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 Tools
CHANGE-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?

Total economic value of ecosystems

Use Non use

Existence values
Direct values Outputs Indirect values Option values The intrinsic value of
that can be Ecological services, The premium placed on resources and landscapes,
consumed directly, such as catchment maintaining resources irrespective of its use such
such as fish, protection, flood control, and landscapes for as cultural, aesthetic,
medicines, wild foods, carbon sequestration, future possible direct and bequest significance, etc.
recreation, etc. climatic control, etc. indirect uses, some
of which may not be
known now.
 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 demand
Supply 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 ecosystems
Source: World Bank 2003
Applying ecosystem valuation to payment for
ecosystem service: simple in theory

Conventional Conservation Conservation

resource use without with payment
payment for service

Payment
Benefits to Minimum payment
producers

Costs to
offsite Maximum payment
populations
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

Reduced
Increase use fertiliser Increase production
pest-control &
& pesticides (in kg) costs (in US$)
pollination

Reduction in water:
floods & drought Change in Economic
Increase in crop Decrease in crop
Deforestation Value of Agriculture
damage (in kg) yield (in US$)
(in US$)
Increased erosion

Reduction of Increase in crop Increase in crop

forest cover production (in kg) yield (in US$)

Intervention Impact on ecological Physical impact of change Socio-economic effects Overall impact of
function & service in functions of physical impact Socio-economic effects
 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….