresent the individual watersheds. The ComisionNacional de Aguas (CNA), the state organization incharge of administering and preserving Mexico’s watersources, established the watershed councils andwatershed committees structure as a way to enlistgreater local participation across various sectors inwatershed management. This was in response to afederal policy re-established in 2000 that places greateremphasis on watershed management. The Consejo deCuenca para la Costa de Chiapas (Chiapas CoastalWatershed Council), also established in 2000, hasvarious committees within it at the individual watershedlevel. These committees provide an importantopportunity for different organizations and local usergroups (e.g., agriculture, urban, livestock, fishing, etc.) totake part in watershed planning. However, thesecouncils and committees are still relatively new, and itwill take some time for them to be truly participatory,representative, democratic, and transparent.

CHIAPAS, MEXICO


QUINTANA ROO, MEXICO21

The SiteLocated along the Caribbean coast in the State ofQuintana Roo, 130 kilometers, or 80 miles, south ofthe resort city of Cancun the Sian Ka’an BiosphereReserve (SKBR) (see Figure 6) is a UNESCO WorldHeritage Site covering 617,265 hectares andcontaining one-third lowland tropical forest, one-thirdwetlands (marshes, flooded savannahs and mangroveforests), and one-third coastal and marine habitats(lagoons, bays, and coral reefs). Reserve boundariesencompass 68 miles of the Mesoamerican Reef, theworld’s second largest barrier reef, and protect uniquefeatures including sinkholes, hummocks, lagoons andfreshwater springs.

SKBR harbors old growth and seasonally floodedlowland forests as well as grasslands and sandybeaches, each of which provides important habitatto species such as jaguars, pumas, tapirs, marsh

and river crocodiles, turtles (loggerhead,leatherback, hawksbill, and green) and more than330 species of birds, including large numbers ofwintering neotropical songbirds. This tropical forestrepresents one of the last secure sites for theseendangered species. Moreover, according toSKBR’s site conservation plan, the reserve’swetlands, estuaries and bays are critical for nutrientrecycling and reproduction phases of marineresources, and its mangroves and reef systems areamong the most productive systems in the world.

The Sian Ka’an site is unique in that its watershedsinclude the Caribbean Sea and an inter-connectednetwork of surface and underground freshwaterflows. In fact, much of the watershed remainsunknown and unexplored due to the “hidden”nature of the largely underground network of watersystems.

Threats to BiodiversityOver the last 30 years, Cancun has grown from asleepy fishing village to the largest resortdestination in Mexico. Tourism has spread southdown the Quintana Roo coast, with somecommunities such as Playa del Carmen, reachingannual growth rates well over 20 percent. This rapidpace of development has brought numerous threatsto SKBR and the region, including unregulatedtourism development, associated water pollutionand hydrologic alteration, overfishing, forest firesand uncontrolled resource extraction.

According to the Sian Ka’an site conservation plan,the main threats to the site’s priority animal species(puma and jaguar) include tourism development,agro-chemical and heavy metal contamination ofwater sources and global warming. In addition, localorganizations note threats related to the lack ofadequate sanitation infrastructure and wastedisposal services, the rapid pace of development(especially of the tourism sector) and poorlymanaged solid waste disposal throughout the area.With water demands for the tourist industry

QUINTANA ROO, MEXICO

Figure 6. Sian Ka’an Biosphere Reserve, Quintana Roo,Mexico © Connie Gelb/TNC


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growing, some aquifers are showing evidence ofincreasing salinization.

Project ActivitiesTNC’s partners, Amigos de Sian Ka’an (ASK) andthe Comisión Nacional de Areas NaturalesProtegidas (CONANP), have been working in theSian Ka’an area and the State of Quintana Roo fornumerous years. It was only recently, however, thatthe organizations began to focus on watershedvaluation as an approach to conservation. ASK andthe Centro Ecológico Akumal (CEA) conducted twoworkshops in November 2003 to bring together keystakeholders to discuss a watershed valuationprocess and identify next steps. The primary productof this workshop was a publicly-available CD thatpulled together studies, reports and maps fromnumerous organizations working in the YucatanPeninsula. As a result, an enormous amount ofwater-related information was made centrallyavailable, thus setting the stage for strongerinstitutional coordination and greater awareness ofwhat others were doing in the Yucatan’swatersheds. Access to this information helped ASKand other collaborators learn more about howwatersheds in the Peninsula function.

An April 2004 meeting in Akumal (“IntegratedCoastal Watershed Management”), facilitated byASK and CEA, provided an avenue for sharing theresults from the November 2003 workshop andtaking some early steps in the watershed valuationprocess (i.e., identifying uses, actors and threatsaffecting the watersheds). The most significantoutcome of this meeting was the decision by allparticipants to establish the Red de Agua Limpia delMayab (the Mayab Clean Water Network). All thosepresent at the meeting are considered foundingmembers and include government and non-governmental organizations, research institutes,businesses and several community-basedorganizations.

ASK, CEA, Grupo XCaret (a watershed partner fromthe tourism sector), Centro de Investigaciones delSistema Acuifero de Quintana Roo (CINDAQ) andother actors have helped facilitate various studies

that provide a better understanding of the situationin some of the region’s key watersheds. GrupoXCaret, for example, provided funding for a portionof a peninsula-wide hydrologic study conducted bythe Universidad Nacional Autónoma de México(UNAM). Grupo XCaret is particularly interested inthe results related to rivers that feed into XCaret andXelha nature reserves, two areas the companymanages for conservation and nature tourism.

Similarly, ASK contracted with CINDAQ to map thesubterranean waterways adjacent to the Sian Ka’anBiosphere Reserve. ASK saw this as crucialinformation to understand water flows affecting thereserve and to make well-informed managementdecisions. For instance, if links to Sian Ka’an existed,then inappropriate development elsewhere couldlead to contamination of the SKBR, the adjacent OxBel Ha underground aquifer and the MesoamericanBarrier Reef. Results from this study revealed thatwater flows vary, but much of the water in themapped areas flows from the northwest to thenortheast and south. This southerly flow is whatcould be of concern for the reserve, ascontaminants in the underground aquifers couldmake it to SKBR. ASK intends to use the results ofthis work to help inform decisions made by theEcological Land Zoning Committee (of which ASK isa member) for the Solidaridad and Benito JuarezMunicipalities.

Preliminary OutcomesIt is difficult to evaluate outcomes in terms of therole of watershed valuation as compared to some ofthe other studies. The groups recognize the need forwatershed valuation studies but have not yetreached the stage of project development (seeFigure 1) where it made sense to conduct one.Currently, various types of studies provide keyinputs to the watershed conservation planningprocess into the future.

The biggest achievement to date has been the abilityto bring diverse groups together to work on watershedmatters relevant to all. Stakeholders now have astronger sense of what is happening in the watershed,and they know who uses the water for what purspose.



QUINTANA ROO, MEXICO23

As described above in the Chiapas case study, therole of Consejos de Cuencas or Watershed Councilsis important to watershed conservation in Mexico.The Yucatan Peninsula Watershed Council includesthe states of Campeche, Yucatan and Quintana Roo.The Yucatan Peninsula Watershed Council includeswater users organized by sectors of use (e.g.,industry, urban public, agriculture and livestock)and two scientific groups that help the Councilmake informed decisions-the Specialized Group onSanitation (a committee for the northern zone andanother for the southern zone) and the CleanBeaches Committee.

Alliance-building is occurring through interactionsamong members and committees within theYucatan Peninsula Watershed Council. ASK hasbeen involved with the Watershed Council primarilythrough participation in its technical committees.ASK staff feel that the water valuation meetingswere instrumental in helping them secure theirparticipation in the Yucatan Peninsula WatershedCouncil. Given the central role of watershedcouncils to water resource planning, use andpreservation, it is key to have supporters of awatershed valuation process participating in thewatershed councils and their committees.

Overcoming Challenges: The FutureThe two workshops that TNC partners facilitated in2003 and 2004 were aimed primarily at buildingawareness and, to a lesser extent, capacity inwatershed valuation. Watershed valuation activitiesare still in their infancy in Quintana Roo. Capacity-building in watershed valuation is a process that willtake much more time. Part of the challenge hasbeen the lack of clarity about the roles and theobjectives of the many different groups working onwater issues, including TNC and governmentalorganizations (Secretaría de Medio Ambiente yRecursos Naturales, the National WaterCommission, municipalities, etc.).

