CONCEPT NOTE:
July 2001, International Institute for
Environment and Development (IIED)
PROJECT TITLE:
Developing Markets for Watershed
Protection Services and Improved
Livelihoods
COUNTRY:
International - with a particular focus in
the Caribbean, India, Indonesia and
South Africa
1. Introduction
1.1
The goal of this project is to promote the maintenance of watershed services
that support local livelihoods. The purpose is to increase understanding of the
potential role of market-based approaches in promoting the provision of watershed
services for improving livelihoods in developing countries.
1.2
A one-year inception phase of the project costing £199,300 is proposed.
This inception phase will deliver some specific outputs, and will provide the basis for
a further three-year implementation phase to fully achieve the above project
purpose. This concept note describes the inception phase in detail and the
implementation phase in indicative terms. A project framework is attached.
2. The Problem
2.1
Watershed management is a vital issue for huge numbers of people in
developing countries. Perhaps 40% of the world’s population currently suffers from
seasonal water shortages, often due to poor watershed management. Many others
are vulnerable to flooding, landslides, silt and sedimentation that result from land use
change in upland watershed areas. Whilst scientific understanding of the links
between upland use and downstream hydrology has improved dramatically in recent
years, this work has had relatively little impact on land use policy and practice. As
fresh water becomes scarcer, and as upland forests are increasingly converted to
farms and residential areas, there is an urgent need to strengthen the links between
land and water users both upstream and downstream.
2.2
Watershed services include the regulation of water quantity and quality, flood
and erosion control, maintenance and enhancement of soil fertility, and micro-climate
regulation. People’s livelihoods are affected by watershed protection both directly,
e.g. through the provision of clean water and drought mitigation, and indirectly, e.g.
through improved agricultural productivity and reduced siltation in irrigation and
hydropower systems. Different land use practices may enhance or degrade
watershed services, through their impacts on rainfall interception, infiltration, runoff
and other hydrological parameters. Impacts may be temporary, as in the case of road
construction, or long-term where there is a sustained change in land use. Watershed
benefits may be provided deliberately, e.g. through investments in soil and water
conservation, or inadvertently as a result of land use choices made with no
consideration of off-site impacts. There are considerable gaps in knowledge in some
contexts of the effects of land uses on watershed services, particularly changes in
dry season water flows, water quality and the ascribable impacts of these on
downstream users, and the livelihoods of poor people both upstream and
downstream.
1
2.3
There are often stark trade-offs between watershed protection and other land
uses values. What is good for watershed protection may be less than optimum for
other objectives such as crop and fuelwood supply, biodiversity conservation or
carbon storage. Claims for watershed services must be weighed against other land
values. Wider mutual understanding and negotiation amongst stakeholders is needed
about who pays, who benefits and what incentives for change can be developed.
2.4
Conventional approaches to watershed management have relied heavily on
land use restrictions in upland areas, subsidies to encourage soil and water
conservation by private land users, and public investment in infrastructure (e.g. flood
control). More recently a combination of government budget cutbacks and economic
liberalisation has brought more actors into the frame. Participatory watershed
management and efforts to establish or strengthen common property regimes have
received much attention.
2.5
Market-based approaches to water resource management are increasingly
common, e.g. water pricing reform, privatisation of water supply, allocation of
tradeable water use rights, etc. Efforts to develop similar market incentives for
watershed protection have emerged recently in several countries. Innovative
initiatives involve negotiated contracts for water supply/protection services between
downstream water users and upstream land users, including payments to cover the
costs of watershed protection. Market-based approaches appear to offer costeffective means of linking demand for watershed protection services to potential
sources of supply. However, it is by no means clear that markets for watershed
protection are more efficient in practice than alternative approaches. It is likewise
unclear whether and how markets for watershed protection can contribute to securing
other environmental and land use values, and to poverty reduction. Little is known
about how governments and others should intervene to ensure markets achieve such
aims.
2.6
If policy-makers and programme co-ordinators are to maximise and ensure
the equitable distribution of benefits, more needs to be learned about the evolution of
market-based approaches to watershed management, their institutional and
informational pre-requisites, and their costs and benefits to different stakeholder
groups. Key design issues for the introduction of market-based approaches include
the allocation of rights to watershed benefits, how to avoid perverse incentives, and
how to ensure that such approaches contribute to improvements in the livelihoods of
poorer groups both up and downstream.
2.7
In summary, there is a need for better data, and increased understanding, on
the hydrological impacts and downstream effects of different land use practices. This
information needs to be linked to an appreciation of the economics and politics of
land and water use, in order to chart appropriate courses for negotiation through the
institutions and fields of policy necessary to develop more efficient, effective and
equitable watershed management systems. There is a pressing need for guidance, in
the development of such systems, on assessing market-based approaches to
watershed management, and making them effective as a complement or alternative
to existing regulatory and common-property approaches. Such systems may
generate more forest or less – but should be defined by their ability to achieve an
equitable balance of local and off-site costs and benefits among all key stakeholders.
2
3. The Approach
3.1
The purpose of this project is to increase understanding of the potential role
of market-based approaches in promoting the provision of watershed services for
improving livelihoods in developing countries. The project will involve a combination
of: gathering and synthesising research in a range of countries, and detailed case
studies in two countries (up to five more countries in the implementation phase);
preparation with local partners of learning groups, diagnostics and practical
proposals for action in four further countries; and network-building, development of
guidance and dissemination.
3.2
The project will pursue case study research - learning from contexts where
experiences are particularly advanced and instructive – and building up a knowledge
base on what works under what conditions. Following a global review carried out
prior to this project (see 3.5), highlighting high-potential sites, partners and demands,
two detailed case studies will be undertaken involving key issue prioritisation, site
selection, in-country research, and optimising use of the results in learning and
decision processes. These case studies will be carried out by IIED, in collaboration
with local consultants. Potential sites for the case studies have been identified on the
basis that they have most to offer the global development of thinking on these issues.
Two sites will be chosen from four with high potential: Costa Rica, Ecuador, China
and the Philippines. (Further case studies – up to five more – will be undertaken in
the anticipated implementation phase to follow this inception phase).
3.3
Sufficient information, capability and demand are present in some contexts to
justify taking ‘best bet’ actions and, on the basis of their outcomes, optimising
learning and adaptation. Demand for such action-learning is most evident in four
DFID priority countries/regions – the Caribbean, India, Indonesia and South
Africa. Work with a range of partners, forming local teams, in these countries will
involve comparable activities to shape appropriate pathways to improved watershed
protection and livelihoods and the role of incentives and especially markets in these
pathways. Lessons from research and case study activities elsewhere can support
new work in these countries and, conversely, the partners involved at these sites can
provide guidance from their experience for others. Annex 1 outlines the proposed
programme in each of these four countries.
3.4
Networking, developing guidance and dissemination will take place
throughout the project. An international network of interested, informed and actionoriented agencies will be steadily built up, starting in this inception phase, through the
following means: Local learning groups will be established in and around the actionlearning sites to plan and develop the work. Exchanges between partners in casestudy sites and action-learning sites will be facilitated through the network and an
international workshop which will draw out lessons and identify ways in which
lessons can be spread. An active website will be developed to be the hub of the
communication strategy, complemented by a range of electronic and face-to-face
information exchanges and learning events. The project will produce the following
materials in electronic and hard-copy formats: working papers on key themes and
methods; case studies; policy briefings; diagnostics and proposals for practical
actions for continuing action-learning processes in four countries; and a final
synthesis report – summarising findings and policy options from all project
components, and initial guidelines for future efforts to promote markets for watershed
protection services. In addition, a project proposal will be developed with DFID for the
further concerted implementation phase. (The Implementation Phase is estimated at
three years, focused on: developing further case work; stepping up action-learning in
association with DFID’s country programmes and partners; and, increasing and
3
strengthening the international network to produce confident stakeholders - in the
case study sites, action-learning countries and elsewhere – prepared to support the
development of effective and equitable markets for watershed services.
3.5





In preparation for this work, IIED has developed:
Review of markets for forest environmental services – an evaluation of worldwide
experience of market-based incentives to promote watershed protection as well
as carbon sequestration, biodiversity conservation, and preservation of
landscape values.
Initial network of in-country and international information sources, researchers
and potential decision-takers - representing a solid base of thinkers and doers to
build on for both shaping and making use of the work.
