14 May 2013 | Green Water Credits, were first used in 2007 in Kenya's Tana River Basin, and in many ways they laid the groundwork for WWF's ground-breaking payments for watershed services now underway in the Lake Naivasha watershed. They work by compensating upstream farmers for incorporating soil and water conservation activities into their farming, and their use has since spread to Morocco and Malawi.
In 2012, the concept spread to Asia as China picked it up with plans to implement it in the Yangtze River – China's longest and most economically important tributary.
This type of information and experience sharing between developing countries like Kenya and China can lead to a host of benefits. Organizations from both countries signed a Memorandum of Understanding for cooperation concerning water resources management, as developing countries face many of the same challenges in terms of reducing poverty and building strong economies. Because of their similarities, it's often advantageous for these nations to share their experiences and learn what works and how it works and, as a result, produce innovative solutions faster.
South-South learning, as it's called, could play a big part at this week's Katoomba Group meeting-Katoomba XVIII: Forests, Water and People-in Beijing, a global forum where experts, policymakers, practitioners and investors come together to discuss nature-based solutions to the water crisis. Representatives from Peru and Ghana as well as China, who is co-hosting the meeting with Ecosystem Marketplace publisher Forest Trends, will be attending and looking to gain insights on how to solve their individual water troubles.
All three of these developing countries struggle with different versions of water stress and scarcity and each nation has implemented or is in the process of implementing their own variation ofinvestments for watershed services (IWS) as a solution. The community-focused water fundis growing in popularity throughout Latin America, while China has adopted the massive eco-compensation program backed by the national government. The meeting encourages Peru to look at the benefits of being financed by a national government while China can examine the social byproducts of IWS that can connect stakeholders and empower communities.
Regardless of the advantages and disadvantages of each model, Peru, Ghana and China stand to benefit from learning about other approaches and integrating the successful pieces of these approaches into their own version.
China is no stranger to environmental problems. The air and water pollution and clean water scarcities threaten the nation's future prosperity and economic growth leaving the government pressed for solutions. The country-wide market-like initiatives that are based on payments for ecosystem services and launched by the national government comprise China's eco-compensation program. Programs that compensate individuals and communities in a variety of ways to ensure and protect ecosystem services fall under eco-compensation. China's economic progress has given the nation the financial means to produce this program.
Eco-compensation operates at different scales. There are municipality level programs like the initiative in the Min River Watershed where Fuzhou City pays two upstream communities to protect and treat the watershed. In Zuhai, residents are compensated with health insurance for the pollution in their drinking water source.
On a larger scale, eco-compensation includes the Conversion of Croplands to Forests and Grasslands (CCFG), which aims to reforest millions of hectares of land to prevent agricultural runoff down steep slopes during heavy rains. There is also the Forest Ecosystem Compensation Fund, which provides subsidies to communities and households that manage and protect an area that supplies ecological services, like water filtration, to the public.
While all of these programs are designed and funded by the national government, they are administered locally permitting plenty of flexibility when it comes to on the ground implementation. This means there is a lot of experimentation occurring using various approaches throughout China's provinces and municipalities.
Eco-compensation has gained widespread momentum- China accounted for 91% of global watershed investments in 2011, according to Ecosystem Marketplace's State of Watershed Payments 2012 report.
Although Peru isn't the leader of watershed investments in Latin America, the nation is engaged in the space and constantly investigating methods that would help solve their water shortage. The Vice Minister of Environment in Peru, Gabriel Quijandria, is attending the Katoomba meeting and will be part of a panel looking at business and government approaches to natural infrastructure innovations regarding water risks.
Peru's policies also reflect their interest in environmental matters. In 2005, the government approved the General Environment Law which recognized the importance of ecosystem services and required the state develop finance mechanisms to value and maintain these ecosystems. Then in 2008, the Ministry of Environment was formed and with it came environmental quality standards.
Last year, Peru collaborated with Forest Trends and SDC (Swiss Agency for Development and Cooperation) to launch the Watershed Services Incubator, which develops financing mechanisms to be used toward funding IWS schemes.
Latin America as a whole has produced several innovative IWS models, such as using in-kind payments, but most notable of these approaches is the water fund, which originated in Ecuador. The water fund is a collection of user fees and public, private and NGO sources that is deposited into an account that invests in conservation projects. A stakeholder committee decides how the money is spent enabling local communities to choose the most effective ways to use the funds and also possibly secure sustainable financing. According to the Watershed Payments report, 23 funds were active in 2011 with several more in development.
Perhaps the most well-known water fund is FONAG (Fondo para la Protección del Agua or Fund for the Protection of Water) in Ecuador. Also known as the Quito Water Fund, the funds go towards education for the indigenous populations upstream who have agreed to adopt sustainable land-use practices.
The water fund is now the dominant model of the region. From Ecuador, it has spread to Bolivia and Colombia as well as others. Peru has met with representatives from FONAG on different occasions expressing their interest in setting up water funds.
Ghana is still very much in the development phase when it comes to IWS programs and could gain valuable insights when engaging with other developing countries who are implementing programs.
In the works in Ghana is a possible IWS project in the Pra and Kakum River watersheds. Both bodies of water suffer from sedimentation and toxic chemical contamination. Watershed investments could offer a dependable supply of clean water. As of right now, the organizations involved are working on performing a full feasibility assessment.
The success of the water fund spreading from Ecuador throughout Latin America already demonstrates the benefits of South-South learning. It's showing up in other areas of IWS in Latin America as well. Peru and Bolivia have been in contact several times over their programs. In fact, Peru has an allocation in their budget for exchanges with Bolivia. The Bolivian NGO, Fundacion Natura Bolivia, (FNB) is also involved in several projects outside of Bolivia.
Even before this week's Katoomba meeting, Peru and China have begun sharing ideas. The environmental engineering firm, Keiser & Associates, is well-known for its work on IWS projects in Peru and is now working on a water project in China.
The Katoomba meeting is a big opportunity for more of this South-South learning to take place on a grand scale involving multiple continents.