One of the greatest threats to the Quintana Roowatersheds is the inadequate sanitation system.There is no proper infrastructure to deal with

wastes. Instead, pollutants directly enter the wastestream. This, combined with the rapid pace ofdevelopment, is causing much concern amongconservation organizations. Conservation actors aretaking some discrete actions, but there is not, as ofyet, a strategy that includes a watershed valuationprocess. Conservation leaders feel it is important tolook at the sanitation problem from a human healthperspective-human health costs and increaseddiseases-which, ultimately, will have an importanteconomic impact on the region.

Funding also remains an issue. CEA had beentasked with heading up the Mayab Clean WaterNetwork, but limited funding and staffing haveprevented the organization from fully launching thenetwork. Objectives for the Network have beendelineated as: (1) define and consolidate theNetwork’s internal structure, functionalorganization, and strategy (including theestablishment of an institutional charter and thedefinition of projects and allocation of partners’responsibilities); and (2) successfully launch theNetwork’s public activities and advocacy efforts(including education and awareness-raisingactivities as well as the identification ofsustainability criteria for Akumal’s development).Many of the activities defined under the secondobjective are critical for the water valuation process(e.g., awareness-raising, policy advocacy anddevelopment, and ecological, social and legalbackground studies).

There is an opportunity for stronger coordinationamong the Yucatan Peninsula Watershed Councilmembers who are focused on water for human usesand the municipal ecological land use zoningcommittees, which are focused on waterconservation and preservation. The groups areinterested in water resource use, but they do notcoordinate their work. ASK is a member of theWatershed Council and the Ecological Land UseZoning Committee for the Solidaridad and BenitoJuarez municipalities (CEA is also a member of thelatter committee). ASK hopes that its dualmembership in these two groups will help improvethe coordination and collaboration between them.


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They also hope to encourage the Watershed Councilto take a broader perspective and consider waternot only in terms of human uses, but also in termsof its biological and conservation importance.

Because the representatives participating in theMayab Clean Water Network come from a variety ofsectors, there are unique opportunities to influencepolicies and actions beyond the governmentalrealm. The most obvious example is the potential tolobby the tourism industry and influence the waythat tourism develops and operates. One of thegreatest threats to Quintana Roo’s watershed is theexponential growth of mass tourism that often payslittle regard to environmental impacts.

One of the greatest challenges to watershed publicoutreach in the Yucatan Peninsula and QuintanaRoo is the nature of the watershed itself. Peoplecannot see the water. Even if they know there issubterranean water, they are not aware of theintricate networks, how they flow, and how theyinfluence water quality or are affected by watercontamination. Conservation actors in QuintanaRoo and the Yucatan face this in terms of law andpolicy effectiveness. Although Mexican water lawsand regulations are fairly strong, they generally arenot relevant for the Yucatan’s watershed because oftheir unique underground nature. Mexicanstandards are developed for conditions in themiddle of the country, not for coastal areas withsubterranean watersheds. The unique ecologicalconditions also make it difficult to communicateeffectively with policymakers. A priority for theregion, according to ASK, is to make the officialwater quality norms stricter or, at a minimum,acceptable for the local conditions.



LAKE YOJOA, HONDURAS25

The SiteLake Yojoa, located in central-western Honduras,is Honduras’ only natural lake and covers about 79square kilometers. In 1971, the Honduran Congressdeclared Lake Yojoa and its watershed a protectedarea. In 1975, the government developed a“multiple use plan” for the area. Since then,Hondurans have considered the lake and itswatershed to be a multiple use area, although thismanagement category has no legal basis inHonduras. The 1971 legal decree defined theboundaries of the protected area, but to date, thearea has no zoning. This means that it does nothave (as most protected areas do) a “core zone”that defines and protects the most intact andecologically significant areas. The lake is locatedbetween two other protected areas (see Figure 7),established in 1987, when Honduran Decree 87-87gave legal protection to all montane areas above1800 m. On the western side of the lake is theSanta Bárbara Mountain National Park(PANAMOSAB) and on the eastern side is CerroAzúl Meambar National Park (PANACAM).Together, these three protected areas cover 635square kilometers.

The Lake Yojoa area contains diverse ecosystemsthat have been categorized into the following fourgroups: (1) the lake ecosystems, including wetlandsand flooded forests, (2) the submontane, broadleafforests around the lake, (3) the montane forests ofSanta Bárbara and Cerro Azúl Meambar and lowersurrounding areas, and (4) the dry forests of theZacapa and Ulúa river valleys.

An analysis of the comparative value of Honduras’protected areas for biodiversity conservationconcluded that Lake Yojoa is the fourth mostimportant of the country’s 98 protected areas, dueto its high biodiversity, the presence of unique oruncommon ecosystems and rare and endemicspecies. The Lake Yojoa region has the highestdiversity of plants of any region in the country (802species or 10.6 percent of the national flora), mostof which is concentrated in the submontane zonearound the lake. This floral diversity includes all ofthe Honduran plants on the CITES 1 list, 15 endemicplants, and 86.5 percent of the aquatic plantsreported in the country. The 407 species of birds inthis region represent 55 percent of Honduran birdspecies and 88 percent of the country’s freshwaterbirds. The 31 species of amphibians and 72 speciesof reptiles represent 44.2 percent of the amphibianand 43.6 percent of the reptile species in thecountry. Scientists have reported 54 species ofmammals, including endangered species such asthe tapir, jaguar, giant anteater, spider monkey,white-faced monkey and howler monkey.

Threats to BiodiversityIn addition to its biological value, the lake and itsassociated watersheds have high hydrologic value.Several economic activities depend directly on thelake. For example, the national governmentmanages two hydroelectric plants located ontributaries of the lake. The beauty of the lake andsport fishing opportunities attract both internationaland national tourists. Residents have constructed

LAKE YOJOA, HONDURAS

Figure 7. Lake Yojoa, Honduras


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aquaculture ponds around the lake, while a foreign-ownedcompany cultivates tilapia in cages in the lake. In addition tothese economic activities, the lake’s watersheds providedrinking water to approximately 200 communities with over36,000 residents. Despite the region’s value for biodiversityconservation and the socioeconomic value of its waterresources, land use practices have resulted in loss ofbiodiversity and watershed degradation. Other economicactivities have caused water pollution, altered hydrologicflow patterns and contributed to the loss of native species.

Between 1986 and 2000, land use maps show that almost allof the primary forests and pine forests in the Lake Yojoamultiple use area were converted to agricultural lands.Forest cover also diminished dramatically in the SantaBárbara and Cerro Azúl Meambar National Parks, but to alesser degree due to the rough terrain and inaccessibility ofmuch of the two parks’ primary forests (especially in thecore zones). Because floral biodiversity is higher in thesubmontane region around the lake than in the two parks’montane forests, conversion of the forests in the multipleuse area probably has caused significant biodiversity loss.

Hydropower generation has altered the lake’s hydrologicflow patterns. In the 1970s, the Honduran governmentconstructed a canal in the northwest part of the lake todivert water for hydropower generation to two hydroelectricplants (Cañaveral and Río Lindo). The government alsoconstructed a dike that blocked natural drainage into thelake in the southwestern part of the lake. To make up forwater diverted from the lake’s watersheds, the NationalElectric Energy Company (ENEE) diverts two rivers fromother watersheds into the lake. The increasing demand forhydropower production has lowered the level of the lake andaffected wetlands that are ecologically adapted to thenatural fluctuations of the lake.

Organic pollution from municipal sewage and floatingaquaculture tanks contribute to the Lake’s eutrophication.Most of the towns in the lake’s watershed do not havesewage treatment plants. Aquaculture tanks cover 2.6hectares of the lake, where 4,500 tilapia are grown eachyear. The food given to the fish every day is a constantsource of organic pollution that contributes toeutrophication.

Heavy metals contaminate the lake’s sediments and havebeen found in lower concentrations in the fish. Mining ofgold, zinc, silver and lead in the lake’s watershed havecaused heavy metal contamination since the late 1940s.Wastewater from the mines and the processing areas (wherechemicals are used to separate the minerals) used to flowdirectly into the lake, but the owners of the mining companyconstructed a settling pond in 1971 to minimize the flow ofpollutants into the lake.

Agrochemicals are also a major source of water pollution.Ornamental plant nurseries, pineapple plantations andcoffee plantations all contribute to this problem. In addition,in 1954, black bass was introduced into the lake, and in1964, tilapia was introduced. Both of these exotic specieshave displaced native fish species. Before the introduction ofthese species, fishermen caught native fish, primarilyguapote (rainbow bass) and bagres (catfish).