Relationships with DFID country programmes and potential collaborators in the
four key countries/regions where an action-learning approach to exploring
watersheds-livelihoods-markets connections is in demand and can be initiated.
Collaboration with DFID Forestry Research Programme-supported research
initiatives focused on synthesising existing hydrological information and filling
some key gaps in knowledge.
Project planning with the Global Environment Facility – on a broad initiative to
investigate, and promote best practice, in markets for other ‘forest environmental
services’, namely carbon management, biodiversity conservation and landscape
amenity.
4. Timing and costs
4.1
A one-year project Inception Phase is proposed, beginning in October 2001
and ending in September 2002. This project would pursue the case study, actionlearning and networking components in parallel. The cost of the project is estimated
at £199,300. The anticipated follow-up project Implementation Phase proposal
(described in section 3.4) is likely to involve a period of three years. Its budget will
depend on the extent of engagement by the DFID country programmes. An indicative
figure for this follow-up project budget is £2.5 million.
5. Policy issues
5.1
The proposed project builds upon DFID’s experience in sustainable
livelihoods, forestry, water and land use. It will rise to the challenge laid down by the
two recent White Papers:
 ‘Eliminating World Poverty: A Challenge for the 21st Century’ (November 1997),
commits DFID to a development process to improve people’s access to povertyreducing factors within a supportive social, physical and institutional environment.
 ‘Eliminating World Poverty: Making Globalisation Work for the Poor’ (December
2000) pledges to assist in seizing the opportunities to address poverty, and to
tackle the threat of increased inequality, implicit in international trends towards
economic and political liberalisation, and rapid technological innovation. Until
recently, many viewed these trends as irresistible and irreversible – but the White
Paper captures the growing realisation that the outcomes of globalisation are not
predetermined: “it depends on the policy choices adopted by governments,
international institutions, the private sector and civil society”.
The project will contribute to finding solutions for poverty reduction strategies in the
context of globalisation, and the key role of natural resources in these.
4
5.3
National prioritisation of the issues addressed by this project is evident in:
 South Africa – forest and water policies, acts and strategies as well as
incorporation of these issues in the national drive for transformation, redistribution
and empowerment.
 Caribbean (Grenada in particular) – recent prioritisation of need for valuation,
incentives and partnerships for watershed protection services highlighted in new
forest and land use policies, improved forest management exercises and forest
debates.
 India – Andhra Pradesh, Himachal Pradesh – key policy drives in participatory
watershed management and development, and watershed management funds
contributed to by users.
 Indonesia – watershed management highlighted as priority in the multistakeholder process to re-shape forestry and land use policy, and emerging
systems of payments made by water utilities for watershed protection.
Further details of country-level policy priorities, and their supporting DFID country
programmes, which this project addresses are given in Annex 1. Other countries in
the frame for programme case studies have policy initiatives prioritising action on the
combined issues of watersheds, markets and livelihoods.
6. Key project management issues
6.1
Developing this project will require particular consideration of:
 Collaborative research approach: working with a mix of partners in all sites;
working with different sections of DFID and a wide range of international partners;
embedding case studies and action-learning sites in wider priority processes incountry; capacity building and active consideration of gender and youth issues
 IIED capacity: managing the project network and international financial support
with sufficient flexibility to react to changing knowledge and circumstance, but with
a clear strategic direction and focused outputs.
 Coordinating partners, local consultants and learning groups in collaborating
countries – identifying and maintaining mutually-productive relationships with
those in case-study and action-learning sites
 DFID country programmes and their partners in each of the action-learning
countries to build towards financial support to the action-learning sites in a followup phase of the project
 Monitoring systems to inform project management to ensure activities stay on
track and adapt appropriately to achieve project outputs.
 Means of engagement with international forest and water policy initiatives.
7. Risks
7.1
The project notes the following risks and strategies to deal with them:
 The currently proposed action-learning sites may not develop as expected. Should
this occur, lessons will still prove valuable, and alternative sites will be proposed
and developed with DFID country programmes and DFID-London approval.
 The place of market-based approaches in overall strategies for improving
watershed and livelihoods may not find favour with policy makers. Should this
occur, work should focus on the complementarity of market-approaches to
achieve the purposes of regulatory and common-property approaches.
 Available hydrological information may allow only weak attribution of effects of
land use changes. Should this arise, the focus will be on filling key gaps in
information and pursuing the ‘best bets’ for development.
5
 Institutional weaknesses may limit the degree and intensity of take-up of the work.
Should this occur, the project will sharpen its focus on actions which convert
interest in the work into effective readiness and capacity to pursue it.
 Installing better knowledge and information systems in policy may prove difficult –
with watershed decisions not being made on the basis of water values. Should this
occur, the project’s stress will be on the advantages of balancing different land
use values and on improving decision-support systems and policy influence
strategies.
6
Annex 1:
Notes
on
four
possible
country
programmes. DRAFT July 2001
action-learning
Summary of the proposed international programme
Developing markets for watershed protection services and improved livelihoods
A central plank in strategies to reduce poverty is to improve access to reliable supplies of
clean water. Another is to reduce vulnerability to environmental risks such as flooding,
landslides and water pollution. Both of these require better management of watersheds.
Today, services provided by watersheds are under threat in many contexts, and existing
regulatory approaches to addressing the problems are often insufficient. IIED with its partners
in developing countries have identified the need to integrate and promote approaches which
can improve watershed land use and livelihoods – fitting new market-based approaches
together with existing policies, incentives and institutional mechanisms that work. An initial
one-year project of research and action in a range of countries is proposed to increase
understanding on how market-based approaches can support better watershed land use and
improved water services for the benefit of poor people. The programme will have an
international network-building, experience-sharing component and an action-learning
component involving people in sites that can gain from working together. Four action-learning
sites are proposed – South Africa, India, Indonesia and the Caribbean (starting in Grenada) –
to be co-ordinated by partners in those sites, with back-up from IIED. Following this one-year
preparatory period, substantive implementation work in the action-learning sites will depend
on the support of the relevant DFID country/regional programmes. (See DFID project concept
note prepared by IIED, dated June 2001).
Notes for a possible action-learning programme
in South Africa
Livelihoods, watersheds and markets issues in South Africa
Livelihoods and watersheds are intricately entwined in South Africa, providing major
development opportunities but also challenges. South Africa is a middle income
country with exceptionally high levels of poverty and inequality - the legacy of the
political and economic structures of apartheid which were designed to protect the
interests of the minority and restrict access by the black majority to property,
economic opportunity and public services. According to UNDP Human Development
Indices, whites are ranked 19th on a global scale of 173 countries, while blacks are
ranked 117th. The removal of the distortions due to apartheid and the elimination of
poverty are leading objectives of the Government’s agenda for social and economic
transformation. [See Box/Annex on new legislation].
South Africa is also a water-scarce country, having recently dipped below the
1,000m3 per capita per year threshold used by these same Human Development
Indices. The government estimates that the country will reach the limits of
economically usable, land-based fresh water resources in the first half of this century.
In response, a national water and sanitation programme is being developed and the
government is restructuring water charges and establishing catchment management
7
authorities. Addressing inequality is a major objective - ‘water security for all’ is the
slogan – and the management of water resources together with management of
other natural resources, notably forest and land, are now seen as core elements in
the national struggle to build a socially and environmentally just society.
Understanding how different land uses impact on water resources is vital, and has
received considerable attention. Natural vegetation predominates on many
watersheds, but plantation forestry covers others, and the effects of forestry on water
and watersheds is a key issue. Plantation forestry consumes more water than the
natural vegetation it replaces – a series of long term studies of afforested whole
catchments in South Africa shows this. The total amount of water used by the
forestry industry is approximately 1.4 billion m3 annually which is about 7% of total
water use in South Africa and about twice that of the sugar-cane industry. Under the
1998 National Water Act, the government owns all water rights and has designated
forestry a Stream Flow Reduction Activity which will thus be subject to water user
charges (other land uses such as sugar cane production will also be designated
soon).
The main water management intervention practised in the forestry sector is to leave
unplanted buffer zones along rivers, wetlands and other water bodies - to reduce the
risk of soil erosion close to stream channels and to avoid any increase in water use
by riparian vegetation. However, alien species - chiefly wattles and pines - often
spread rapidly into these riparian areas and it has been demonstrated that these selfestablished riparian trees can have huge effects on stream flow. The government has
pursued a “Working for Water” programme to remove many alien trees, citing the
economic and socio-economic (job creation) benefits of the programme in addition to
the benefits for water resources.
