WATERSHED PAYMENTS FOR ECOSYSTEM SERVICES
AND CLIMATE CHANGE ADAPTATION
CASE STUDY: RUGEZI WETLANDS, RWANDA
By
Elizabeth Willetts
Dr. Randall Kramer, Dr. Lydia Olander, advisors
March 2008
Masters project submitted in partial fulfillment of the
requirements for the Master of Environmental Management degree in
the Nicholas School of the Environment and Earth Sciences of
Duke University
2008
©
Abstract:
Watershed Payments for Ecosystem Services and Climate Change Adaptation
Case Study on Rugezi Wetlands, Rwanda
By
Elizabeth Willetts
March 2008
A majority of East African nations rely heavily on hydropower for their energy supply. Climate change experts predict
significant changes to total precipitation and seasonal weather patterns in this area in the near future. Consequently, these
nations should expect hydrologic stress across all watershed scales. Resilience of East Africa’s energy sector to these climate
change impacts will rely on coordinated environmental and economic policy. It will depend on the ability of governments to
quickly improve management of important ecosystems and water basins. However, effective decision-making must balance the
watershed needs of local livelihoods, such as subsistence agriculture, with national energy needs, such as expansion of electricity
infrastructure. Environmental policy increasingly leans to economic mechanisms to find resolutions to ecosystem dependency
conflicts. Payments for Ecosystems Services (PES) is one environmental economic mechanism that could effectively and
rapidly improve environmental management in this region. This paper investigates the feasibility for using local PES schemes in
a major Rwanda watershed as both a tool for community vulnerability reduction and for energy sector resilience to climate
change impacts.
Payments for Ecosystem Services in developing countries involves local-level environmental negotiations between the public
and private sectors. The mechanism has two goals. Primarily, it gives physical value to specific resource improvements.
Secondly, PES reorganizes funding streams towards particular environmental objectives using positive incentives. In effect, it
can develop a sustainable, locally-driven, conservation funding mechanism. PES most strongly emerged as a conservation tool
in the early 1990’s in Latin America. Uncertainty in its ability to achieve restoration targets and questions about its ability to
achieve financial independence does not deter PES’ popularity. PES schemes and informational networks now exist in Latin
America, Asia, Africa, and Oceania.
The first portion of this paper looks at the capacity-building potential of PES mechanisms. It relates these to adaptive capacity
needs for climate change given by the United Nations Framework Convention on Climate Change (UNFCCC). The second
portion of this paper organizes key literature describing different feasibility criteria for PES implementation in the Rwandan
context. To verify whether watershed PES is plausible, the paper then investigates the political, social, and environmental
context of Rwanda’s major watershed and compares these to fourteen international PES case study sites. The final portion of
the paper links potential PES scheme designs in the Rugezi area to specific capacity building potential and then to climate
change adaptation objectives.
Successful implementation of watershed PES in Rwanda will depend on careful scheme design and persistent trust-building in
order to harmonize wetland inhabitant and electric utility needs. Existence of contextually parallel projects in Indonesia, South
Africa, and Columbia, gives evidence that these challenges can be creatively overcome. Findings show that Rwandan decisionmakers will need more hydrologic data to make ecologically informed and efficient decisions and to set targets. With several
necessary conditions in place, watershed PES in Rugezi may be a feasible tool for climate change adaptation and energy sector
resilience. However, there is need for cost-benefit analysis to clarify short term, long term, and distributive costs and benefits of
such a project.
Date:________________
Approved:
_________________________
Dr. Randall Kramer, Advisor
_________________________
Dr. Lydia Olander, Advisor
Masters project submitted in partial fulfillment of the
requirements for the Master of Environmental Management degree in the Nicholas School of the Environment and Earth Sciences of Duke
University 2008.
2
This paper is written for and supported by the International Institute for Sustainable Development.
The International Institute for Sustainable Development (IISD) is an independent, not-for-profit corporation headquartered in
Winnipeg, Canada, established and supported by the governments of Canada and Manitoba. Its mandate is to promote sustainable
development in decision-making in Canada and around the world.