Project ActivitiesIn 1995, a group of mayors from municipalities around thelake (both within and outside of the lake’s watershed) cametogether to analyze the problems facing the lake and todiscuss common social and economic problems. Theyformed the Association of Municipalities for the Protectionof Lake Yojoa and its Areas of Influence (AMUPROLAGO),which currently includes representatives from 14municipalities. During the initial phases, TNC and itspartners focused on helping AMUPROLAGO with: (1)strategic planning with the municipalities in the Lake Yojoawatershed, (2) a site conservation plan for the Lake Yojoawatershed and the Santa Bárbara Mountain National Park,and (3) a watershed valuation process.

The Lake Yojoa watershed strategic planning processbrought together representatives of the municipalities andother stakeholders in the Lake Yojoa watershed includingAFE-COHDEFOR, Honduras’ federal agency responsible forprotected areas. AMUPROLAGO facilitated a series ofparticipatory workshops in 62 area communities, duringwhich participants analyzed socioeconomic andenvironmental problems as well as infrastructure and serviceneeds. As a result of the process, AMUPROLAGO producedstrategic plan documents and maps for each municipalityand a strategic plan for Lake Yojoa. More importantly, theprocess effectively engaged local stakeholders.



LAKE YOJOA, HONDURAS27

In February 2002, AMUPROLAGO and TNCorganized a site conservation planning workshop forthe area encompassing the Lake Yojoa and SantaBárbara protected areas. At the workshop,scientists, managers and key stakeholders workedtogether to identify the most important ecosystemsand species (the site’s conservation targets),analyze the viability of each target, analyze thethreats facing each target, and define indicators tomeasure success in reducing threats andconserving the site targets.

AMUPROLAGO and TNC organized a series ofwatershed valuation workshops with representationfrom all major stakeholder groups. Participantsworked together to define all of the valuableservices that the water from Lake Yojoa and itswatershed provide and to identify water users andbeneficiaries. They also defined the threats to thelake and its watershed. Finally, they definedmanagement objectives and identified audiencesthat would need to be involved in order to achieveeach objective.

As a resul t of these planning processes ,AMUPROLAGO defined as its mission “to promotethe sustainable development of the AMUPROLAGOregion through the joint effort of the 14 membermunicipalities.” The organization has fourprogrammatic priorities, one of which is theconservation, protection and valuation of Lake Yojoaand its watershed. Within this programmatic area,the organization has chosen to focus on reducingwater pollution, conserving priority ecosystems(such as the lake’s wetlands) and involving themunicipalities in natural resource management.

Preliminary OutcomesThe watershed valuation workshops producedseveral significant results. First and foremost, itbrought together a diverse group of stakeholderswith different perspectives and a history ofconflicts. It enabled participants to recognize thecollective value of the lake and its watershed andalso convinced them of the need to pay more toprotect their water resources. Participantsrecognized that currently they do not pay enough

to ensure the conservation and management ofthis vital resource. In addition, two municipalitiesinitiated processes to protect springs that providedrinking water to their communities. Finally,participants proposed the creation of a WatershedAdvisory Committee, a 24-member multi-sectoralgroup charged with ensuring thatAMUPROLAGO’s priorities and projects respondto the needs of all the watershed stakeholders.

During both the strategic planning process and thewatershed valuation process, participants identifiedthe need to protect micro-watersheds-especiallyupper watershed areas that provide drinking waterto communities. For example, the Municipality ofSanta Bárbara decided to purchase the land whereits water sources are located. The Municipality ofSanta Cruz de Laguna included in its strategic planactions to protect micro-watersheds and improvewater quality for human consumption.

With technical assistance from TNC, AMUPROLAGOinvested a significant amount of time in negotiating,developing and signing five conservation easements:two easements with private landowners and threewith the Municipality of Santa Cruz de Yojoa. Togetherthe private and municipal easements protect almost60 hectares of forest.

When AMUPROLAGO signed these conservationeasements in 2000-2001, it was a significant stepforward in the use of this conservation tool. At thetime, conservation easements had been usedextensively in North America, but their applicationin Latin America was quite limited. There areseveral incentives for landowners to place aconservation easement on their property. TheHonduran government has made all land includedin a conservation easement exempt from propertytaxes, and it has committed to give landowners helpin fighting forest fires, if necessary. In this case,AMUPROLAGO also provided legal assistance tohelp the private landowners obtain legal rights orofficial title to their land.


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Overcoming Challenges: The FutureMany believe that stronger legal instruments andmore technical information are needed before themayors of AMUPROLAGO could apply user fees tocompanies like ENEE and Aqua Finca Saint Peter Fish.

Since 2001, AMUPROLAGO has faced countlesschal lenges in upholding the establ ishedconservation easements ranging from new claimsof property ownership to owners not upholding theobligations of the easement. Political changes inthe mayor of Santa Cruz de Yojoa have resulted inless importance being placed on monitoringcompliance by landowners. This experiencedemonstrates some of the challenges of usingconservation easements in Latin America.Overlapping claims to land are common in theregion, and many people do not have legal title totheir land; thus, conservation organizations run therisk of getting involved in land disputes, unless theyconduct thorough background research on theproperty before signing the easement. In addition,monitoring easement compliance requires aninvestment of staff time over the long term. Also,ensuring the legal enforcement of the easementpotentially can be expensive; conservationorganizations generally do not have the resourcesneeded to take legal action in cases of non-compliance. Finally, because there is no legalprecedent, it is not clear whether the Hondurancourts would uphold a conservation easement.

Organizations like AMUPROLAGO, the Ministry ofNatural Resources and Environment (SERNA) andothers involved in the management of the lake needmore technical information about its hydrology andwater quality: a water balance study to determinewhy the lake level has decreased; maps of criticalhabitats such as wetlands, so that they can protectthem; and more information about current waterquality and the relative contribution of differentsources of pollution, so that they can direct theiractions toward decreasing the most significantsources. It has also been suggested that a study ofthe carrying capacity of the lake could provideinformation to help regulate aquaculture and otheractivities that directly affect water quality. Managing

the lake requires regulating the various uses of theresources and resolving conflicts between usergroups. Resolving conflicts in a fair and transparentway requires a good base of technical information.

Like many Latin American countries, Honduras’water legislation is outdated and inadequate tomeet modern needs. The National Water Use Lawwas developed in 1927 and reflects the priorities ofsectors that had strong political power at that time,such as the banana companies, the railroad andcattle ranchers. One of the weaknesses of the law isthat it regulates different water uses such asdomestic water supply, irrigation, navigation andindustrial use individually (sector by sector), withoutconsidering overlaps and conflicts and the need forintegrated watershed management. Another is thatalthough groundwater is a finite resource that canbe overexploited, the law allows landowners to drillwells freely, and it considers groundwater as privateproperty once it has been extracted by thelandowner. There have been many attempts tocreate a more modern legal and institutional systemfor water management but much more needs to bedone to ensure its passage and implementation.



LORE LINDU, CENTRAL SULAWESI, INDONESIA29

The SiteCentral Sulawesi is mostly covered in montane andsub-montane moist tropical forest, but other vegetationtypes that can be found there include rare cloud forest,

heath forest, monsoon forest, marsh and small amountsof lowland forest. Among the threatened and endemicspecies found in the province of Central Sulawesi arethe anoa, babirusa, Sulawesi hornbill, maleo, Sulawesipalm civet and the Tonkean macaque. The capital city ofCentral Sulawesi, Palu, is reputed to be the driest placein Indonesia, as the steep mountains to east and westof Palu city catch most of the rainfall and leave the valleyin a rainshadow.

A large extent of forest in Central Sulawesi is underformal protection status as part of Lore Lindu NationalPark (LLNP). The Palu River is located in the province ofCentral Sulawesi. The major forested areas draining intothe Palu Valley include Lore Lindu National Park and theGawalise Mountains, both of which are crowned bymontane forest (see Figures 8 & 9).

Threats to BiodiversitySmall-scale illegal logging has burgeoned anddeforestation has accelerated. The impact oninfrastructure and living standards of local people hasincreased as well, although the sustainability of thisgrowth is uncertain. High population density hascreated a competitive environment for cultivatableland in the area.

LORE LINDU, CENTRAL SULAWESI, INDONESIA

Figure 9. Lore Lindu. Central Sulawesi, Indonesia

Figure 8. Conservancy Projects in Indonesia.


