Equitable Payments for Watershed Services (EPWS) in Tanzania: A CARE/WWF Joint Program

Uluguru Mountains in Tanzania is an Equitable Payments for Watershed Services (EPWS) site. PHOTO/ V. Meadu (PRESA)

The Uluguru Mountains of Tanzania are one of the sites for the Equitable Payments for Watershed Services (EPWS) programme. PHOTO/ V. Meadu (PRESA)

This project aims to establish Equitable Payments for Watershed Services (PWS) in selected watersheds in Asia, Africa and Latin America.

The central premise of this project is to ensure a sustainable flow of watershed services to beneficiaries of these services into the future through the establishment of equitable payments mechanisms.

It is predicated upon the effective articulation of conservation practices while addressing issues related to poverty alleviation. Our intervention strategy is divided into two phases: Phase 1, preparatory in nature, lasting 18 months, and Phase 2, lasting 3-and-a-half to 4 years.

The central objective of Phase 1 is to prepare and establish solid verifiable business cases for equitable PWS for at least 5 of the 10 sites located in 5 selected core countries.

Phase 1 is conceptually, methodologically and operationally linked to Phase 2, where the objective is to build on the business cases and establish the PWS mechanisms in the selected sites.

Background

It is now widely recognized that natural ecosystems produce a wide range of environmental services. These include carbon sequestration of forests, regulation of water quantity and quality of watersheds, scenic beauty, and biodiversity. Proponents of payments for ecosystems services (PES) argue that the failure of society to compensate land managers for these services is a key contributory factor to the rapid changes in land-use that is being witnessed globally.

PES mechanisms are market-based instruments that arose as a response to remedy market failures associated with environmental services. The basic principle of PES is that those who provide environmental services should be rewarded for doing so. This means mechanisms are put in place that transfer rewards from those who benefit from the environmental service to those who manage it. For example, land managers have the choice to sustainably manage the natural resources on their land that provide environmental services, or to allocate their land and natural resources to other alternative uses such as agriculture.

In many cases, however, the services provided by natural resources are not restricted and the benefits they provide accrue beyond the people who manage them. For example, upstream watershed protection services typically benefit downstream stakeholders, including drinking water companies, bottling companies and hydro-electric companies. In most cases, however, these beneficiaries have not compensated upstream land managers for the provision of these services, and the result is that beneficiaries have been “free-riding” – deriving benefits at someone else’s expense.

PES aims to change the incentives for land use in order to maintain or restore the desired environmental service. Payment mechanisms assume that decisions on land use and land use change are largely based on the net economic benefits that accrue to the land manager. Maintaining land in its natural state that provides environmental services is seldom a more attractive option than its conversion. The main reason for this is that benefits of environmental services often accrue to stakeholders other than the land manager, ranging from downstream stakeholders in the case of the regulation of quality and quantity of water of upstream forests and wetlands, to international stakeholders in the case of carbon sequestration of forests.

To be effective, the payment to the land manager must effectively change the net benefits, making the maintenance of the natural resources and the environmental services derived thereof greater than alternative land uses.