International Institute for Sustainable Development
Geneva office
International Environment House 2
9 chemin de Balexert
1219 Châtelaine
Geneva Switzerland
Phone +41 22 917-8373
Fax +41 22 917-8054
3
Contents
Abstract……………………………………………………………………………………………………….pg. 2
Introduction…………………………………………………………………………………………………..pg. 6
1.0 Conceptual Links Between Payments for Ecosystem Services
and Climate Change Adaptation…………………..…………………………………………………….pg. 8
1.1 Ecosystem Services
1.2 Local-level Payments for Ecosystem Services
1.3 Linking Payments for Ecosystem Services to Climate Change Adaptation
1.4 Climate Change Risks in Rugezi Watershed of Rwanda
2.0 Institutional Feasibility for Local-level Payments for Ecosystem Services…………………………..pg. 15
2.1 Institutional Feasibility Assessment Chart
2.2 Rwanda Background Analysis
2.2.1 Ecology and Social Assessment
2.2.2 Watershed PES and the African Context
2.2.3 Rwanda Environmental Policy Context
2.3 Case Study Analysis
2.4 Stakeholder Analysis
2.5 Local-level PES Institutional Design Options in Rugezi
3.0 Feasibility Summary……………………………………………………………………………………pg. 48
3.1 Climate Change Adaptive Capacity Feasibility
3.2 Institutional Feasibility
3.3 Hydrologic Feasibility
3.4 Next Steps
4.0 Conclusions……………………………………………………………………………………………..pg. 53
5.0 References……………………………………………………………………………………………….pg. 54
6.0 Appendices………………………………………………………………………………………………pg. 59
4
Abbreviations
“Integrating Vulnerability and Adaptation to Climate Change into Sustainable Development
Policy Planning and Implementation in Eastern and Southern Africa”
ACTS
African Centre for Technology Studies
CITT
Center for Information and Technology Transfers
COOCASTER
Coopérative de Conservation et d’Amelioration de Sol et Terrassement Radical
EDPRS
Economic Development and Poverty Reduction Strategy
ELECTROGAZ (Hyroelectric utility) Société de Production et de Distribution d’Electricité, d’Eau et de Gaz
GEF
Global Environmental Facility
ICRAF
World Agroforestry Centre
IMCE
Integrated Management for Critical Ecosystems
IPCC
Intergovernmental Panel on Climate Change
IRICP
International Research Institute for Climate Prediction
IUCN
World Conservation Union
KIST
Kigali Institute of Science and Technology
MDG
Millennium Development Goals
NBI
Nile Basin Initiative
NELSAP
Nile Equatorial Lakes Subsidiary Action Project
PEI
Poverty Environment Initiative
PES
Payments for Ecosystem Services
PRESA
Pro-poor Rewards for Environmental Services in Africa
REMA
Rwanda Environmental Management Authority
RUPES
Rewarding Upland Poor for Environmental Services
UNDP
United Nations Development Program
UNEP
United Nations Environmental Program
ACCESA
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Introduction
In the past few years water levels have fallen drastically in Rwanda’s major northern lakes due to precipitation
changes and poor agricultural management in the watershed. As result the region has a low water table, reduced
hydro-potential, and reduced agricultural productivity. Between 2004 and 2006 national electricity shortages led to
the tripling of utility prices. At the same time, rural communities continue to inhabit and rely on the Rugezi
wetlands – the source of basin water flow - in search of water, food, and livelihoods. The local watershed suffers
from conflicting use and no one is conserving it, and no one has the incentive. Emerging climate change impacts in
this area –primarily, more droughts and a greater frequency of dry periods –will undoubtedly heighten both issues.
As result, the Rugezi watershed suffers a three-part burden: local watershed degradation, a national energy crisis,
and a livelihood dependency problem.
The Rwandan government created its National Environmental Policy along with an implementing agency, Rwanda
Environmental Management Authority (REMA) in 2005, in order to deal with its increasing resource problems.
However, gaps in the implementation and monitoring of the new environmental policy limit conservation efforts.