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Natural forests that are converted for agriculture producesoils that are highly weathered, lacking in nutrients andonly productive for a short time (and then are typicallyabandoned). Conversion of these forests often involves‘hidden’ costs, including: rapid loss of soil fertility afterforest clearance that can only be compensated for byincreasing investment in fertilizers; loss of sustainedyields of forest products; increased soil erosion; andalterations to the hydrological regimes of watersheds.

Flooding, which has occurred every year since the late1990s, leads to negative impacts to infrastructure andagricultural land in and around the Palu watershed. Thisflooding results from mismanagement of the watershedthrough forest encroachment and illegal logging; weaklaw enforcement; antiquated sectoral management that issusceptible to overlapping policies and implementation;and poorly-defined management authorities betweencentral government, provincial and district/town.

Project ActivitiesIn 2002, the Conservancy commissioned a study on thevalue of water resources in the Lore Lindu NationalPark. The study found that, in total in 2001, watersarising from LLNP had an estimated current annualvalue of approximately Rp. 89.9 billion, or US$9 million.The study noted that the forested areas of Lore LinduNational Park provide important ecological functions inthe regulation of flow rates and sediment loads andassist in maintaining important groundwater reservesfor the city of Palu. Through the provision of thesefunctions, important infrastructure and irrigationsystems are protected, and water quality is maintained.The study pointed out that LLNP’s forests are animportant part of the physical and economic characterof Central Sulawesi and will continue to play asignificant role in future developments in the province.As a result of the study recommendations, theConservancy is incorporating the conservation of LLNPforests into all of Central Sulawesi’s development plansfor watershed protection.

The issues around mismanagement of the watershedwere brought to the fore in a House of RepresentativeHearing in March 2003, which resulted in theemergence of a recommendation to urgently “develop amodel and plan for multi-stakeholder management ofthe Palu watershed.” However, there was no significant

effort from local institutions, including the House ofRepresentatives, to implement this recommendation.TNC, which has been working in Palu since 1994,helped catalyze inter-institutional communication onenvironmental issues and worked to ensure that theissue of Palu watershed management remained high onthe governmental agenda.

Originally, about 40 institutions were identified aspotential stakeholders, but only 15 of these had ongoingactivities in Palu watershed. The next step ofstakeholder analysis was to limit the number ofstakeholders to an initial core committee for Paluwatershed management. A priority was placed on localgovernment institutions at provincial level that had on-going activities in the proposed project site (the Miusub-watershed). Based on these criteria, eightinstitutions were selected as members in the initial corecommittee for the Palu watershed-BP-DAS Palu Poso,Bappeda Propinsi Sulawesi Tengah, Sub Dinas PSDAKimpraswil Sulawesi Tengah, Bapedalda Sulawesitengah, Dinas Kehutanan Sulawesi Tengah, Balai TamanNasional Lore Lindu, Universitas Tadulako and BappedaDonggala. TNC acts as the committee secretary only.

After the core committee for the Palu watershed waschosen, measures were undertaken to formallyestablish the committee. From June to July 2004, TNCidentified and then proposed potential candidates fromeach institution to their respective Head Office, whichmade final decisions on who would represent each ofthese offices on the Palu Watershed Committee.

Preliminary OutcomesThe first committee meeting was held in July 2004 toannounce a grant from the Japan Bank for InternationalCooperation (JBIC) and to introduce relevant issues andpossible strategies for improved management of thePalu watershed. The meeting resulted in a betterunderstanding about TNC’s intended outcomes andagreement on the need for a multi-stakeholderapproach to watershed management. Other resultsincluded: the naming of the multi-stakeholdermanagement committee to “Forum Pengelolaan DASPalu (FP-DAS Palu);” selection of the Miu sub-watershed in the upper Palu watershed as the projectarea for the grant; preparation of the work plan for FP-DAS Palu; and the decision to include TNC as one of the



LORE LINDU, CENTRAL SULAWESI, INDONESIA31

forum’s members, making the total members of FP-DAS Palu nine.

FP-DAS Palu was legalized through a decree by thehead of the River Area and Water Allocation WorkingGroup RAWAWG) on August 30, 2004. According to thisdecree, the group is responsible for the following:

1. Establishing a watershed management forum (FP-DAS Palu) for the Miu sub-watershed.

2. Developing recommendations on the establishment of a computer model to inform the Master Plan for Miu Watershed Participatory Management.

3. Providing inputs and advice to the River Area and Water Allocation Working Group (RAWAWG) ondevelopment of the “Palu-Lariang Rivers Management Plan.”

4. Database management of the Miu sub-watershed.5. Providing regular reports on the progress of the

JBIC grant to RAWAWG.6. Forum Pengelolaan Das Palu (FP-DAS Palu) for the Miu

sub-watershed has direct responsibility to RAWAWG.

The Water Resource Coordination Team is responsiblefor the overall management of water resources inCentral Sulawesi and reports directly to the Governor.For more effective management of water resources, theCoordination Team was divided into two working groups.

Since the Palu watershed is specified as one of the mostimportant river areas in the province and is a criticalsource of water irrigation, the FP-DAS Palu falls underthe coordination of RAWAWG. This position is beneficialto FP-DAS Palu, increasing the likelihood that it will besustained and funded into the future. Existing decreesprovide clear direction for FP-DAS members toparticipate officially in the forum activities whileRAWAWG finances the costs. The FP-DAS also cansubmit a proposal for funding to the local governmentunder the existing decrees.

One of the key early successes of this project is that itprovided enabling conditions for the watershed forum.This study led to an immediate and significant increase inlocal support for LLNP. Prior to the water valuation study,a seven year management partnership by the Indonesianparks agency, PHKA, The Nature Conservancy and local

NGOs had led to only lukewarm support for the park. Onlyafter the value of the park beyond its boundaries wasdocumented did a local constituency form withagricultural users (previously a threat to the park) andlocal government (a key management stakeholder in thenew era of decentralization in Indonesia). The economicand social values of water production now form anintegral part of management effectiveness assessment ofLLNP. Furthermore, as the members of the watershedmanagement committee are acting on behalf of theirinstitutions, they are the catalysts for coordinating theactivities of the forum within their respectiveorganizations. Government institutions also have agreedto integrate the planning of activities in the Miu watershedfor the next calendar year and share budgetary burden tomaintain efforts at the end of the current grant.

As part of the multi-stakeholders project approach, theConservancy collaborated with Partnership Forum forLore Lindu National Park (FKTNLL) to produce bulletinsand documentary films and update the website(www.lorelindu.org). Three volumes of Suara Lore LinduBulletin have been published, 500 copies per volume,and distributed to communities surrounding LLNPand related stakeholders in Palu City. Documentaryfilms on local planning processes and the study visit ofFP-DAS Palu to Balikpapan Bay also have beenproduced.

Overcoming Challenges: The FutureA management structure has been developed, butsignificant challenges remain with regard to waterusage. Depletion of groundwater has resulted in lossof pressure to operate artesian wells. PerusahaanDaerah Air Mimum (PDAM), the state-owned watersupply enterprise, provides water to approximately 20percent of the households and 35 percent ofmanufacturing industries in the City of Palu. It has hadto close several of its deep wells. In addition to animminent lack of water in the city, the water studyconducted by Widjajanto concluded that levels oforganic compounds are nearing critical levels ofacceptability for clean drinking water. The studysuggests that increases in these organic compoundsare the result of activities linked to agriculture,plantations, communities and home-based industriesadjacent to the Gumbasa River. Widjajanto identifiespossible sources of contamination as fertilizers,pesticides and industrial solvents.


32

Given these concerns, PDAM currently is seeking newopportunities for drinking water to provide for the Cityof Palu. One option being explored involves sourcingwater from Lake Lindu, potentially in conjunction witha hydropower development. In order to develop afacility large enough to accommodate the requiredcapacity of 700 litres/second, PDAM is seekingforeign investment for the intake and delivery system.

Threat analysis carried out by the Conservancy identifieda number of threats that vary in scale and type of impact.All threats, however, are exacerbated by a number of rootcauses including lack of enforcement, conflicts overnatural resource use and land tenure, lack of economicalternatives, lack of appropriate land use plans, lack ofcapacity, poor organizational structure and governanceand lack of a conservation ethic in Central Sulawesi. Eachof these alone requires significant time and investment toovercome. It will be important to build strongpartnerships among organizations to ensure effectiveconservation of the area for people and biodiversity.

In all likelihood, increased forest clearing will result ingreater frequencies of flooding and erosion and willhave increasing negative impacts upon irrigationsystems, riverbanks, infrastructure and householdsliving downstream from cleared areas. The protectionvalue afforded by the forested areas of LLNP is crucialfor maintaining the economic viability of these systemsas well as securing the safety of people living there.