However, forestry also makes many vital contributions to the national economy –
economic growth, foreign exchange earnings – and its potential in some areas to be
a driver for local enterprise and economic development is considerable. Forest and
tree resources – whether they be plantations, indigenous woodlands, planted trees in
the farm landscape or self-established aliens - can contribute significantly to
livelihoods through increasing income, expenditure saving, reducing vulnerability,
and through improving the sustainability of the natural resource base. Indeed, from a
livelihoods perspective, some poor people may derive greater value from, or be in
greater need of access to, forest products than water. Getting the right balance
between forest products and water resources, and between different stakeholder
groups, is thus a major challenge at both national and household levels.
The Department of Water Affairs and Forestry (DWAF), has made major advances in
identifying innovative policy instruments and strategies related to forests and water
use. DWAF water sector strategies are presently centred on integrated water
resource management objectives. Catchment management authorities will be
responsible for allocating water under their purview to three categories with different
purposes: strategic reserve, basic human needs and trade-able. Trade-able water is
to be allocated to ‘most beneficial use’ and a key challenge is to develop systems
that define and negotiate this within each catchment (and systems for making the
resulting changes, e.g. re-allocation away from irrigated sugar cane towards rain fed
agriculture, etc). Equity considerations and the precedents and legacy of previous
distribution patterns will be key in this process.
Development of markets for watershed protection is not an end in itself. It is a
potential means to the end of better, and more sustainable, livelihoods. Thus the
emphasis must be on shaping markets - getting the tenure, negotiated rules,
8
incentives and institutions right so that markets may operate efficiently, internalise
watershed values, and reduce social inequities.
Market-based instruments such as land and water charges or trade-able rights offer
potentially efficient means of internalising the full social and environmental benefits of
watersheds in production and consumption decisions. The potential will only be
realised with considerable prior work to remove current market distortions, develop
the right balance of regulation and institutional capabilities, and get the property
rights and price signals right, in the broader context of structural reform and social
transformation. This is the challenge that this programme seeks to meet.
Programme design challenges
A programme of action-learning is proposed, to understand and shape the emerging
potential for developing markets in the cause of equitable water resources
distribution and sustainable watershed management. Key questions for this proposed
programme include: How can markets play their part in moving towards ‘optimal’
negotiated land uses for watersheds - striking a balance amongst those with a
legitimate local stake between environmental security, economic efficiency and social
equity? What type of market mechanisms work best, and under what conditions?
Integrating land uses and making trade-offs between them. The optimal land use for
providing watershed services may differ from the optimal regime for a range of other
land use benefits, such as crops, fuel wood, carbon storage or biodiversity protection.
Possible trade-offs need to be carefully examined. Markets for watershed protection
services operate in broader marketplaces – and must be shaped to strike a balance
with other land use values. The resulting balance must also contribute towards wider
processes of macroeconomic transformation and redistribution in South Africa.
‘Fitting’ markets to regulations and institutions. Another balancing act required is
between political and economic efficiency. It is critical that market-based approaches
are weighed up against non-market-based alternatives. Administered payment
mechanisms are likely to have a role to play and regulatory approaches certainly will.
In some circumstances, over-hasty introduction of markets might serve to undermine
social institutions built up over years of painstaking negotiation over protection of
watershed services. Critical factors here will be how best to fit markets to
complement the strengths of regulatory approaches and to supplement the
weaknesses.
Getting the property rights and prices right. Removing existing market distortions,
establishing ownership of watershed benefits, and getting the pricing and trading
systems right are major challenges. Water charges are currently being calculated on
the basis of public ownership and the expected costs of catchment management
agencies, and not on the basis of ‘internalising’ the true social and environmental
costs of land and water use in private decision-making. Regulations and pricing
associated with Stream Flow Reduction Activities are to be negotiated and managed
at the level of catchment management authorities. This is another area in which
important trade-offs need to be made between different objectives e.g. environmental
considerations and job creation. The use of water trading has been proposed by
DWAF as potentially a key tool for water management and the department intends to
9
investigate the implications - in particular through its ongoing co-ordination of
strategic environmental assessment processes.
Exchanging lessons between South Africa and other countries. South Africa is a
world leader in some innovative approaches to water resources management –
having developed a solid hydrological knowledge base and more recently some
astute regulatory and institutional frameworks capable of tackling poverty and
developing strategic environmental assessment for catchment management. South
African institutions can thus potentially play a key role in building capability in other
countries. In addition, there may also be ways in which learning from elsewhere can
be usefully fed into the South African context. Some areas in which other countries
may offer applicable lessons include: installing good hydrological information in
objectives-focused natural resources management; assessing policy, institutional and
market impacts on livelihoods; building effective negotiation, decision support and
regulatory systems; and mechanisms to help fight the corner of better water
resources management in wider macroeconomic policy.
Possible activities in a programme of action-learning in South Africa may include:
 Stakeholder engagement and analysis of stakeholder perceptions, interests,
positions and powers to take action
 Detailed hydrological evaluation linking land-use practices to water supply and
quality
 Assessment of willingness to pay by beneficiaries and willingness to accept by
suppliers of watershed protection services
 Preparation of options and scenarios for markets, the resources needed, and
identification of the key protagonists and their first moves
 Market design with the key protagonists, including rights and responsibilities,
mechanisms for exchange and mutual reinforcement of markets and regulations
 Institutional development and capacity building to pursue agreed ways forward
e.g. developing information systems, finance systems, participation systems,
human resource development/training and planning/process management
systems
 Development of monitoring and evaluation approaches
 Preparation and dissemination of reports and other learning materials (e.g. policy
briefings, primers and ‘tool-kits’) summarising emerging experiences, lessons and
guidance on market-based approaches that work
Next steps
A one-year inception period is proposed, in which the issues are hammered out with
key watershed and livelihoods protagonists and actions are focused and developed.
Activities in this period might include:
 Further scoping consultations and network building
 Mapping current policies, institutions, incentives and markets influencing
watershed land use (including forest and tree use), water use, and watershedlinked livelihoods – and the links, conflicts and synergies between them
 Initial assessments of economic and hydrological information linked to land uses
 Stakeholder and institutional analysis
 Establishment of a learning group on watersheds, livelihoods and markets
 Planning workshops with specific stakeholder groups and at country level
10
 International workshop with other action-learning site representatives and case
study partners, IIED and others
 Production of a detailed diagnostic and proposals for practical action in a 3-year
action-learning implementation phase
Potential lead partners in this inception year would be the Department of Water
Affairs and Forestry and Environmentek CSIR. Whilst the proposed programme
appears to sit well with the respective strategies of these agencies, and reflects the
initial IIED scoping exercise, it is not based on a detailed assessment of needs and
potentials. These agencies thus need time to respond and sharpen the focus of the
thinking.
Other agencies and individuals can be brought on board and their roles developed
during the inception year. These might include: catchment management authorities,
government departments, university departments, livelihoods researchers, finance
agencies and organisations representing key land uses such as forestry, sugar cane
and smallholder agriculture. It is likely that a core research team will be established
and this team would engage with a wider pool of thinkers and doers loosely affiliated
in a periodically-convening ‘learning group’ on watersheds, livelihoods and markets.
Key references consulted
CSIR (2000). Environmental impacts of the forestry sector in South Africa with
specific reference to water resources. CSIR report ENV-P-C 99016. Pretoria
DFID-SA (1998) South Africa: Country Strategy Paper. UK Department for
International Development-South Africa office. Includes objectives to support GoSA
efforts: to improve the effectiveness of government and its agencies in delivering
essential health, education, water and sanitation services to the poor; and to develop
sustainable livelihoods and initiatives with direct benefit to poor people.
DFID-SA (2000) ‘Water Resources Management, South Africa’. Project Concept
Note approved in late 2000. Includes output (second output of the project
framework): ‘coherent and integrated approach to allocation of water resources
developed’.
DWAF (1998). Proposed pricing strategy for charges for raw water use in terms of
section 56(1) of the National Water Act, 1998 (act no.36 of 1998). Department of
Water Affairs and Forestry, Pretoria.
