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REWARDING BENEFITS THROUGH PAYMENTS AND MARKETS
Box 5.4: Private sector contracts for PES: the example of Vittel mineral water, France
Background: Since 1993, Vittel has conducted a PES programme in its 5,100 hectare catchment in the
Vosges Mountains to maintain high water quality. 26 farmers (‘sellers of ecosystem services’) in the watershed
are paid to adopt best low-impact practices in dairy farming (no agrochemicals; composting animal waste;
reduced stocking rates).
Use of funds: The programme combines cash payments (conditional upon the adoption of new farming
practices) with technical assistance, reimbursement of incremental labour costs and arrangements to take
over lands and provide usufruct rights to farmers. Average payments are EUR 200 hectare/year over a five
year transition period and up to 150,000 EUR per farm to cover costs of new equipment. Contracts are
long-term (18-30 years), with payments adjusted according to opportunity costs on a farm-by-farm basis.
Land use and water quality are monitored over time which has provided evidence of improvement in relevant
ecosystem services compared to an otherwise declining baseline. This high service value clearly makes
the investments profitable.
Structure and lessons learnt: The Vittel scheme built on a four-year research programme by the French
National Institute for Agricultural Research (INRA) and took 10 years to become operational. It is implemented
through Agrivair, a buyer-created intermediary agency that helps to mediate between parties. Total costs in
1993-2000 (excluding intermediary transaction costs) were almost 17 million EUR or US$ 25 million. The
tenacity of Vittel in securing an agreement reflects the fact that it was simply significantly cheaper to pay for
a solution with farmers than to move the sourcing of water elsewhere (in France, natural mineral waters are
not allowed pre-treatment).
Sources: Perrot-Maître 2006; Wunder and Wertz-Kanounnikoff 2009
A well-documented case of PES as value for money
comes from the Catskills Mountains, US. A comprehensive
PES programme for this 200 km2 watershed
costs around US$ 1-1.5 billion over ten years, significantly
less than the estimated cost of a water filtration
plant (one-off costs of US$ 4-6 billion and operational
and maintenance costs of US$ 300-500 million). Nearly
all (93%) of the farmers in the region participate and
water bills have been raised by 9% instead of doubling
in the case of new filtration capacity (Wunder and
Wertz-Kanounnikoff 2009; see Chapter 9 for further
details on the case).
Using water rates to fund PES can be done in different
ways. One study analysed 17 local PES schemes
where fees are charged to domestic water users. Seven
made the additional costs visible in water bills; percentage
premiums are added to final water bills in Pimampiro,
Ecuador (20%) and in Cuenca, Quito (5%); a flat
rate per cubic metre is used in Heredia, Costa Rica; and
in Zapalinamé, Mexico, contributions are voluntary and
users can choose the level, helping to address social
concerns (Porras et al. 2008). To give an example of
scale, charges paid by federal water users in Mexico’s
national PSA-H scheme generated US$ 18 million in
2003, rising to US$ 30 million in 2004. These monies
are disbursed to individual and collective owners of
natural forests that serve watershed functions. Payments
for preservation of cloud forest (US$ 40 per
hectare/year) exceed those for other tree-covered land
(US$ 30 per hectare/year) (Muñoz-Piña et al. 2007).
PES WITH MULTIPLE CO-BENEFITS
PES schemes can be designed to create or support
employment related to the provision of ecosystem
services. The type and number of jobs will
obviously depend on the scale of the scheme and the
nature of the activity involved. A large-scale example is
the Working for Water (WfW) public works programme
in South Africa which protects water resources by
TEEB FOR NATIONAL AND INTERNATIONAL POLICY MAKERS - CHAPTER 5: PAGE 13