BERAU DICTRICT, EAST KALIMANTAN, INDONESIA33

The SiteBerau Kabupaten or Regency (“Berau”) is locatedjust above the equator in the Indonesian provinceof East Kalimantan province on the island of Borneo(see Figures 8 & 10). The Segah watershed is locatedin Berau District, East Kalimantan and containssome of the largest tracts of undisturbed lowlandforest in Indonesian Borneo. Although most ofBerau lies below 500 meters, the area ranges fromsea level along the east coast to 2,467 meters atGunung Mantam (Gunung Guguang), a massiflocated west of Tanjung Redeb, the administrativecentre for the Regency.

Surveys conducted by TNC in a remote patch of foreststraddling Berau and East Kutai districts resulted inthe discovery of 1,000 to 2,500 orangutans, which mayrepresent up to 10 percent of the world’s known wildorangutan. This 370,000-acre area of lowland forestharbors the last substantial orangutan habitat left inEast Kalimantan and also provides refuge for animpressive 11 species of primates-making it one ofthe richest primate sites in the world. The area alsocontains many other endangered, threatened or raremammals such as clouded leopard, sunbear and themoose-like banteng.

Threats to BiodiversityMost of the forests in East Kalimantan are overlaid byactive logging concessions. Destructive land clearingpractices and drought resulted in forest fires in 1982-83 that affected an estimated 3.6 million hectares offorest in East Kalimantan and another million hectaresin neighboring Sabah. Fires in 1997-98 affected anestimated five million hectares throughout Indonesia,including 3.06 million hectares in Kalimantan. Thetotal economic value of the damages caused by the1997-98 fires has been estimated conservatively at US$4.47 billion, most of which was borne by Indonesia. Italso has been estimated that 30 percent ofKalimantan is susceptible to landslides. The mostcritical zones under threat are the hill and mountainareas where forests have been cleared or partly felled.

The forests of Berau have a high abundance ofdipterocarp trees, which are seriously threatened bydestructive logging practices and habitat degradation.The entire district of Berau has been parceled intoallotted concessions for timber and mining for coaland other minerals. There is presently no knowledgeof the areas most prone to soil loss and how thisdischarge may increase the total sediment loadcarried out into the ocean and nearby reefs.

Increased sediment loads, as a result of forestclearing, also is found along the two major riversystems-the Kelay and Segah-in the Berau District ofEast Kalimantan. Locals report that increasedsedimentation in these rivers resulted from elevatederosion rates in the upper catchments as a cumulativeeffect of forest conversion activities.

Communities along both the Kelay and Segah riversreport erosion and the loss of productive land foragriculture. Erosion of productive land impacts 19.6percent of rural households annually. Anecdotalinformation from the Berau local governmentindicates that as recently as twenty-five years ago, itwas possible to see fish on the bottom of the KelayRiver in Tanjung Redeb. Today, the river there is verymurky and visibility is near zero.

Figure 10. East Kalimantan, Borneo.

BERAU REGENCY, EAST KALIMANTAN, INDONESIA


34

Project ActivitiesWith its partners, TNC developed a project aimed at aparticipatory approach to watershed managementthat involves stakeholders such as local government,communities and industry in the management of thewatershed. TNC also is developing a computersimulation model to help serve as a decision-makingtool for land use planners and policy makers.

In 2002, the Conservancy commissioned a study onthe value of water resources in the Berau District. Thestudy looked at the economic contributions of waterfrom the Kelay and Segah rivers. The study estimatedthe value of these contributions to the economy ofBerau District through the monetization of agriculturalproduction, livestock inventories and other sources ofprotein, and household consumption of waters fromthese two rivers.

The study concluded that, in total in 2002, water fromthe Kelay and Segah rivers had an estimated annualvalue of Rp. 48.2 billion, or approximately US $5.62million. The study noted that the forested areas of thegreater Kelay and Segah watershed provide importantecological functions in the regulation of flow ratesand sediment loads and the provision of water topeople and agricultural systems. Through theprovision of these functions, important infrastructureand irrigation systems are protected, and waterquality is maintained. The study pointed out that theseforests are an important part of the physical andeconomic character of Berau District and willcontinue to play a significant role in futuredevelopments. The relationship between forests,water, economy and human well-being were set out inthis report. The study recommended that the variousfunctions need to be considered by planners anddecision-makers and that the needs of conservingBerau’s forests should be incorporated into all of theRegency’s development plans. Based on theserecommendations, the Conservancy began designinga project around improved watershed management.

In Berau, the Conservancy initiated its approachthrough an internal identification of potentialstakeholders followed by intensive discussion with

select institutions to gain support for the project. InAugust 2004, TNC began by engaging the Ministry ofForestry in improved management of the Segahwatershed, including discussions aroundmanagement policies, establishment of a watershedmanagement forum and establishment of a microwatershed study and modeling. That same year, astakeholder workshop was held in Berau on Segahwatershed management and forest/land rehabilitationto obtain commitment on establishing a forum tocoordinate all activities related to Segah watershedmanagement. Meetings with communityrepresentatives from the Segah sub-district were heldto introduce the program.

In September 2004, a workshop was held to reachconsensus on the functions provided by Segahwatershed and confirm the urgency of maintaining itsfunctions. Participants identified institutionsresponsible for activities related to the Segahwatershed management. TNC then invited pertinentinstitutions to participate as core team members of aSegah Watershed Management Committee (SWMC)in October 2004. The Committee met in December2004 to develop a short-term work plan, whichincluded specific roles and responsibilities.

Capacity-building at the local level was carried outthrough training activities, regular meetings, peerevaluations and learning missions between keystakeholders at both locations. Studies and computersimulation models for a major watershed weredeveloped to identify problems and issues includingthe likelihood of flooding if certain portions of thewatershed were deforested and/or degraded.

Preliminary OutcomesWith strong support from the Provincial WatershedManagement Agency (BPDAS), a core team andthe secretariat of the Segah WatershedManagement Committee (SWMC) have beenestablished. The ultimate goal is to create a SegahWatershed Management Forum to oversee watershedmanagement in the Segah watershed. The coreteam includes:

BERAU DISTRICT, EAST KALIMANTAN, INDONESIA


LESSONS LEARNED35

1. District Planning Agency (BAPPEDA) of Berau District

2. District Environmental Agency (BAPELDA) of Berau District

3. District Forestry Agency of Berau District4. District Mining Agency of Berau District5. District Estate Plantations Agency of Berau District6. District Public Works Agency of Berau District7. Model Forest Secretariat8. Upper Segah Natural Resources Management

Body9. District Drinking Water Authority (PDAM TIRTA

SEGAH) of Berau District10.PT Sumalindo Lestari Jaya Unit IV of Berau District11.The Nature Conservancy, Berau Field Office

Core team members have agreed to hold regularmeetings to discuss and find solutions for issuesrelated to the management of Segah watershed. TheDistrict Planning Agency has provided office spaceand meeting rooms for the activities of the secretariat.

To enhance the ability of the Segah WatershedManagement Committee (SWMC), TNC and itspartners have undertaken several approaches. First,one person from each of the pertinent localinstitutions has been assigned to the committee.Second, cross learning is taking place through a studyvisit to Balikpapan Bay and a cross visit between thestudy sites (Palu and Berau). Committee membersalso will be trained on the use of the hydrologicalmodel and interpretation of the resulting scenarios.

Overcoming Challenges: The FutureEstablishing a Segah Watershed Management Forumas the coordinating agency is key to sustainablewatershed management. Progress on this has beenimpeded due to the remoteness of the district and itsdistance from the provincial capital of Samarinda.Furthermore, the Berau Basin has been assigned as athird-level priority for rehabilitation activities plannedby the Ministry of Forestry. Although the Berau forumhas not yet been inaugurated, select stakeholdershave agreed to establish the Committee and serve asthe core team to work on work plan preparation, initialfield studies and institutional arrangements in theinterim. Several meetings have been held to identifyneeds and discuss and share information about

challenges faced in the Segah watershed. A work planhas also been formulated.

TNC and World Education (WE) are the only NGOsactively working with the villages of the upperSegah. No local NGO operates in this area, andthere are few NGOs focused at all on terrestrialconservation and none on watershed managementin the Berau District. TNC has been working in theupper Segah for over three years on issues relatedto community empowerment and raising awarenesson environmental issues. As a result, the core teammembers deemed that TNC has sufficientexperience to represent NGO interests. The studyinvites the participation of local NGOs; however, atthis time, none exists.


