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PREM Working Paper 06-04 - Developing a market for watershed services
|Author(s)||Hanna Schösler, Curtis Riddington|
|Theme(s)||Water, Policy and Trade, Forest, Agriculture|
|Method(s)||Valuation and CBA, Social Analysis, Policy Instruments|
SummaryAn innovative approach to financing conservation is emerging in the form of Payments for Water Services (PWS). This concept aims to influence the choices of land managers in favour of conservation by offering a financial reward. PWS means developing markets for services such as clean water where beneficiaries pay land managers to provide the service, by for instance reforesting slopes. Equitable PWS means designing markets that deliver both conservation outcomes and benefits to poor people. The Wami Ruvu Basin
in Tanzania represents significant opportunities to implement a PWS scheme. The results of this report indicate that most potential buyers express a wish to be part of PWS, even though it means paying for something that is usually provided for free. The responses indicate that determining scientific relationships between conservation efforts and river health may be less necessary to convince buyers to pay. The analysis of potential sellers concludes that communities are the most appropriate sellers of watershed services both inside and outside the forest reserves. When the goal is to alleviate poverty the Catchment Forestry department, owner of the forest reserve, is considered an inappropriate seller. In order for this to be possible the communities must be allocated the property rights to the watershed services originating in the forest reserve. The majority of the work in developing a PWS market will be spent on increasing capacity of communities and government bodies. The communities will need serious support and training, but may potentially manage the reserves more effectively than the government has. Another major challenge will be to design efficient and affordable ways to monitor and report on conservation activities across the varied communities.
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