DWAF (1999) Draft water conservation/demand management strategy for the South
African Forest Sector. Department of Water Affairs and Forestry, Pretoria
DWAF (2000) Strategic Environmental Assessment for Water Use: Mhlathuze
Catchment, KZN. CD produced by Water Utilisation Directorate of the Department of
Water Affairs and Forestry, Pretoria
Evans, J. and Mayers, J. (2001 in prep.) Raising the stakes in private sector forestry.
South Africa Country Study of collaborative research project: Instruments for
sustainable private sector forestry. CSIR and IIED, Pretoria and London.
People consulted
11
Barbara Schreiner – Department of Water Affairs and Forestry
Lael Bethlehem - Department of Water Affairs and Forestry
Mike Warren - Department of Water Affairs and Forestry
Steve Horik - Department of Water Affairs and Forestry
Mark Harvey – UK Department for International Development
Tim Foy - UK Department for International Development
Jeremy Evans – Environmentek, CSIR
Ian Calder – Centre for Land Use and Water Resources Research, Newcastle
University, UK
Box: New legislation - the basis for innovative approaches to improving watershed
services and livelihoods in South Africa
South Africa has adopted a land reform programme aimed at redressing land ownership and
access imbalances introduced through racially discriminatory legislation from 1913 to 1994.
This comprises:
 Land Redistribution: poor and disadvantaged people assisted to buy land with the help of
a Settlement/Land Acquisition Grant.
 Land Restitution: returning land, or compensating victims for land rights, lost because of
racially discriminatory laws, passed since 19 June 1913.
 Land Tenure Reform: aims to bring all people occupying land under a unitary legally
validated system of landholding. It will provide for secure forms of land tenure and help
resolve tenure disputes.
The Development Facilitation Act (1995) introduces extraordinary measures to facilitate and
speed up the implementation of reconstruction and development programmes and projects in
relation to land. Provision is made for the compulsory setting of Land Development Objectives
through a process of extensive public participation. District-level authorities are required to
prepare integrated development plans. Land uses and water management are hence
potentially subject to regulation not only by national government departments, but also by
district bodies.
The National Water Act (1998) aims for equitable and economic water use and provides the
basis for three types of charge on ‘stream flow reduction activities’: a water catchment charge,
a water development charge (for infrastructure) and an economic charge. The National
Forests Act (1998) aims for transforming a polarised plantation-based forest industry into a
fully-fledged ‘forestry sector’ making an important contribution to integrated rural
development. The National Environmental Management Act (1998) paves the way for a
national environmental management system which is required to place people and their
needs at the forefront, and to serve their physical, developmental, cultural and social interests
equitably.
Development of improved land use, watershed services and livelihoods are thus
responsibilities and priorities shared by many different government departments and other
stakeholder groups. Policy instruments and other interventions which build on the foundations
provided by this legislation need to be co-ordinated across all these departments and groups.
The programme proposed here will aim to support decision-making which contributes to this
integration and co-ordination.
12
Notes for a possible action-learning programme
in India
Policy background and key issues
Watershed development programmes in various dryland areas of India show several
outcomes such as increases in net agricultural production, development of village
level institutions, improvements in the livelihoods of some social groupings, and
implementation of an approach that has widespread political and public support.
Examples of watershed projects that have attempted to improve livelihoods and
address equity issues are given in Boxes 1 and 2. However, it is also apparent that
certain groups often capture water resources at the expense of the poor, new village
level institutions generally have minimal political or legislative support, the emphasis
is on development (for example through construction of new infrastructure) rather
than improved management of existing water resources, and the local nature of
village level planning ignores wider issues e.g. upstream-downstream and intervillage equity, flood protection, drought preparedness, etc. There are sometimes
conflicting challenges of increasing productivity and reducing poverty – for example
when priority is given to water for irrigation at the expense of drinking water supply
and groundwater levels (as found by Batchelor et al in the case of Karnataka). Hence
there is a clear need to incorporate livelihoods approaches in watershed
management - addressing issues of inequitable access and entitlements to water
resources.
Box 1: MYRADA’s experience in Gulbarga: an attempt to redress village inequity
It is sometimes a feature of watershed programmes that the landless are marginalised since
most investments are on land. In an attempt to overcome this, MYRADA (a south Indian
NGO) has developed projects in Gulbarga, Karnataka, that promote the establishment of
watershed protection funds administered by village self-help groups. These self-help groups
ensure benefit sharing from watershed management activities by channelling contributions
from beneficiaries to upland farmers and landless. Beneficiaries – such as downstream
farmers - pay either directly or indirectly through cheap loans to undertake watershed
protection activities, which are implemented by the self-help groups, who in turn contract
local farmers to regenerate and maintain fallow land. Contributions reflect the expected
benefit that will be gained. The self-help groups also lend money (often interest free) to
farmers who wish to undertake their own measures on their land.
Recognising a range of problems associated with watershed degradation, watershed
protection is a key feature of the Government of India’s programmes. The Ministries
of Rural Development, Agriculture, and Environment and Forests each have
separately developed watershed development programmes (although the first two
are now in the process of harmonising these).
The National Water Policy gives first priority in water allocation to “fundamental
rights” for drinking and domestic use1. Agriculture has second priority followed by
1
This may be compared to priorities set in the National Forest Policy of 1988, which entitles
rural and particularly forest-dependent communities to first charge on forest produce for their
subsistence needs – a very similar notion to the ‘fundamental rights’ provided for in the
National Water Policy.
13
industry. However, currently Government of India policy does not encourage
individual water users to maximise water use efficiency and productivity. Rather,
many government policies create unintended disincentives - causing individuals and,
particularly, farmers to be inefficient in their water use.
At the state level, there is increasing recognition of the value of watershed services,
particularly by those states in which upper watersheds are located. For example,
Himachal Pradesh has embarked on a court case in Punjab, to claim compensation
for watershed services in the catchment areas of river valley projects. Proactive
action has been taken by the Supreme Court, which has directed the Ministry of
Environment and Forests and the Ministry of Finance to consult all states to consider
compensation/ incentives to forest-rich states for conservation services from the
Government of India or from states that are enjoying the benefits of these services.
Box 2: Benefit-sharing in Sukhomajri watershed: urban beneficiary payments to upstream
communities
Sukhomajri village was amongst the first in India to test participatory watershed management.
The scheme was launched in 1979 in response to growing water scarcity in dry months,
compounded by reductions in local dams’ storage capacity due to high levels of siltation.
Downstream residents in Chandigarh were particularly badly affected by siltation of their water
source, and it appeared that much of the siltation was derived from the part of the catchment
in which Sukhomajri was situated.
With external support, the villagers of Sukhomajri formed a Water Users’ Association in 1982,
charged with implementing watershed management activities, dam management and the
collection of fees from water users set at a rate per hour. However, the main beneficiaries of
watershed protection and reduction in siltation were the residents of Chandigarh, and to
secure Sukhomajri’s participation, some form of transfer was necessary from the downstream
beneficiaries. This was achieved through an injection of resources to construct a reservoir for
irrigation in Sukhomajri. Whilst the reservoir helped to align Sukhomajri farmers’ incentives
with those downstream, it was soon recognised that benefits were not evenly spread within
Sukhomajri. For example those farmers with land below the reservoir benefited from increased
access to irrigation water, whilst the landless who depended on common lands above the
reservoir found their access to grazing and NTFPs restricted. Consequently, watershed
management negatively affected landless people.
In response, the Water Users Association developed a benefit-sharing system based on water
rights. The scheme awarded every household the same rights to water and permitted those
that had no use for water rights to sell their rights to others.
The Central Water Commission operates a river monitoring scheme, focusing on
water quality, and a hydrology scheme. However there is a scarcity of information - or
at least obviously used information - on the hydrology of different land uses and
vegetation covers in watersheds, although it is widely assumed that forest cover is
preferred (in the Himalayas this often means chir pine). There are cases of land
effectively being requisitioned from local communities for the benefit of conservation,
the implication being that the relevant government department (most likely the Forest
Department) could conserve the watershed better than communities who use the
land for grazing.
Overall, there is potential for the development of market arrangements for watershed
services, both at local/ district and at state and inter-state level. Supporting this
potential, DFID-India is now encouraging valuation of goods and services from
different land uses within its programmatic aid: the Andhra Pradesh Rural Livelihoods
14
Project will be the first experience of such activities to be supported in India. However
some contend that until recently, donor-funded watershed work has lacked a
livelihood aspect.