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In some places, such as Ecuador, the Conservancyhas engaged in watershed valuation projects as a toolfor biodiversity conservation for the past ten years. Inother countries, like Mexico and Honduras, theConservancy efforts are more recent. Even ten years,however, is a relatively short time for environmentalprojects. To see real impacts, time is often needed aswell as tools and funding for monitoring andevaluating progress.

Although Indonesia was not part of the U.S. Agencyfor International Development (USAID) grant to TNCin Latin America, the two case studies from Indonesiaare included here to broaden awareness within TNCand externally on the use of watershed valuation inbiodiversity conservation. They are also included tohelp break down geographic barriers in sharingexperiences with these tools. Despite differences inlegal regimes, cultures and approaches to sustainabledevelopment across the globe, valuation of water bygovernments, the private sector and the public willbenefit from improved understanding of how tochange behavior and attitudes in managing theworld’s freshwater resources.

With a decade of experience and work in at least sixcountries, TNC and its partners continuedocumenting lessons learned to improve existingefforts and influence future projects.

Strong Leadership & ConsistentFundingThese processes require long-term commitment,consistent leadership and continuous funding.Because watershed valuation processes require along process of outreach, consultation and capacity-building of stakeholders (see Figure 1), it generallytakes several years for them to produce concreteresults such as stronger local or national policies,water user fees and more sustainable resource use.During that time, maintaining momentum and long-term funding is critical. In the cases described in this

summary report, local conservation organizations andthe Conservancy are playing this role. However, theytoo are dependent on external funding sources, suchas USAID.

Political and multi-sectoral leadership are essential tomoving forward effectively. Even when the legalmechanisms for implementing water user fees maynot be clearly defined, political support is critical tomoving water valuation activities, including long-termfinancing mechanisms, forward. In Chiapas, forexample, Coapa had many of the desirablecharacteristics for launching a pilot watershedvaluation project but lacked the political will. Incontrast, the municipality of Arriaga lacked some keycharacteristics (good, reliable water service), but themunicipality’s president and administration stronglysupported watershed conservation and environmentalservices payments. As a result, Arriaga is one of thetwo main areas under consideration for a pilot wateruser fee mechanism.

In many sites, the support of municipalities isessential to the watershed valuation process. Thus,TNC and its partners have worked to build alliancesand secure political will. With municipal electionsoccurring every three or four years, though, projectsface the prospect of losing hard-won support witheach change in administration. In the short term,organizations consider it important to work withcandidates and elected representatives early on togain their support.

Throughout the projects described in this report, TNCand its partners have dedicated extensive time andresources to cultivate relationships. However, over thelong-term, some of the organizations would like todevelop structures that are more immune to politicalturnover. In Ecuador, for example, FONAG wascreated by an 80-year contract signed between TNC,the municipal water company (EMAAP-Q), the QuitoElectric Company (EEQ), the Andean Beer Companyand the Swiss Agency for Development andCooperation. Because EEQ and EMAAP-Q are

LESSONS LEARNED

Lessons Learned


LESSONS LEARNED37

municipal companies, on three different occasionsover the past eight years, changes in city leadershiphave required TNC to invest in lobbying a new mayorto continue honoring this contract. TNC and theFONAG Technical Secretary consider it essential toinstitutionalize FONAG through a municipalordinance. This process is currently underway.

In addition multi-sectoral leadership is critical forproject success. For example, important skills neededto help facilitate the creation of a water fund includetechnical capacity in water resources managementand knowledge and experience in conservation policy.In addition, knowledge of politics, negotiation skillsand the ability to develop strategic alliances arecrucial. The most important skills, however, may bepatience and the ability to continue investing in long-term processes.

Both types of leadership are critical to securing stablefunding. To date, TNC-Ecuador has invested about 10years in the Environmental Fund for the Protection ofWatersheds and Water (FONAG), with supportprimarily from USAID-Ecuador. In Bolivia, theAssociation for the Protection of the Environment ofTarija (PROMETA) began working on watershedvaluation in the Sama Reserve in 2000, and most of itswork over the past five years has been supported byTNC and USAID-Bolivia. TNC and its partners inChiapas began working on watershed valuation in thelate 1990s and have received nearly $6 million insupport, primarily from USAID, the PackardFoundation and TNC. In Guatemala, Defensores beganworking on the design of a water fund for the Sierra delas Minas Biosphere Reserve, and many organizationshave supported its work over the past three years,including World Wildlife Fund (WWF), SwissRe andothers. In Indonesia, the Conservancy has receivedfinancial support from the Japan Bank for InternationalCooperation and has used these resources to helpbuild local political support for the projects.

Until recently in Quintana Roo, Mexico, limitedfunding and staffing prevented the launch watershedvaluation activities. Fortunately, Amigos de Sian Ka’an(ASK) recently has received UNESCO funds to help

support work in the watershed, which may used toreactivate inter-institutional collaboration and launchthe Mayab Clean Water Network. In Honduras, theAssociation of Municipalities for the Protection ofLake Yojoa and its Areas of Influence(AMUPROLAGO) worked on watershed valuationbetween 1999 and 2002, but a change in leadershipbrought that process to a halt.

Stakeholder Involvement &Institutional CollaberationIn all of these projects, conservation organizations(TNC and/or local NGO partners) have facilitatedcommunication and collaboration among a diversearray of stakeholders, including water companies,government agencies responsible for natural resourcemanagement, municipalities, communities, citizensgroups, private industries, tourism businesses,hydroelectric companies and others. Conservationorganizations cannot implement these projects ontheir own. Watershed valuation projects are designedto link water users to watershed conservation. Theyseek to get water users to contribute to conservationeither financially (through user fees or increasedpublic financing of conservation activities) or bytaking direct actions to reduce threats to waterresources. Because of this, conservationorganizations must implement these projects incollaboration with other stakeholders, especiallymajor water users and the municipalities and nationalgovernment agencies responsible for regulating wateruse. It is important, however, to clarify institutionalroles and responsibilities to avoid potentialmisunderstandings.

Many organizations, companies, agencies and groupsare involved in water use. However, due to fundingand time limitations, it is not feasible to work witheveryone, and determining who to involve can bechallenging. Most of the conservation organizationstarget major water users that have the capacity to payfor water or contribute to watershed management andare willing and able to participate.


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In Berau, Indonesia, the Conservancy began byidentifying potential stakeholders following intensivediscussions with select institutions. Afterwards, aworkshop was conducted to reach consensus on thefunctions provided by the Segah watershed,participants identified institutions responsible foractivities related to management of the Segahwatershed. As a result, the Conservancy collaboratedwith key government agencies as well as the JambataFoundation, a local environmental NGO based in Palu,which helped facilitate the process of local planningdevelopment in 17 target villages in the Miu sub-watershed (see Figure 11).

In Bolivia and Ecuador, conservation organizationshave focused primarily on major water users. Forexample, PROMETA’s principal partner in Bolivia isthe Potable Water and Sewer Services Cooperative(COSAALT), a water cooperative that has a

concession from the Municipality of Tarija to providethe city’s drinking water. Other partners aregovernment agencies (local, departmental andnational) and two civic organizations. In Ecuador, themajor players in the Water Conservation Fund are theMunicipal water company and the Quito ElectricCompany. In Guatemala, Defensores is workingclosely with hydroelectric companies and water-usingindustries as well as water users with less capacity topay for watershed environmental services. In bothHonduras and Chiapas, conservation organizationshave tried to work with hydroelectric companies, butto date, they have not found substantial interest inimproving watershed management. In Quintana Roo,Mexico, one of the main partners in the watershedvaluation activities is a tourism company concernedabout ecologically-sustainable tourism. Partners therehope that this company will provide leverage forworking with other tourism companies to show thatwater conservation is critical for maintaining tourismin the area over the long-term.

Another priority group is government agencies withresponsibility for the management of water resources.In Bolivia, PROMETA is working with municipalities,the departmental government, and the nationalagency responsible for natural resource management.In Honduras, Guatemala and Chiapas, the projects allhave worked closely with municipalities and mayors,because of the responsibilities that local governmentshave to provide residential water service tocommunities and to manage natural resources.

