7th GEF Biennial International Waters Conference in Barbados Presentation on Latin American Water Funds Partnership Experiences from Scaling Up Watershed Conservation by Fernando Veiga and Rebecca Tharme, The Nature Conservancy

1. Water Funds
Latin American Water Funds Partnership
Experiences from
Scaling Up Watershed Conservation
Fernando Veiga
Rebecca Tharme
The Nature Conservancy
1

2. 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 services
e.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 waterrelated benefits and regulate water-related risks
2

3. Water Funds
Users
ECOSYSTEM SERVICES MODEL
Providers
Water Fund
Board
$
Financial
Fund
$
Quito Ecuador
Population 2 million
Condor Bioreserve
& Surrounding farmlands
WATER
SERVICES
WF is a conservation trust fund that finances watershed protection
3

4. 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)

5. Business case
São Paulo, Brasil
• 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)
5

6. Business case
Cauca 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
18
Sugar cane harvest (million tons)
8.7% decrease in productivity
15
12
Loss of $33 million / year
Loss of $250 / ha / year
9
6
Sugar cane mills are main funders
- for water supply assurance
3
0
2006
2007
2008
Production Caña 5 Riegos
Producción dewith 5 cycles
2009
2010
Promedio
Production with 4 cycles
Producción de Caña 4 Riegos
Source: Sugar Cane Research Centre - Cenicaña – estimations Asocaña
6

7. Feasibility Study Economic Rationale
Bogotá, Colombia
50.0
m3/ha/año
m3/ha/year
Ton/ha/year
toneladas/ha/año
40.0
10:1
Reducing sediment loads
Water quantity
Cantidad agua 2 Million tons
by
Quantity de sedimentos
Cantidadof sediments (Component of Quality)
30.0
RegulationProjected savings
significant but not quantified
USD 3.5 M per year in
treatment costs
20.0
10.0
0.0
Conserved
Conservado
Area
Uses inside
Uso actual (con
Protected Area
política ambiental)
Sources: CIAT 2007, Bogota Water Fund
Outside
Uso fuera parque
Protected Area
(sin política
ambiental)
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8. Proof of Concept
Quito Water Fund
• 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
Importance
• 2 million residents
• Condor Bioreserve: 2.5 million acres, exceptional
biodiversity, inc. 760 bird spp.; 28 rivers
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)
Partners
• EMPAAQ (Quito’s Water Agency); Quito Electric Company;
USAID; Swiss Development Corporation; Cerveceria National
(beer company); Tesalia Springs Co. (water bottling company)
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9. Proof of Concept
Quito Water Fund
Conservation
Progress
Benefits to People
• 85 000 ha of public lands protected
• 19 000 ha of private lands restored and/or
under Best Management Practices
• 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
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10. Steps to establish
a Water Fund
Prefeasibili
ty and
Evaluati
on
Which
ecosyste
m
services?
Where is
the area
of
Design
Feasibility
studies:
Environme
ntal
Socioeconomic
Institution
al
and legal
Negotiat
ion
Instituti
onal
arrange
ment
Partner
s’
commit
ment
(financi
al and
Operatio
n
Contracts
with
local
stakehol
ders
Field
activities
Fundraising
Maturity
Financial
sustainab
ility
Consolid
ation of
field
activities
and
monitori
ng
Monitori
10

11. Science-based approach
Contribution
to aquifers
Contribution
to flows
Sediments
Coverage
Biodiversity connectivity
Highest priority areas for conservation
Sistema
Water for life and sustainability
Río
Río
Río
Río
Río
Río
Amaime
Bolo
Desbaratado
Fraile
Nima
Tuluá
TOTAL
Área ronda del río
(250 mts cada lado)
(Has)
7.126
2.210
1.016
2.792
1.642
13.234
28.020
Área en cobertura
natural para
conservación (Has)
3.135
1.414
772
2.345
1.133
5.426
14.226
%
44
64
76
84
69
41
Área intervenida
para restauración
(Has)
3.991
796
244
447
509
7.808
13.794
%
56
36
24
16
31
59
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12. Investment Portfolio

13. Investments
Private and communal lands
1.
2.
3.
4.
5.
6.
Conservation agreements
Best agricultural and cattle ranching practices (silvopastoral systems)
Riparian forests
Reforestation and restoration
Income generation
Environmental education
Public areas
1. Implementation of management plans
2. Park guards
13

14. Peru
Ecuador
Colombia
Brasil
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15. WATER MONITORING
Water Monitoring Sites
Quality
• 9 sites
• 9 parameters
Precipitation
• 3 sites
Parâmetro Analítico
Flow
• 3 sites
Community
Engagement
PH
Turbidez
DBO
Cor
Coliformes Termotolerantes
Oxigênio dissolvido
Nitrogênio amoniacal
Fósforo Total
Temperatura
15

16. 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
16

17. Community monitoring
4218 families benefited upstream in watershed

18. Monitoring of multiple
water funds ongoing

19. TNC, FEMSA Foundation, IDB
and GEF Launched in 2011

20. 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
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21. Goals
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)

22. Water Funds as at June 2013
Status
15 in evaluation
14 in design
13 operating
1 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)

23. Thanks
www.fondosdeagua.org
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