Potential sites and activities
It is proposed that the research be carried out in Andhra Pradesh and/ or Himachal
Pradesh.

Andhra Pradesh (AP) is a DFID-India partner state, and the DFIDI-supported
Rural Livelihoods Project (APRLP) has started recently. AP is a progressive
state, where much reform is taking place, and where local institutional
arrangements for water management have received attention. There is some
accessible water quality and quantity data at project level, but not at wider scales.
Watershed development has been chosen as the entry point in the APRLP. The
five districts targeted by the project are drought-prone (although in the year 2000
AP also experienced the worst floods in 50 years). The state watershed
programme is evolving rapidly in response to critical comment: there is a ten-year
action plan for scaling up watershed development to cover 10 million hectares;
watershed programmes are being unified through common principles for
watershed development (these principles specify the roles of different bodies and
suggest ways of increasing the involvement of Panchayati Raj Institutions and
developing usufruct-sharing arrangements); and the watershed development
process itself is being studied on an ongoing basis. In particular, the Government
of AP has promoted self-help groups such as Water Users’ Associations, with
some success where people are aware of their rights and used resources
effectively.

In Himachal Pradesh, there is interest within the State Government in an
approach which would build capacity to value watershed services at state level.
The Government of Himachal Pradesh has been attempting to make the case for
compensation payments from beneficiaries of water resources, given that the
upper watersheds of five major rivers, which supply the north-west agricultural
belt and urban centres including Delhi, are located within HP. In effect, HP
already receives some payment in return for water provision: the central
government is paying for construction of dams in HP, provides free electricity in
the local area and some lower duty power to HP: in fact HP gets 12.5 per cent
free power from HEP projects, and support for ‘compensatory afforestation’. HP
is in fact the first state where there has been a debate about making payments to
the state to reflect value of watershed protection - although it appears that so far
there has been little research done on how an appropriate value can be
determined and whether/ how payments could reach communities. In addition to
free power as noted above, HP and other states are making the case to the
central Power Ministry for a water cess, similar to areas where mining activity
takes place and where a coal cess is applied. Further, the Government of
Himachal Pradesh has already requested changes to the hydro policy at central
(GoI) level.
The watershed values at stake in HP may be very high, but are not captured due
to market failure. Within the state there is increasing recognition of user
willingness to pay for clean water, especially in the dry season, and the
Department of Irrigation and Public Health policy is apparently to move towards
charging the full cost of drinking and irrigation water. There is also interest in how
15
best to channel back as much as possible to local forest users so that the
incentives for SFM are increased.
Himachal Pradesh is not a DFIDI partner state but DFID-supported forestry
activities are likely to continue, pending approval of the HP Forestry Project
phase II.
Issues to be addressed in programme design
Considering the perceived importance of water resources to livelihoods in both
states, there is a need to consider in detail the trade-offs associated with changing
patterns of land and water use, such that options maximising social and economic
value can be selected. Hence any market arrangements should ensure that where
drinking water supplies are scarce, for example, they be given priority over other
uses. Also the scale at which research is undertaken will be considered carefully,
recognising that it is difficult to identify upstream-downstream links over a large area.
Direct links will more easily be made in local areas where suppliers and users are
sufficiently closely located.
Batchelor et al (with reference to Karnataka, but of relevance to all water-scarce
areas, such as AP) suggest the need for piloting innovative water allocation
mechanisms. Such mechanisms might include: zoning of areas from which village
drinking water supplies are extracted (this could involve compensation payments to
current landowners); tradable water rights, user-based allocation or demand
management that includes electricity and water charges. Further, they suggest
establishing community irrigation schemes, such that the costs of irrigation are
shared. The feasibility and local applicability of such mechanisms should be
considered during the action-learning research.
The development of markets for environmental services is a new concept in India,
and whilst it has its supporters, there is generally widespread suspicion of marketbased approaches, and a preference for collective action. Thus innovative
approaches to water allocation and use may not be popular initially, and establishing
local participation and acceptance will require some time and effort. Further, water
supplies are often successfully managed locally as common property, outside the
market system. However, it is clear that collective action/ common property
approaches, and market-based approaches are not mutually exclusive, and may
indeed complement one another. But to date in India, there is comparatively less
knowledge and experience of the ways in which market mechanisms can support the
provision of environmental services and livelihoods, hence the need for further
research. In both Himachal Pradesh and Andhra Pradesh, the study will include
documentation of cases of management of water resources as common property or
as a result of collective action, as a complement to market-based approaches.
Ultimately the research will seek to identify an appropriate mix of regulation,
participatory approaches (to common property management, etc) and market-based
approaches, to ensure efficient and equitable watershed protection services for
improved livelihoods.
Potential partners
Potential partners for the inception phase have been tentatively identified; other
research partners can be included and their roles developed during the inception
16
phase. Final identification of research partners for the implementation phase will be
part of the inception phase activities.
In AP, the DFIDI-supported Rural Livelihoods Project would provide a natural home
for the research, and the Project Coordinator has expressed enthusiasm for
developing ideas for markets for watershed services. Should a ‘water resources
audit’ be carried out for the APRLP – as was carried out in Karnataka, as a means for
identifying water resource management options that match the physical
characteristics of an area – this would complement activities under this project well.
In HP, subject to phase II of the Himachal Pradesh Forestry Project going ahead, the
proposed Policy and Planning Unit, to be located in the Government of HP, could be
a partner and beneficiary in this project.
In both HP and AP, Winrock International-India would be a potential research
partner, with forestry and watersheds experience in both states. Further scoping work
is required to identify suitable local partners in each state – although it is anticipated
that Winrock will be establishing an office in AP.
Next steps and timing
The Andhra Pradesh Rural Livelihoods Project started only recently (October 2000);
the Himachal Pradesh Forestry Project phase II is awaiting approval and will start in
April 2001 at the earliest. Thus there is a case for a detailed scoping exercise as part
of the one-year inception phase, for delaying the start of action-research activities for
(say) 6 months, to allow for development of key action-research issues and
identification of the most appropriate project partners.
The one-year inception phase is likely to include the following activities in India
(subject to further consultation with Indian partners):
 Further consultations with potential research partners and development of an
informal network of those working on issues concerning markets for watershed
protection services in India
 Assessment of availability and utility of hydrological information at the national
level and specifically for proposed action-research sites
 State level workshops in Himachal Pradesh and Andhra Pradesh, to assess
information and learning already available, and key issues and needs for future
research
 Inter-state/ federal level workshop to discuss issues of inter-state learning and
development of market mechanisms for watershed services at the national level
 International workshop including country partners from up to four ‘action-learning’
country studies and up to five case study countries: towards the end of the
inception phase, to refine planned activities for the implementation phase
 Detailed diagnostic and proposals for practical action in a 3 year implementation
phase.
References
Agarwal, A. and Narain, S. 1999. Making water management everybody’s business:
water harvesting and rural development in India. Gatekeeper series no. 87. IIED,
London.
17
Batchelor, C., Rao, R.M., James, A.J. 2000. Water resources audit, Karnataka
Watershed Development Project. DFID and Karnataka Watershed Development
Authority.
Chopra, Kadekodi and Murty. 1990. Participatory development, people and common
property resources. Sage Publications, New Delhi.
Fernandez, A.P. Equity, local groups and credit: lessons from MYRADA’s work in
south India. In: Hinchcliffe et al, 1999. Fertile ground: the impacts of participatory
watershed management. IT publications.
Kerr, J. 1992. Watershed management: from technology intervention to social
organisation. Proceedings from seminar on Economics of the sustainable use of
forest resources. Edited by A. Agarwal. Delhi.
Patel-Weynand, T. 1997. Sukhomajri and Nada: managing common property
resources in two villages. In: Kerr et al: Natural resource economics: theory and
application in India. Oxford and IBH Publishing Co. Pvt. Ltd. New Delhi and Calcutta.
Richards, M. 2000. Economic appraisal. Himachal Pradesh Forestry Project Phase II:
sustainable livelihoods for forest-dependent women and men. Government of India
and DFID-India.
Deshingkar, P. 2000. Social development inputs for the start-up phase of the Andhra
Pradesh rural livelihoods project.