Many people involved in these projects haveemphasized the importance of presenting watershedconservation and environmental services fees interms that are relevant to specific user groups.Different user groups will require different outreachstrategies and interventions. Only when they canunderstand the benefit in a concrete, relevant fashionwill they be willing to support a fee mechanism orparticipate in watershed conservation activities. Forexample, rural residents are most interested in howwatershed management activities (or the lack ofwatershed management) will affect the availabilityand quality of their water. Hydroelectric companiesare interested in minimizing maintenance costs,

Figure 11. Local Planning in the Miu Sub-Watershed

LESSONS LEARNED

Village meetingSocialization

Sketch map localplanning team

Survey andtransect

Data AnalysisVillage meeting

Presenting villageplanning result

Region meeting

Village planningcompilation

Inter Regionmeeting

Region planningcompilation

Document of Local Planning on Miu Watershed Management

Supporting & Implementing:1. Community2. FP-DAS

Õ Õ

Õ

ÕÕ

ÕÕ


LESSONS LEARNED39

prolonging the productive lifespan of their plants andsometimes also improving relations with localcommunities. Private industries may be interestedprimarily in reducing their costs and improving theirenvironmental quality.

Several people also highlighted the importance ofworking with groups from the upper, middle andlower sections of a watershed, because each grouptends to value and use water resources differently.Those in the lower watersheds typically will place ahigher value on water than will upstream users,because they receive less water or water alreadycontaminated from upstream uses. TNC and itspartners have found it effective to use workshopsand exchanges to help people from different partsof the watershed understand how their actionsimpact other users.

The Role of Studies & TechnicalAssistanceThroughout the projects described in this report, thedatabase, hydrologic simulations and economicvaluation studies were valuable for building credibilityand convincing stakeholders of the importance oftaking action. However, the types and range of studiesdepends on a number of factors, including time andresources (e.g., financial, capacity). In cases wherewater user fees will not be used, it may not benecessary to conduct a contingent valuationassessment, which is expensive. An estimate of thecost of watershed degradation under a “noprotection” scenario may be sufficiently persuasive.

Although there is some variation among the casestudies, it appears that in most cases, TNC and itspartners have found it essential to generate a strongbasis of technical information (primarily hydrologicand economic information) early in the process. Inseveral cases, this information provided a strongfoundation for building consensus about the need forconservation. In Bolivia, PROMETA found that thehydrologic research and economic valuation studiesthey conducted increased their credibility withmayors, the governor, the water company and otherkey actors. In essence, it enabled them to facilitate theorganization of a formal inter-institutional governance

structure for water (PRO-AGUA). In Quintana Roo,Mexico, maps of underground waterways providedcrucial information to understand water flows thatstakeholders cannot see. By mapping thesewaterways, partners there have been able to make thecase for how water (and contaminants) flow and havestarted to use this type of information to help informdecisions made by local municipalities’ ecologicalland zoning committees.

In Guatemala, Defensores invested most of theproject’s first year and a half conducting researchneeded to support the design and development ofthe water fund. This included research onGuatemalan legislation related to water and studiesof water use and valuation of watershed services bymajor users, including households, farmers whoirrigate their crops, hydroelectric companies,beverage industries and a paper company. Similarly,in Chiapas, TNC and its partners conductedeconomic and biological feasibility studies early inthe process to determine the value of environmentalservices provided by the watersheds and thewillingness of local users to pay for those services.They used these studies to identify municipalitieswhere water user fees might be most feasible.

The Conservancy’s Indonesia Program dedicatedsignificant time and resources to a long list of studiesto help determine how best to address the threats inthe watersheds. In addition to the valuation studies,the Conservancy and its partners collected data tohelp complete hydrologic modeling for the study sites,land cover analysis for the watershed modeling andfield surveys. The computer simulation models wereimportant in developing scenarios on watershedecology. Spatial and land use patterns around thewatershed strongly influence existing watershedquality. Scenarios developed helped buildstakeholders awareness and served as the basis offuture management. Given time constraints and arange of “off the shelf” models, TNC did not seek todevelop new hydrological models for the selectedwatersheds. Instead an existing model was chosenthat would best meet the project objectives, given thedata and software availability on two sites.


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In contrast, in Ecuador, TNC and its partners did notconsider hydrologic or economic research a highpriority during the start-up phase of theEnvironmental Fund for the Protection of Watershedsand Water (FONAG). At that time, a TNC partnerorganization made a relatively simple estimation ofthe cost of upper watershed protection in oneprotected area. TNC considered that getting keyactors to make long-term financial commitments tothe water fund depended more on awareness-building and negotiation than on the results ofeconomic research. In 2004, however, TNC andFONAG decided to conduct a technical analysis ofthe river basins and water demand in Quito’s area ofinfluence (Hoja de Quito) to consolidate informationabout the watersheds and provide a strongertechnical basis for management.

While the idea of linking water users to watershedconservation activities sounds attractive toconservation organizations, these groups tend to havelittle experience in watershed valuation. Technicalassistance is often essential to help organizationsdesign, plan and implement projects. TNC’s senioradvisor for international water policy helped many ofthese projects to concentrate on building aconstituency for watershed conservation andencouraged them to not focus too much on thedevelopment of a water-based finance mechanism orwater fund. TNC partners also have drawn ontechnical assistance from in-country partners to helpthem better understand the context in which theywere working. For example, in Chiapas, the TNC officethere partnered with a few local organizations toundertake studies related to the economic andecosystem service benefits that well-maintainedwatersheds provide, whether local users are willing orable to pay additional fees to support conservation ofthose watersheds, and how the country’s legalframework might influence the development of awater fund mechanism. Likewise, in Quintana Roo,partners leading watershed valuation activities therehave worked closely with the Centro deInvestigaciones del Sistema Acuifero de QuintanaRoo (CINDAQ) to map underground aquifers. Thesemaps have been critical in showing how pollutionfrom one area migrates to fragile areas and can pose

threats to clean water sources as well as the YucatanPeninsula’s profitable tourism business.

The subterranean nature of Quintana Roo’swatersheds poses a unique challenge worth noting asthis may be applicable to other areas across theglobe. Those living in the watershed and using itsresources cannot always see the waters that sustainthe watershed or understand how it operates. Thismakes it difficult to reach policymakers and usersalike. Those working in watershed conservation inQuintana Roo have learned that the laws andpolicies are not adequate for their local situationand that education and awareness-raising are keyto helping policymakers make informed decisions.They also have learned that they need to work withlocal users to help them understand what asubterranean watershed is, how it functions andhow their actions impact it.

Managing ExpectationsThe experiences of these sites seem to indicate thatwater funds do not have the potential to become aprimary source of funding for protected areas andbiodiversity conservation. Protected areas of particularvalue for biodiversity conservation tend to be largeareas that encompass many watersheds. Water usersgenerally want to support management activitiesspecifically in the watersheds that provide their water,not entire reserves or ecologically functional sites.

For example, the early literature about FONAGpresented the fund as a finance mechanism for theAntisana Ecological Reserve and the Cayambe-CocaEcological Reserve, or potentially the entire CondorBiosphere Reserve, which includes more than onemillion hectares. The watersheds of interest toFONAG member organizations, however, include asmaller area-the headwaters of several basins thatsupply drinking water and support hydropowergeneration and other economically productiveactivities that depend on water. Similarly, in Bolivia,PRO-AGUA’s goal is to stop the deterioration ofTarija’s water sources, which only encompass part ofthe Sama Biological Reserve. In Chiapas, TNCpartners are trying to work in important watersheds

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that have sufficient political will and public supportto institute a water fund. Nevertheless, there areonly a couple of watersheds that meet this criterion,and they cover only a small portion of the ChiapasCoastal Watershed Platform Site, which includesthree protected areas: El Triunfo, La Encrucijada andLa Sepultura Biosphere Reserves.

Watersheds that produce economically valuablewater may not be the areas of greatest biodiversityvalue within a protected area. Conserving thesewatersheds only achieves a small part of what isnecessary to conserve the biodiversity of the entireprotected area. While it may seem obvious that waterfunds cannot be the sole source of funding for largeprotected areas, it must be taken into account so thatorganizations will be realistic when projecting thegeographic area that could potentially benefit from awater-based finance mechanism.

Based on the case study experiences, ruralcommunities frequently do not have reliable serviceand clean, potable water. Poverty makes it difficult toimplement an environmental services paymentmechanism. Inhabitants in some of these areas havegreat difficulties making ends meet and would likelyhave financial difficulties making payments forwatershed conservation. Nevertheless, surveys inChiapas have found that local people would be willingto pay at least a small fee if they could be guaranteedreliable service and clean, potable water. While thisfee might not be sufficient to cover all of the costs ofwatershed conservation, it would help instill anawareness of the value of water resources andconservation. Similarly, in Bolivia and Guatemala, localresidents expressed willingness to work to conservetheir water supply.

