This blog discusses Pay: Establishing payments for watershed services that provides guidance on how to improve water security by establishing rewards or payments for ecosystem services provided by a given water resource. Providing appropriate payment to land and water managers to maintain or restore watershed services is an innovative way to improve water security.
Water-related services can include producing agricultural products, supporting ecosystem functioning, regulating water flows, and providing cultural and recreational attributes. Pay presents how such services can be valued and measured and provides an overview of the various components of an effective payment scheme for watershed services.
Total Economic Value (TEV) is a common framework for valuing ecosystems. It uses two categories – use and non-use values. Use values can be:
Direct use value – mainly derived from goods that originate directly from the watershed
Indirect-use value – mainly derived from services that the surrounding ecosystem provides
Non-use values are derived from benefits from preserving the watershed and ecosystem in its natural state. These can be either keeping something in existence (existence value) or preserving the ecosystem or watershed for future generations (bequest value).
Valuations are an important basis for negotiations but in the end the values will be determined by negotiations between parties.
Designing a payment scheme should be centered on creating market-based incentives to change management choices that optimize the benefits of the watershed.
Like other documents in the WANI toolkit, Pay focuses on shared benefits and values of ecologic resources From a ecosystem perspective. It outlines how to identify and value watershed services, design a payment scheme, identify and engage stakeholders and negotiate agreements, establish rules and governance frameworks and monitor progress and share learning across different stakeholders.
Pay also describes the following payment schemes:
Private – direct payments to service providers, purchase of land or sharing of costs among private entities
Cap-and trade – trading of water permits among users with an overall cap of water withdrawal and pollution
Certification or eco-labeling – environmental and social attributes are included in the costs of a traded product
The needs and capacities of the various stakeholders must be recognized as well as clear linkages between upstream land and water use, and downstream benefits.
Pay outlines elements of an agreement – services provided, compensation, monitoring and compliance, and governance and management. It also presents the need for clear and enforceable rules and transaction mechanisms and that these must operate within a wider framework of laws, policies and customary arrangements.
Finally, Pay explains the importance of incorporating social learning to continually monitor progress and prioritize efforts. The social learning process should be accessible to all well-informed stakeholders and include a feedback loop that can lead to continuous improvement to the overall payment scheme.
To review the WANI toolkit and related documents please visit: http://www.iucn.org/about/work/programmes/water/resources/toolkits/