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Latin American Water Funds Partnership Experiences from Scaling Up Watershed Conservation
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Water FundsLatin American Water Funds Partnership
Experiences from Scaling Up Watershed Conservation
Fernando VeigaRebecca Tharme
The Nature Conservancy
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Investing in Green Infrastructure
Ecosystems provide services to society
Growing evidence that the conservation and restoration of ecosystems are key to guarantee water security for human needs, and in many cases
represent the most cost-effective solutions
Water funds rely on concept of ecosystem servicese.g. erosion abatement; sediment reduction; nutrient filtration;
flow regulation; flood control - clean reliable water sources
Water Funds invest in conserving watersheds to improve or maintain water-related benefits and regulate water-related risks
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Users Providers
Quito EcuadorPopulation 2 million
Condor Bioreserve& Surrounding farmlands
$
WATERSERVICES
$FinancialFund
Water Funds
Board
Water Fund
ECOSYSTEM SERVICES MODEL
WF is a conservation trust fund that finances watershed protection
Water Funds are effective tools for watershed conservation because they:
• Connect suppliers of ecosystem services with beneficiaries, providing direct benefits downstream and improved livelihoods upstream (efficient)
• Mitigate water scarcity and pollution problems at the source rather than end-of-pipe treatments (effective)
• Provide a sustained funding mechanism with a flexible governance structure to allow for adaptive management of risks and opportunities (sustainable)
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• Most important water supply area in Brasil - 50% of São Paulo metropolitan area, 9 Mill people
• Poor land-use practices in sensitive areas undermining system capacity to serve growing demand
• Invest models estimated mean erosion rates and sediment loads – 14 300 ha of priority areas (3% of total area) for water fund investments = 50% of sediments abated= 600 000 tons per year
• US$ 4.9 million/year of potential reduction in water treatment and drainage costs (excl. other potential benefits e.g. contaminants reduction)
Business caseSão Paulo, Brasil
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2006 2007 2008 2009 2010 Promedio 0
3,000,000
6,000,000
9,000,000
12,000,000
15,000,000
18,000,000
Producción de Caña 5 Riegos Producción de Caña 4 Riegos
Sugar cane harvest (million tons)
Source: Sugar Cane Research Centre - Cenicaña – estimations Asocaña
8.7% decrease in productivity
Loss of $33 million / yearLoss of $250 / ha / year
Sugar cane mills are main funders- for water supply assurance
Production with 5 cycles Production with 4 cycles
Business caseCauca Valley, Colombia
- Most important sugar cane production area in country (200 000 ha)- Increased pressure on water resources - potential future reduction from 5 to 4 irrigation cycles with current degradation trends
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0.0
10.0
20.0
30.0
40.0
50.0
Conservado Uso actual (con política ambiental)
Uso fuera parque (sin política ambiental)
m3/
ha/a
ñoto
nela
das/
ha/a
ño
Cantidad agua Cantidad de sedimentos
Sources: CIAT 2007, Bogota Water Fund
Water quantity
Quantity of sediments (Component of Quality)
Conserved Area
Uses inside Protected Area
Outside Protected Area
m3/
ha/
year
Ton
/ha/
year Regulation significant but not quantified
10:1
Reducing sediment loads by 2 Million tons
Projected savings
USD 3.5 M per year in treatment costs
Feasibility Study Economic RationaleBogotá, Colombia
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Proof of ConceptQuito Water Fund
Importance
• 2 million residents• Condor Bioreserve: 2.5 million acres, exceptional
biodiversity, inc. 760 bird spp.; 28 rivers
Partners
• EMPAAQ (Quito’s Water Agency); Quito Electric Company; USAID; Swiss Development Corporation; Cerveceria National (beer company); Tesalia Springs Co. (water bottling company)
Fund Progress
• 2000: $21 000 start-up 2013: ~ $13 000 000• Since 2006, 2% of the water utility revenues
• Annual investments of nearly $2-3 million (leverage)
• Páramo and forest as biodiverse natural water tower• 80% of water for the city of Quito, Ecuador, from three protected
areas and their buffer zones• Conversion with land pressures reducing ability to provide services
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Proof of ConceptQuito Water Fund
Benefits to People
• Permanent support through various programs to communities close to the water sources
• Enrolled 30 500 children in environmental education programs
• Over 200 families engaged in community development projects in rural basins
Conservation Progress
• 85 000 ha of public lands protected• 19 000 ha of private lands restored and/or
under Best Management Practices
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Steps to establish a Water Fund
Pre-feasibility
and Evaluatio
n
Which ecosystem services?
Where is the area of influence?
Who are the
stakeholders?
Design
Feasibility studies:
Environmental
Socio-economic
Institutional
and legal
Negotiation
Institutional
arrangement
Partners’ commitme
nt (financial
and technical)
Maturity
Financial sustainabilit
y
Consolidation of field activities
and monitoring
Operation
Contracts with local
stakeholders
Field activities
Fund-raising
Monitoring
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Science-based approachContribution
to aquifersContribution
to flowsSediments Coverage
Highest priority areas for conservation
Biodiversity connectivity
SistemaÁrea ronda del río
(250 mts cada lado) (Has)
Área en cobertura natural para
conservación (Has)%
Área intervenida para restauración
(Has)%
Río Amaime 7.126 3.135 44 3.991 56Río Bolo 2.210 1.414 64 796 36Río Desbaratado 1.016 772 76 244 24Río Fraile 2.792 2.345 84 447 16Río Nima 1.642 1.133 69 509 31Río Tuluá 13.234 5.426 41 7.808 59
TOTAL 28.020 14.226 13.794Water for life and sustainability
Investment Portfolio
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Investments
Private and communal lands1. Conservation agreements2. Best agricultural and cattle ranching practices (silvopastoral systems)3. Riparian forests4. Reforestation and restoration5. Income generation6. Environmental education
Public areas7. Implementation of management plans8. Park guards
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Peru
Ecuador
Colombia
Brasil
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WATER MONITORING
Water Monitoring Sites
Precipitation• 3 sites
Flow• 3 sites
Quality• 9 sites
• 9 parameters
Parâmetro AnalíticoPHTurbidezDBOCorColiformes TermotolerantesOxigênio dissolvidoNitrogênio amoniacalFósforo TotalTemperaturaCommunity
Engagement
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Biodiversity Monitoring• Importance of riparian areas
• Terrestrial monitoring of páramos and forests also showing first
encouraging results (e.g. forest bird species in restoration areas)
Paulo Petry
Community monitoring4218 families benefited upstream in watershed
Monitoring of multiple water funds ongoing
TNC, FEMSA Foundation, IDB and GEF Launched in 2011
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The vision
Over the next 5 years $27 million in Seed Capital will
support direct investment of $143 million
in 32 Water Funds, leveraging additionally $500 million
providing long-term payments for environmental services
to rural communities, and securing
clean and sufficient water and
effectively conserving 7 million acres
for 50 million people in Latin America
1. Support the establishment and strengthening of the WFs
2. Identify and share best practices
3. Development of regional projects
4. Support monitoring initiatives
5. Keep developing the business cases
6. Raise awareness (Where Does Your Water Come From?)
7. Support the green infrastructure approach in water sector
loans (IDB and CAF)
8. Partner with water regulators with the aim of including the
watershed conservation costs in water tariffs (ADERASA – PE,
CR, BR)
Goals
Status15 in evaluation14 in design13 operating1 mature
Opportunities• Exchange lessons learned• Regional players (public
and private) – reduction of transaction costs
• Diversity and cooperation• Upscale (implementation
channel)• Expand to new
geographies (Africa, USA)
Water Funds as at June 2013