People consulted
Mr Simon Croxton, Rural Livelihoods Adviser, DFID-India
Dr Kinsuk Mitra, Winrock International India
Dr Virinder Sharma, Environment Adviser, DFID-India
Mr Satya Prakash Tucker, Project Coordinator, Andhra Pradesh Rural Livelihoods
Project
18
Notes for a possible action-learning programme
in Indonesia
Country context
Protection of watersheds has moved to the forefront of environmental issues in
Indonesia, as people across the archipelago encounter proliferating problems with
their water supplies:
 Water quality is a growing public concern in larger cities, especially Jakarta;
 Water flows are increasingly unreliable in drier areas such as Lombok;
 Erosion of watersheds is associated with a variety of negative impacts both
upstream and downstream:
 soil loss for small-scale farmers in hilly regions, notably South Sulawesi;
 siltation damage to coral reefs, causing widespread economic losses;
 landslides, for instance those during the recent monsoon in Central Java.
Events such as the Central Java landslides, which have caused havoc and killed
more than a hundred people during the current rainy season, have brought attention
to the inextricable links between the status of watersheds and the livelihoods of poor
rural Indonesians. Upland smallholder farmers typically bear most of the
responsibility for protecting watersheds as well as the worst of the consequences of
watershed deterioration. Financial transfers from downstream users to upstream
residents have already been mooted in Indonesia as a potentially equitable means of
securing protection of watersheds without compromising the livelihoods of those in
the uplands. For example, negotiations are underway between a downstream water
company and an upstream village in Lombok.
A variety of institutional issues provide both constraints and opportunities to these
kinds of emerging markets:
 Government control over water courses is not streamlined, and several
departments are involved - the Ministry of Forestry has jurisdiction over
watersheds, the Ministry of Public Works over surface water and the Department
of Geology in the Ministry of Environment over ground water;
 Decentralisation, recently initiated on an ambitious scale, is shifting the locus of
government from Jakarta to local governments in the approximately 300
kabupaten, which should provide space for novel approaches to watershed
management, though complications or conflicts could occur where rivers or forest
management units (KPHPs) are split between adjacent kabupaten;
 The World Bank is at the pilot stage of a structural adjustment programme for the
water sector in Indonesia (WATSAL), which is intended to include a system of
downstream to upstream payments for watershed protection services;
 By law private companies (e.g. municipal water suppliers or hydro-electric power
stations) cannot negotiate with rural communities other than through established
channels of local government;
 Entrenched corruption in local government and the private sector suggests that
the biggest challenge to emerging pro-poor markets will be securing equity of
opportunities and benefits.
Existing information
19
A key issue is the extent to which land management in the uplands is in fact the
cause of patterns of water quality and quantity downstream. For example, the media
have blamed deforestation of steep slopes for the landslides in Central Java. This
explanation not only ignores the more fundamental causes of this deforestation
(probably re-migration to rural areas following the economic crisis of 1997), but also
depends on the assumption that conversion from forestry to other land uses leads to
soil instability. Validation of these types of assumptions requires hydrological
evidence. Some evidence may be internationally generalisable, but it could be more
useful within the Indonesian debate to draw on the extensive studies completed or
ongoing locally:
 ICRAF is conducting a long-term policy-relevant hydrological study in South
Sumatera;
 Universities active in hydrological research include Unila, Browijaya (in
collaboration with ICRAF) and Gaja Madah;
 The Ministry of Forestry has a large data set for watersheds at Brantas;
 The completed Indonesia Tropical Forest Management Programme (ITFMP)
within DFID collated hydrological information and provided an economic valuation
of Indonesian forests which included a consideration of watershed values;
 USAID has also done valuation work on natural resources.
Next steps
A six-month to one-year inception phase is proposed, in which key protagonists
identify the most effective routes for investing in a long-term project. Activities during
the inception phase will comprise:
 Consultations and building of an informal network among potential partners and
collaborators;
 Collation of completed and ongoing hydrological research linked to land uses;
 Mapping and analysis of current policies, institutions and incentives influencing
land use and livelihoods on watersheds, and downstream water use;
 Investigation of promising action research sites (see Table 1);
 Workshop bringing together interested parties - including appropriate
representatives of central government (Ministries of Environment, Public Works,
Forestry and Decentralisation), local government, local and national NGOs,
community groups, research institutes and international donor agencies - to plan
next phase and to discuss key issues;
 Agreement on a site and on initial roles for those involved;
 Attendance at international workshop by key Indonesian partners (two people) to
share country experiences with other “action research countries”, and to
contribute to country plans;
 Production of a detailed diagnostic and proposals for practical action in a threeyear implementation phase at the chosen action research site.
People consulted
This note was put together from a short scoping visit to Jakarta and Bogor in
November 2000 and is based on discussions with the following:
Safril Salim, Munawir Centre for Water and Land Resources Development and
Studies (PSDAL - LP3ES)
Boen Purnama, Silver Hutabarat Ministry of Forestry
20
Yvan Biot, Tri Nugroho, Neil Scotland DFID-Indonesia forestry programme
Chip Fay ICRAF
Joyotee Smith, Lini Wollenberg CIFOR
Guy Alaerts, Scott Guggenheim World Bank
Table 1. Some potential action research sites
Where
Bentek village,
Lombok, West Nusa
Tenggara Province
Serang and Cilagong
kabupaten, West
Java Province
What
Nascent negotiations
between downstream
water company and
villagers with LP3ES
as facilitator
Steel company pays
local tax of Rp50/m3
water used, of which
Rp15 goes to
protection of upstream
lake
Irrigation and
municipal water
networks, West Java
Province
National Parks protect
watersheds supplying
rice paddies and water
supplies to Jakarta but
economic contribution
is not acknowledged
South Sulawesi
Not much as yet, but
NGO network keen to
develop payment
mechanisms
Expressions of
concern by Ministry of
Environment and
private sector
Coral reefs
Brantas, East Java
Province
Solo River Basin,
Central Java; Toba
watershed, North
Sumatra; South
Kalimantan
Nothing as yet
Nothing as yet
Why
Already underway
without external
impetus
Contact
Suhardi, LP3ES
Mataram
Decentralisation
means that lake and
steel company will
now be in different
kabupaten, making
payments more
difficult
National policy
interest in water
supplies to Jakarta
(also tie-in with
ongoing IIED work
on Jakarta water
supplies)
Area of national
concern (hilly with
high erosion)
Munawir, LP3ES
Jakarta
Overall economic
losses due to
siltation of reefs are
estimated at US$
800 000 pa
Good hydrological
data
Other sites which
interest Ministry of
Forestry
Yvan Biot, DFID
Tri Nugroho, DFID
Tri Nugroho, DFID
Boen Purnama,
Ministry of Forestry
Boen Purnama,
Ministry of Forestry
21
Notes for a possible action-learning programme
in the Caribbean
Shared regional issues relating to poverty:
Caribbean island states are diverse both in terms of their environments and in terms
of the social well being of their citizens. For example, semi-arid low-lying Barbados
has a poverty threshold line which equates to US$11.2 per day, while mountainous
Grenada has a poverty threshold line equating to only US$4.4 per day. Despite this
diversity these island states face many common threats to their environments and
livelihoods. The last decade has seen a declining world market share in tourism (the
major industry), increasing stringency of offshore banking regulations (the main
invisibles earner in many islands), eroding preferential access to European markets
(bananas in particular), a burgeoning ‘narco-economy’ undermining authority and
social relations, and increasing environmental vulnerability (e.g. much greater
numbers of hurricanes and storm surges). This all results in greater reliance, and
greater pressure, being placed on natural resource systems such as watersheds. At
the same time, some cultural trends (individualism and consumerism) are weakening
some natural resource management traditions and institutions.
High regional demand for improved watershed management
In a recent FRP-funded regional survey of the major problems faced by poor people
in 11 Caribbean countries key informants from every single island state ranked
watershed degradation as a critical issue. This was particularly true of the poorest
among the Eastern Caribbean States (e.g. Grenada, St Lucia and St Vincent).
There is growing realisation that watershed protection services are critical livelihood
issues for both rural and urban poor:
 Flash floods are common in the larger islands, regularly inundating peoples’
houses and fields and causing significant damage. Public concern is being very
strongly expressed in Trinidad and Jamaica.
 Deteriorating soil fertility is endemic to the region and has been exaserbated by
the increasing severity of storms which discourage repeated costly investments in
erosion control measures
 In very small islands water has occasionally had to be shipped in (although
watershed management through land use and protection is less important here
than artificial forms of water harvesting).
 Water contamination is an endemic problem in the region (from high levels of silt,
agricultural chemicals and faecal material)
The main environmental issues associated with poor watershed management
include:
 Siltation of coral reefs – highly topical at present, as this is causing not only
biodiversity loss, but also increased beach erosion
 Decline in quality of fresh water for domestic and industrial use
 Decline in quality of coastal waters through turbidity
 The destruction of attractions such as waterfalls
Many of these environmental issues cause significant costs to tourism, fisheries and
agriculture. Other key economic issues are:
22
 Economic depression in some of the islands (notably the Windwards banana
economies such as Dominica, St Lucia and St Vincent) limits any obvious ability
to pay for watershed protection
 Tourism is a huge water user. Preferential access to water by hotels is not being
paid for by the industry, leading to local resentment. Even so, regular shortages
are affecting the tourism industry
 Most islands produce a low proportion of their own food. Investment in irrigation
is being considered in many, e.g. in St Lucia, and reliable water supply is a
concern for both users and policy-makers. However, current water quality
threatens the economics – the relatively small reservoirs and dams silt up quickly
Institutional issues are critical to overcoming the widespread regional phenomenon of
watershed degradation. The fact that many of these issues are common throughout
the region is an important opportunity at the institutional level. The commonality of
problems has resulted in increasing regional co-operation at many different levels.
For example, the last two years have seen the rapid development of PROCICARIBE
(the Agricultural Science and Technology System of the Caribbean). PROCICARIBE
has been designed as an instrument that will provide an institutional framework within
which the Caribbean would design and implement strategies for the integration and
coordination of agricultural research at the national and regional levels with linkages
to international organisations.
One of PROCICARIBE’s eight regional networks is CLAWRENet which deals with Land and Water Resources. Co-ordinated out of the University of the West Indies
(UWI) in Trinidad, this network encompasses institutions in each of the Caribbean
States and acts as a research and action learning platform for watershed
management.
The burgeoning regional co-operation is also reflected in greater inter-country
cooperation at the level of National Forestry Departments. For example, in the latest
Caribbean Foresters Meeting in Guyana (June 2000) several national watershed
developments were shared and discussed in plenary session (e.g. from St Lucia and
Grenada).
At the institutional level, there is increasing recognition of the need to learn from
experiences across the region. Both UWI and CANARI (the Caribbean Natural
Resources Institute) have been instrumental in fostering regional dialogues, the latter
opening a new office in Trinidad.
As a result, there are positive trends towards regional co-operation in participatory
natural resource management relating to watersheds. This offers an excellent
opportunity to improve the regional impact of watershed interventions, even if for
reasons of practicality, they have to be located initially at a single or limited number
of sites.
There are also positive trends towards the privatisation of public benefit production
across the region, but there are still many institutional constraints and a shortage of
information on water supply/land management interactions and on ability/willingness
to pay:
 On the one hand, a growing awareness of the value of participatory natural
resource management, and more examples of collaborative approaches on the
ground, bodes well for the production of watershed protection services. This is
helped by the small size of the watersheds/catchments, aiding the correlation of
water supplies with land management.
23
 On the other hand, land tenure in watersheds can be a locally complex mix of
private and state ownership, with many of the de facto managers of steeper
slopes being considered ‘squatters’ by the authorities. Furthermore, many of
these potential ‘producer groups’ are unorganised and lack strong negotiation
platforms
 In some countries, responsibilities for watershed management are unclear, or are
in flux, between different agencies and between the decentralised levels; there is
little in the way of guiding policy or institutional coordination on watershed
management
 In practice, professional watershed management skills may be concentrated in
one person in the smaller states, and these may be at a rudimentary level
 Water resources are more routinely treated by policy makers as an issue of
utilities rather than land management
 There has been very little work to value watershed benefits – still less the
realisation of these values through market mechanisms. However, a number of
exercises connected to policy review, TFAP processes, or establishment of
participatory projects, have revealed strong public opinions that soil and water
conservation is a high-ranking value (e.g. the recent Grenada participatory policy
exercise which ranked this highest)
 Islands differ in the degree to which there is good information which can correlate
land management practices to water supply. Information is better in much-studied
St Lucia, for example, than in Grenada
 The apparent awareness of watershed issues at government level has not often
been matched with changes in rights, responsibilities, incentives and
technologies to effect good watershed management
 However, attempts are now being made e.g. in St Lucia and Grenada, to bring
watershed authorities, local groups, and the water supply authorities together
 Whilst there is a general promotion of decentralised and privatised instruments
for the production of public benefits, no clear example of a ‘watershed market’
has become apparent; neither has a long-standing incentive/compensation
mechanism, or indeed polluter-pays mechanism
 The numbers of potential ‘buyers’ from any one watershed is small, but often it is
clearly identifiable – the tourism industry, agribusiness, or municipalities (most of
all these being small in size, and some with low ability to pay)
Specific entry points and foundations from which to build regional solutions
While problems relating to watershed management may be regional, immediate
solutions may most readily be developed at specific sites where existing contexts,
actors and processes are favourable. It makes sense, therefore, to focus initial work
on those areas which have a high potential for impact, before sharing and promoting
lessons through the existing regional networks set up expressly for this purpose.
The initial proposed ‘entry point’ is in Grenada where ‘potentials and needs’ scoping
will be conducted. Grenada is a particularly attractive choice because it shares many
of the topographical, social and economic problems of a number of the smaller
Caribbean island states (e.g. Dominica, St Lucia and St Vincent).
Comparative ‘potential and needs’ scoping will also be conducted in St Lucia,
Trinidad and Jamaica to provide important information about the variable contexts
within the Caribbean, so as to make the approach as generally applicable as possible
(‘maximising the recommendation domain’). These sites will also provide alternatives
should the anticipated processes not be practicable in the preferred site. Taken
together, these four countries cover a mix of private and public lands, a range of
participatory approaches, and a range of potential buyers from agribusiness and
24
tourism to municipalities. They have similar forms of government, and the countries
are linked with formal and informal forestry and participatory resource management
networks. They belong to the same language group, and three have had DFID
involvement. In all of them, there are willing and capable partner institutions. It may
be the case that the preferred entry point (Grenada) is an ideal site for an action
learning programme, or alternatively, that different elements of a programme need to
occur simultaneously in different countries where opportunity allows. A certain
degree of flexibility is desirable, since there will be abundant opportunities to share
lessons with all the countries facing these problem through the well-established
regional networks already in place.
Salient points are:
 Grenada: watershed market development both as a way of dealing with the
number one forestry issue, and as a focus for developing partnerships called for
by the new forest policy. Public opinion has clearly placed watershed protection
as the highest forest priority. The proposed project’s reinforcement of this value
may act as a good catalyst for implementation of the recent policy, the proposed
reorientation of the Dept of Forests and National Parks, and its proposed
development of partnerships with communities, the tourism industry and water
supply industry. Consultations with DFID-Caribbean, which is supporting a project
to implement the new policy, and DFNP, have revealed interest in collaboration
with the proposed project. CANARI will be facilitating the multi-stakeholder
processes involved in the DFID project, with a focus on developing the roles and
capacity of civil society groups. ‘Markets for environmental services’ have barely
been discussed in Grenada, and would seem to be ambitious, although the issue
of ‘who pays’ for watershed benefits has been raised and it is clear that some
basic physical facts about watersheds and stakeholder analysis (which would be
offered in the proposed project) would be useful in themselves. The small number
of buyers would seem to limit market possibilities, with the possible exception of
the tourism industry (on the face of it, the most likely driver of any markets-based
pilot).
 Saint Lucia: building on recent government efforts to develop a coordinated
‘water cycle’ institutional approach, to secure irrigation supplies in particular. The
Ministry of Agriculture has set up a Water Resource Management Unit which is
intended to link the Forest Department, farmers (much of the land is privately
held) and the water supply services in a ‘water cycle’ approach. The Water
Resource Management Unit is St Lucia’s lead institution within PROCICARIBE’s
CLAWRENet. The water cycle approach is funded through STABEX and has
certain presumptions e.g. emphasising afforestation as a watershed management
measure. Despite the holistic approach and attention to coordination of roles, the
issue of ‘who pays’ has not yet been dealt with in detail. This matters to poor
farmers in the watershed; it is also a concern where there is a presumption that
the development of irrigation will act as the driver for watershed management.
DFID has a strong interest here, having supported consultancy work on how to
get water to Vieux Fort (a small town in the south), and a previous watershed
management project which produced a mass of water flow data (and designs for
engineering solutions e.g. river training). The FD has expressed cautious interest
in the proposed project.
 Trinidad: Forest Department and ‘squatters’ roles in improving domestic and
industrial water supplies. Flooding and the poor quality and unreliability of
domestic and industrial water supplies are very topical issues in public debate
and NGO advocacy. Everybody has been flooded out at some time, or has
25
friends who have, and most people experience regular supply disruptions.
Watersheds are managed by the Forest Dept and by smallholders who (illegally)
farm steep slopes. There is also poorly controlled residential development. The
National Environmental Management Authority has held expert focus groups
which also highlighted watersheds as a key environmental problem – and also as
a possible unifying basis for improving environmental governance. Whilst there
has not been discussion of market solutions, the Sustainable Economic
Development Unit (SEDU) of the University of the West Indies (UWI) has been
engaged in helping the T&T Government to understand the incentives facing
communities ‘squatting’ in the Northern Range, and the costs of deforestation in
specific watersheds (Maraval and St Ann’s). SEDU has also been examining the
links between watershed protection and other benefits of land management e.g.
the commercial and watershed benefits of moving from unsustainable agriculture
to various forms of agroforestry. While the regional watershed and land use
network (CLAWRENet) is managed out of UWI, and there are strong potential
partners in both SEDU and the newly established CANARI office, the Forest Dept
has not yet shown a demand for this kind of work. There is also no DFID
intervention in this relatively well-off country.
 Jamaica: finding out how to make a complex institutional landscape work for
market-based, livelihood-supporting watershed management. In Jamaica, there
are some recent efforts to improve the participatory governance of watersheds,
and at the same time to secure public benefits. The 1996 Forestry Act mandates
the participation of local communities in forestry, making provision for the
establishment of Local Forest Management Committees (LFMCs). These
committees are likely to include both large-scale (coffee and bananas) and smallscale farmers. There are several important non-governmental organisations who
provide support for integrated watershed management (e.g. the Southern
Trelawny Environmental Agency - STEA) and have supported local communities.
There are also emerging ecotourism industries and squatters who may or may
not be recognised by such committees.
Outside the forest sector, NEPA is drafting a national watershed management
policy. The Office of the Prime Minister has established the National Integrated
Watershed Management Programme (NIWMP) which sits in the Ministry of Land
and the Environment (rather than the Ministry of Water and Housing). The Forest
Department, with technical support from the CIDA-supported Trees for Tomorrow
project, is actively involved in this Programme and is developing management
plans for key watersheds, in which LFMCs will play a role. CANARI will be
advising on the development of the LFMCs and participatory watershed
management in the Buff Bay and Pencar Valleys, and monitoring how their roles
develop. Already, however, the question of ‘who should pay, and how much’ is
becoming central to the idea of community-based watershed management.
Currently, neither the FD nor communities are rewarded for the quality of
watershed management, although there is a proposal for a ‘forestry development
fund’ to which water users would contribute (again, reflecting a presumption that
afforestation is good for watershed management).
It should be noted that, despite the policy intentions, Jamaica’s institutional
climate for watershed management is difficult. The FD has increasingly good
relations with communities but limited room to manoeuvre. NEPA has strong
political power but weaker implementation capacities and relations with
stakeholders. Politicians support market-based solutions, decentralisation and
co-management in rhetoric but reinforce local power differences. Finally,
community institutions are weak and often with unclear rights. Consequently,
26
there are many barriers to real change being encouraged in practice. In spite of
the obvious need for better watershed management, broader consultation with
the FD, NEPA and others is required to be confident of the value of selecting
Jamaica in the proposed project.
Next steps - agreeing the purpose, outputs and activities of the proposed
project with Caribbean stakeholders:
Two potential partners have been identified, on the basis of discussions on their
current strategies and previous work:
 CANARI, the Caribbean Natural Resources Institute, is the region’s foremost
research, networking and training body in the field of participatory natural
resource management, and in associated policy and institutional change
processes. It is involved, as researchers and facilitators, in natural resource
management in Grenada, St Lucia and Jamaica, and has good contacts in
Trinidad (to which it has just moved its headquarters). It supports multidisciplinary work and its policy advice is well respected.
 SEDU, the Sustainable Economic Development Unit at UWI in Trinidad, is a
small, well-networked group of university economists engaging in research on
economics of the ‘real world’ in the Caribbean. Based on needs assessment, its
priorities are poverty and sustainable development links, sustainable tourism,
climate change, watershed management and solid waste management. Whilst
focusing at present on Trinidad and Tobago, SEDU has a regional mandate and
has conducted certain studies in other countries.
Both SEDU and CANARI staff meet frequently, and they would welcome the
opportunity to work together. As both are based in Trinidad, this should aid
communications. An inception phase is proposed, involving a range of activities
spread over one year. This period would allow SEDU and CANARI to work with
others to develop the issues and make a detailed appraisal and plan. Starting in
Grenada, activities in this period might include:
 Further scoping consultations, network building and assessment of potential
researchers and regional ‘convenors’.
 Mapping current policies, institutions, incentives and markets influencing
watershed land use (including forest and tree use), water use, and watershedlinked livelihoods – and the links, conflicts and synergies between them
 Initial assessments of economic and hydrological information linked to land uses
 Stakeholder and institutional analysis
 Establishment of a learning group on watersheds, livelihoods and markets
 Planning workshops with specific stakeholder groups and at regional level
 International workshop with other action-learning site representatives and case
study partners, IIED and others
 Production of a detailed diagnostic and proposals for practical action in a 3-year
action-learning implementation phase
 PROCICARIBE – CLAWRENet. While yet in its infancy, the regional potential of
this land use and watershed network will be drawn upon in national consultations.
Early involvement with this forum will ensure that lessons are rapidly shared
throughout interested parties in each of the Caribbean island states.
There are several reasons why Caribbean institutions need to take a lead in
assessing needs and potentials (in collaboration with IIED):
27
 The brief IIED scoping exercise cannot be considered to be a detailed
assessment of needs and potentials in a broader range of islands. Greater
confidence needs to be given through a more in-depth screening, based on up to
date information and further consultation. A more tactical consideration needs to
be given of which of the emerging institutional arrangements are good prospects
for market solutions – and conversely where a market-based approach may
damage the institutions necessary for equitable watershed management. This
depends upon good local knowledge. 2
 The limited number of discussions with officials, NGOs and watershed
stakeholders, whilst revealing interest, cannot be confused with an assessment of
readiness for researching and developing market-based approaches. ‘Buy-in’
must be developed.
 ‘Buy-in’ is also required in the research community. Whilst CANARI and SEDU
have been identified as potential partners, and the proposed project sits well with
their respective strategies, they need time to explore the issues and consult.
Following initial work in Grenada, perhaps two to three further countries in the region
might be selected. Since there appear to be no market-based approaches to
watershed management at present in the region, Caribbean actors might be
expected to gain their earliest benefits from this project by coming up to speed in the
concepts and experiences from elsewhere. The approach of ‘incentives’ may be the
best one to take initially, rather than ‘markets’.
People consulted:
Alan Joseph, Chief Forestry Officer, Grenada
Gordon Paterson, Senior Forestry Officer, Grenada
Sandra Ferguson, Director, Agency for Rural Transformation (ART), Grenada
Michael Jahba Andrew, Chief Forestry Officer, St Lucia
Brian Johnson, Senior Forestry Officer, St Vincent
Albert McKenzie, Senior Director, Forest Department, Jamaica
Carlton Sambury, Head of Forestry School, ECIAF, Trinidad
Yves Renard, Tighe Geoghegan and Vijay Krishnarayan, Directors, CANARI
Prof Dennis Pantin, SEDU, Trinidad
Claus-Martin Ecklemann, Forestry Officer, FAO Sub-Regional Office, Barbados
Robert Dunn, Forestry Project TCO, DFID, Grenada
Dick Beales, Graham Chaplin and Rob Bateson, DFID-Caribbean, Barbados
2
NB Check Franklin McDonald, Jamaica and Len Ishmail ECLAC
28