The goal of watershed valuation projects is to involvewater users in conservation. Water users cancontribute to conservation either by paying a user feeor by taking direct actions to reduce threats to waterresources. Most of these projects began with a focuson establishing payments for watershed services, butmany broadened their scope over time.

For example, PROMETA learned that water user feeswere not politically feasible in Tarija and that theycould take an alternative approach to watershedconservation by developing an inter-institutional body(PRO-AGUA) that would coordinate and strengthenthe efforts of existing institutions. In Guatemala, theidea of a water fund evolved into the creation of awater foundation and local watershed committeeswith representation from all major user groups-inother words, the development of a governancestructure in which all water user groups participate indecision-making. The water fund continues to be animportant component of this broader process. InHonduras, AMUPROLAGO started with the idea ofcharging a water fee to the electrical company butended up conducting an extensive participatoryplanning process with all of the municipalities and keystakeholders around the lake. Similarly, in QuintanaRoo, partners have worked primarily on participatoryplanning and advocacy. There is some interest inexploring a water fund, but it is not a central focus oftheir work, and they are only considering it for onearea just north of Cancun. Partners are, however,trying to engage the tourism sector to take on greaterresponsibility for water conservation and possibly forcontributions to a water fund, if implemented.

In Chiapas, TNC partners are most activelyconsidering piloting a water fund in two watershedsthat have critical political support and potential publicwillingness to pay. They also are trying to work with ahydroelectric company and coffee farmers in anotherwatershed to determine potential for a water fundthere. Nevertheless, in all these watersheds, incomesare modest-even among those with a greater ability topay-and it is unlikely that an environmental servicespayment mechanism could ever generate enoughfunds to fully support watershed conservationactivities. Beyond generating money, water valuationwork should create greater awareness so thatlandowners will manage water and forest resourcesmore effectively from a conservation standpoint.

In Indonesia, the initial goal was not to establish afee system but rather to gain a betterunderstanding of ecosystem services and the value


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people placed on these services. In this process,the Conservancy and its partners have supported acollaborative management approach facilitatedthrough the use of Community ConservationAgreements in the Lore Lindu National Park andSegah Management Body to improve thewillingness locals to commit to the long-termsurvival of the forest and the watershed. Onelesson that came out of the two Indonesia projectswas about urgency and ‘tipping points.’ In Berau,the stakeholders agreed that watershedmanagement is important, but because theimpacts of poor management practices (increasedflooding, salination of freshwater systems andsedimentation) have yet to materialize, actionfollowing the project has been slow. In contrast, inCentral Sulawesi, the tipping point is now.Increased population growth and land useactivities, especially farming, are causing top soilto wash away. Localized incidents of flooding haveoccurred as a result of illegal logging. The time toact is now, and the government has taken swiftaction to incorporate the project results intolegislation and development planning.

Building Governance SystemsWatershed valuation is a tool not simply for fundingwatershed protection but also for building effectivegovernance for watershed management. Governancesystems that mandate open, transparent andaccountable decision-making can help ensure thatdecisions are based on sound science, take intoaccount the interests of all stakeholders and theenvironment, and effectively allocate resources forcurrent and future uses. Good governance often isadvanced as a concept but seldom exists in practice.Developing systems of good governance ischallenging as it requires putting into place soundpolitical, social, economic and administrative systems.Water management, to date, has tended to befragmented and uncoordinated as interests operatewithin sectors (energy, agriculture, forestry,sanitation), and the political will to facilitate cross-sectoral decision-making at different levels (e.g.,national, regional, local) is often lacking.

One of the biggest challenges and most importantshort-term results of watershed valuation projects isto build trust among the major stakeholders involvedin the process. Watershed valuation processes bringtogether institutions with diverse and often conflictinginterests, and this can be a useful process forimproving governance systems. For example, watercompanies want to provide clean water; hydroelectriccompanies want to generate electricity cost-effectively; industries want to use water in productionprocesses; communities want drinking water; farmerswant to irrigate crops; and conservation organizationswant to conserve watersheds and their associatedbiodiversity. When successful, watershed valuationprocesses bring together stakeholders with differentperspectives and a history of conflicts and enablethem to think beyond their own interests to recognizethe collective value of their watersheds. They mustwork together to create institutions to better managewater resources and improve existing institutions. Theimportance of this process is underscored in LatinAmerica and other places, where there is an ongoingtrend toward government decentralization. Thesuccess of inter-institutional structures such asFONAG in Ecuador, PRO-AGUA in Bolivia, theHonduran Water Platform, Pigua Committee inChiapas and watershed committees in Guatemalademonstrate the progress these projects have madein building trust among diverse stakeholders.

Defensores originally envisioned the water fundpurely as a finance mechanism in which water userfees and voluntary contributions would be used tocover most or all of the basic ongoing expenses ofconservation and management of the core zone of theSierra de las Minas Biosphere Reserve. In meetingwith representatives of important stakeholder groups,however, Defensores found that they wanted to beinvolved in deciding how that money would be used.For this reason, the original idea of a water fundevolved into the creation of a water foundation andlocal watershed committees with representation fromall major user groups. As different user groupsparticipate in the water foundation, Defensoresbelieves that transparency in decision-making andfinancial management will build trust and increasecontributions. The focus, nevertheless, is on the

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LESSONS LEARNED43

development of a governance structure in which allwater user groups participate in decision-making.Defensores also recognizes that actors can participatein many different ways-not only by giving money.Rather than focusing purely on payments, Defensoresrecognizes that some actors will participate directly inmanagement activities, for example, by helping toprevent and control forest fires, implementing soilconservation measures or planting trees.

The development of new institutions can be a way tohelp move toward participatory decision-making. InIndonesia, inappropriate land-use planning at nationaland local levels contributes significantly to thesethreats and often is rooted in a lack of human andfinancial resources required to develop integrated andparticipatory watershed management plans. As such,TNC used the studies not only to identify the impactsof forest loss on river system functions, but also tobetter inform decision-makers on the down-streamconsequences of poor planning and, ultimately, tobuild capacity to manage these watersheds in aparticipatory and sustainable manner. This hasinvolved the creation of the Segah WatershedCommittee and Forum, which has been a vehicle forevaluating the policy framework, plan, implementationand impacts of current watershed managementmeasures as inputs for the district’s decision makers.The Committee has been tasked with: evaluatingpolicies, plans and programs to be held in thewatershed; evaluating problems occurring due towatershed management policies and natural disasters;providing further considerations and solutions to theRegent (Bupati) on the issues of land use allocation inthe watershed, soil and water conservation and landreclamation, water resources utilisation, and mining inthe watershed; and preparing and conductingmeetings of the Watershed Forum. Such newinstitutions offer a way to bring divergent intereststogether to improve watershed management at thelocal, regional and national levels.


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Conclusion

This report is meant to be a contribution to global,national, regional and local dialogues on how toprotect our important watersheds and the people andbiodiversity that depend upon them.

Although the experiences to date have fallen shortin prioritizing economic valuation research, theprojects showcase the fact that even some level ofwatershed valuation can lead to significant resultsin moving toward better management of waterresources. The basic intention of watershedvaluation projects is to help local actors recognizethe importance of these natural areas and takeaction to protect them in order to ensure theintegrity of this critical environmental service.

The projects of the Conservancy and its partnershave shown that these processes often requirebasic hydrology and economic valuation studies,long-term commitment, consistent leadership,institutional collaboration and long-term funding.Managing expectations and clearly communicatingamong partners is necessary. Regarding waterfunds, the projects have noted that more analysis isneeded on whether funds should be invested incapital funds, technical assistance and/or fieldprojects. There needs to be a realisticunderstanding that once these financialmechanisms are created, investments will take timeand involve trade-offs.

In addition, a strategy for building support forintegrated watershed management in key institutions isimportant for long-term success. A multi-facetedstrategy is necessary. Conservation work in large areas,in particular, requires working with different strategies,including a water-based financial institution, but alsoprivate lands conservation, collaboration withindigenous communities and others.

Watershed management and the implementation ofan environmental services payment mechanism arerelatively new concepts that involve long-termprocesses and commitments. To ensure success, theyneed ongoing supervision to monitor progress towardgoals and objectives. This ongoing monitoring shouldinform watershed managers and stakeholders aboutnecessary adjustments to adapt and improve theiractions. While this type of adaptive management isalways good practice, it is especially important withrelatively unknown tools and strategies, such as thoseused for watershed valuation work.

CONCLUSION


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References

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