Forests Sourcebook - HCV Resource Network

Box 2.13
Water Services Provided by Forests: Claims and Reality
Claim
Forests slow runoff
Forests increase total annual water flow
Forests increase dry season water flow
Forests increase precipitation
Forests reduce flooding
Forests reduce erosion
Reality
True
Because of increased evapotranspiration, forests usually
reduce total annual water flow
Exception: Cloud forests
Unclear
Minor effect, except at continental scale
True at small scales, not at large scales
Depends on use that is made of deforested areas
Sources: Bruijnzeel 2004; Calder 1999; Chomitz and Kumari 1998.
Charging service users
It is sometimes asserted that water users will never pay for
services. This assertion is manifestly false. In Costa Rica, a
variety of water users (hydroelectric producers, bottlers,
municipal water supply systems, agribusinesses, hotels)
are paying to conserve the watersheds from which they
draw their water, generating about US$500,000 annually
in payments. Other examples exist throughout Central
and South America, and in South Africa. In Kenya, the
Nairobi Water Company has indicated its willingness in
principle to pay for watershed protection. The principal
challenge is to demonstrate to users that they will, in fact,
benefit from making such payments, by reducing or
avoiding costs from reduced water services. Nairobi
Water, for example, is currently spending about
US$150,000 a year in additional water treatment and
desilting costs at its Sasumua treatment plant as a result of
upstream degradation.
In general, the primary interlocutors in such discussions
are not the ultimate consumers of the water services
but the companies and public agencies that generate
hydropower, provide domestic water services, or distribute
irrigation water. In many cases, funding for payments
comes from the existing budgets of these agencies. Thus,
Nairobi Water would finance payments for upstream conservation
from the savings resulting from reduced costs at
its treatment plant. Only in rare instances is it necessary to
increase fees to consumers to pay for PES. In those
instances, experience has shown that this can be achieved
with public support if the need for and use of the revenue
are clearly explained.
As noted above, charging biodiversity users is difficult if
not impossible. Most available funding from biodiversity
users (for example, from the GEF) is short term, limiting its
use to paying for the up-front costs of PES mechanism
establishment or to capitalization of a trust fund.
Paying service providers
For PES to have the desired effect, the payments must reach
the land users and do so in a way that motivates them to
change their land use decisions. This is not easy. The historical
record is replete with examples of efforts to induce land
users to adopt particular land use practices, for a variety of
reasons and using a variety of payment mechanisms. Most
have very little to show for their efforts.
In general, several principles are clear:
Payments need to be ongoing. The benefits being sought
are generally ongoing benefits, which will be enjoyed year
after year as long as appropriate land uses are maintained.
For this to occur, land users must receive payments as long
as they maintain the land use. All too often, payments have
been frontloaded into a few years. Predictably, however,
when payments cease, any leverage over land users’ behavior
also ceases.
Payments need to be targeted. Environmental services
depend on both the kind of land use and its location. An
undifferentiated payment system that pays everyone the
same will be much more expensive than a targeted scheme.
It will also make it difficult to tailor interventions to the
particular requirements of given situations.
Perverse incentives need to be avoided. Particular care
needs to be taken to avoid perverse incentives. For example,
88 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT