1. Payments for Watershed Services By Ivan Bond Forestry and Landuse Programme IIED

2. What are the services produced by watersheds? Water flow regulation Water quality control, chemical, biological and solids Maintenance of aquatic habitats Beware the forest – water myths

3. Who are the stakeholders? Anybody and everybody who is involved with land use and water issues -Government; P&L, potential buyers -Land managers; large, small, private, communal, protected -Private sector; buyers of services -Public; water users

4. What kind of payments have been used? Direct negotiations between buyers and sellers Intermediary facilitated transactions between buyers and sellers Pooled transactions that spread the risk among buyer Auctions that engender a level of competition Retail based incentives

5. Public vs Private Payments Public payments: -use money from the tax payer (no new money) -politically susceptible -lower efficacy -example: China, sloping lands conversion programme Private payments -cost effective solution to core problem -new source of money for resource management -potentially more sustainable -example: HEP companies in Costa Rica

6. Spatial considerations Watershed services are spatially restricted -are bilateral, mutually-negotiated agreements between ecosystem service users and providers (Wunder and Vargas). -Water is often highly politicised, terminology becomes important -Markets, payments, rewards, compensation

7. What are the key challenges? Hydrological basis of PWS - is there a service? Economic basis of PWS - Is there a deal? Policy and legal basis of PWS - is there a policy and legal framework?

8. The hydrological basis for PWS Highly complex landuse – water relationships Need to consider ground water and surface water Scale is an important consideration –what can be measured and by whom?

9. The economic basis for PWS Assumes a gradient of wealth – poor landusers live upstream, wealthy downstream In many watersheds there will be no buyers of the service Landscapes are typically highly complex, multiple landuses and landusers Multiple and conflicting objectives

10. The social basis for PWS Organisations: complex organisations with multiple and competing claims over land and water (eg Africa political vs traditional) Institutions or rules: typically sectoral based legislation (land, water, wildlife, forestry) that are not integrated and are primarily control based. Legislation that stimulates (eg New York) Legislation that leads (Costa Rica)

11. Can PWS address poverty? Nature of poverty: structural, governance, other Landless: typically very poor and landless – aim for a neutral impact. Complex landscapes are resilient, changes must not destroy the resilience. Positive examples - mostly from Costa Rica where there are very high payments. Negative examples – China and the impact of grain to green.