Balancing water needs: the experience of the IUCN Water and Nature Initiative

Danièle Perrot-Maître

Seminar on “Ecosystems as Water Suppliers”UNECE-BUWAL, Geneva, 13-14 December 2004

The Water and Nature Initiative: A Learning Initiative

GOAL :To improve watershed ecosystems health and livelihoods

PURPOSE: To learn and demonstrate how to apply the ecosystem approach into river basin planning and management

HOW TO ACHIEVE THIS?

Governance and Law Participation and Empowerment Economics and Finance Information and Knowledge Learning and Communication

The Water and Nature Initiative in Figures

– 5-year (2001 - 2006)– US$ 80 million budget– 80 partner organisations– 30 projects– 30 countries– 10 river basins

The Workspace (www.waterandnature.org)

The ToolsCHANGE-Adapting to climate

change

FLOW - The essentials of environmental flows

VALUE-Counting ecosystems as water infrastructure

What is an environmental flow?

Environmental flow is the water regime provided within a river, wetland or coastal zone to maintain ecosystems and their benefits where there are competing water uses and where flows are regulated.

The outcome is an improved management regime that guarantees the longevity of the system and finds the optimal balance between the various uses.

Source: FLOW, The Essentials of Environmental Flows, IUCN-WANI, 2003

How to establish environmental flows ?

• Define water requirements (defining objective, selecting trade offs scenarios and EF method)

• Modify water infrastructure• Finance• Create a policy and legal framework• Generate political momentum

• Build capacity for design and implementation

Applying environmental flow in the Water and Nature Initiative

1. Toolkit “FLOW”

2. Training, field application and testing of toolkits in 4 regions:

Tacana riverbasin, Guatemala, Mexico. allocation

Pangani River basin, Tanzania and Kenya: water pricing

Huong River Basin, Vietnam: importance of wetlands for shrimp aquaculture and local livelihoods

Volta River Basin, Ghana and Burkina Faso

3. Develop case studies and lessons learned

4. Building a global and regional community of practice

What is the economic value of ecosystems?

Direct values Outputs that can be consumed directly,

such as fish, medicines, wild foods,

recreation, etc.

Indirect values Ecological services, such as catchment

protection, flood control, carbon sequestration, climatic control, etc.

Option valuesThe premium placed on maintaining resources

and landscapes for future possible direct and

indirect uses, some of which may not be

known now.

Existence valuesThe intrinsic value of

resources and landscapes, irrespective of its use such

as cultural, aesthetic, bequest significance, etc.

Non useUse

Total economic value of ecosystems

Economic value of ecosystems: what does it tell us?

• How much does an ecosystem contribute to economic activity or society? Ex. forests in Med countries provide at least US$50 annually per capita. On average forest benefits in the region amount to about 1 percent of GDP. Indirect use value such as watershed protection contributes about 35% of total estimated value. Or:Wild forest-based pollinators increased coffee yields by 20% on farms located within 1 km of forest in Costa Rica and in 2002-03, pollination services from two forest fragments (46 and 111 ha) translated into about US$60,000 per year for one study farm in Costa Rica.

• What would be the benefits and costs of an intervention that alters the ecosystem (conservation investment, development project, regulation or incentive)?

• How are costs and benefits of a change in ecosystem distributed?

• How to make conservation financially sustainable?

Ecosystem valuation results can provide valuable input into many types of water management decisions

• Investing in infrastructure development (design, management, investment appraisal) taking into account the cost of ecosystem maintenance

• Allocating water to various economic users including the ecosystem

• Land use planning: investing in ecosystems for water supply and quality

• Accounting for cost of ecosystems protection in water prices and price of water-based products

• Designing incentives mechanisms such as payments for ecosystem services (and removing inadequate incentives)

• Designing new financing mechanisms

Applying ecosystem valuation in the Water and Nature Initiative

1. Toolkit “VALUE”

2. Training and field application and testing of toolkits in 5 regions:

Costa Rica: hydropower development and public budget allocation

Mekong: livelihood impacts and co management Huong River Basin, Vietnam: importance of

wetlands for shrimp aquaculture and local livelihoods Sri Lanka, Kola Oya Basin: investment decision for

irrigation, water supply and sanitation infrastructure Okavango Delta, Botswana: livelihoods impacts Pangani River basin, Tanzania and Kenya: water

pricing

3. Case studies and lessons learned

4. Building a global and regional community of practice

Lessons and challenges of ecosystem valuation

• Most published studies focus on the direct use values of marketed products

• Non-use values (existence values) are even harder to capture, due to high uncertainty

• Economic valuation handles very large scale and long term problems rather poorly (analysis less robust as scale increases and role of discounting increasingly determinant)

• Valuation runs into trouble when environmental change is irreversible or when resources have no acceptable substitutes

• Economic valuation not always useful for managers and policy makers because Conducted as snap-shot rather than with comprehensive time series Total valuation studies say nothing about values of marginal changes

linked to realistic alternatives Ecosystem services are rarely valued or unreliably valued, due to poor data on

biophysical relationships

Watershed services: supply and demandSupply of services:Upstream land uses affect the Quantity, Quality, and Timing of water flows

Demand for services:Possible downstream

beneficiaries:• Domestic water use• Irrigated agriculture• Hydroelectric power• Fisheries• Recreation• Downstream ecosystemsSource: World Bank 2003

Applying ecosystem valuation to payment for ecosystem service: simple in theory

Benefits to producers

Costs to offsite populations

Conventional resource use

Conservation with payment

for service

Payment

Conservation without

payment

Minimum payment

Maximum payment

Source: World Bank 2002

In practice not so simple…

complex biophysical linkages (Brand 2003)

In practice still not so simple…valuing effects of change in ecosystem conditions on agricultural production

Impact on ecological function & service

Physical impact of change in functions

Socio-economic effects of physical impact

Overall impact of Socio-economic effects

Intervention

Reduction in water: floods & drought

Increased erosion

Increase in crop damage (in kg)

Decrease in crop yield (in US$)

Increase use fertiliser & pesticides (in kg)

Increase productioncosts (in US$)

Increase in crop production (in kg)

Increase in crop yield (in US$)

Reduction of forest cover

Reduced pest-control &

pollination

DeforestationChange in Economic Value of Agriculture

(in US$)

Impact on ecological function & service

Physical impact of change in functions

Socio-economic effects of physical impact

Overall impact of Socio-economic effects

Intervention

Reduction in water: floods & drought

Increased erosion

Increase in crop damage (in kg)

Decrease in crop yield (in US$)

Increase use fertiliser & pesticides (in kg)

Increase productioncosts (in US$)

Increase in crop production (in kg)

Increase in crop yield (in US$)

Reduction of forest cover

Reduced pest-control &

pollination

DeforestationChange in Economic Value of Agriculture

(in US$)

Ecosystem valuation in practice

An example: Application to payments for watershed protection

US$10-42 per ha per year in Costa Rica US$100 per acre per year in the USA (Catskills case)US$230 per ha per year in France (Vittel case)$AUD 85/ha/yr for forest conservation or $AUD 17 per

million liters of transpired water in Australia (New South Wales)

Putting IWRM in practice: a balancing act….