Decentralization of the environmental ministry to incorporate the needs of REMA is also slow. As result, neither
the electric utility nor the rural communities have incentive to modify their resource use. For the utility, the only
way to restore the electricity grid is to increase hydro-potential, such as by construction of more stations and exiling
wetland farmers. But in the Rugezi wetland, inability for the Rwandan government to address significant population
density, land scarcity, and disappearing natural resource bases like timber and topsoil leave rural people with no
other option than to encroach further onto rich wetland soil. Both parties need and want to use the Rugezi as a
water source. But Rwanda runs the risk of losing effective hydro-potential and, or, seeing no end to the resource
struggle in the northern region.
Developing domestic incentives for wetland management is challenging and the responsibility is largely held by
Rwanda’s environmental ministry. The fact that the Rugezi wetlands hold status under the Ramsar Convention as
wetlands of international importance does little to fortify their protection. The international treaty provides little
additional protection or funding towards Rwanda’s internal problems. Creating economic incentives for improved
environmental management will likely be the means for Rwanda to deal with this problem. Local initiatives are just
beginning to focus on economically-integrated approaches to the Rugezi situation. For example, the Poverty and
Environment Initiative (PEI) – a joint program with the United Nations Development Program (UNDP) and the
United Nations Environmental Program (UNEP)- conducts integrated ecosystem assessments for REMA. PEI
measures the vulnerability of the poor and their dependency on natural resources. Environmental financing through
the private sector, such as with tax incentives for better production or pollution control, is one of their goals.1
Most local government and NGO initiatives concentrate on community-based management or improved
environmental management in the region. There are three such projects in the Rugezi watershed. REMA maintains
the first project entitled Integrated Management of Critical Ecosystems (IMCE). IMCE aims to build wetland policy
and management capacity, with a particular focus on training, in the Rugezi region.2 Another organization,
Coopérative de Conservation et d’Amelioration de Sol et Terrassement Radical (COOCASTER), works between
farmers, government projects, and private institutions in select wetland communities. COOCASTER focuses on
sustainable agricultural practices and training while also providing a small-scale credit program to those households
that comply with best practices.3 Thirdly, UNEP’s Integration of Vulnerability and Adaptation to Climate Change
into Sustainable Development Policy Planning and Implementation in Eastern and Southern Africa (ACCESA)
Mulisa, Alex. Personal Communication. Poverty and Environment Initiative. Kigali, Rwanda. September 13, 2007.
Kapiteni, Antoine. Personal Communication. IMCE. at Ministry of Lands, Environment, Forestry, Mines and Water. Kigali,
Rwanda. September 14, 2007.
3 Uwizeye, Jean Claude and Anne Hammill. Reducing the Vulnerability of Energy Sector to the Impacts of Climate Change in
Rwanda pilot project: Preparation of the implementation plan for phase 2 Field Intervention 2007-2009. Workshop Report.
CITT/KIST/IISD. Kigali, Rwanda. February 2007.
1
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works with local and international partners to build decentralization capacity between Rwanda’s ministries and other
actors, such as the utilities. Climate change adaptation and support for energy diversity is the prime focus of this
program.
Ideally, these projects will supply adequate resource training, monitoring, and an assessment of resource valuation to
the area. It is unclear, and unlikely, that they will provide enough immediate incentives to dissipate the Rugezi
hydro-potential and land scarcity issue. At the bottom line, these traditional mechanisms are not inspiring organic
incentives or long-term behaviour change which could lessen the watershed burdens.
In nations where gaps in policy fail to inspire appropriate and sustainable management incentives funding schemes
called payments for ecosystem services (PES) have developed in local areas. PES schemes propose using local
resource markets to prevent degradation and support economic stability. PES values ecosystem goods and services
by incorporating ecosystem goods and services into local, regional, and, or national markets. Payment schemes
operate between identified buyers and sellers in a mutually beneficial way with the assistance of intermediary actors.
Both buyers and sellers are thus able to value the sustainability of the natural resource through positive incentives.
The Center for International Forestry Research (CIFOR), the International Institute for Environment and
Development (IIED), the World Agroforestry Center (ICRAF), and the World Bank have noted the substantial
capacity-building benefits of PES schemes in enhancing overall sustainable development, despite their inherent
operational uncertainties.4 In the Rugezi context there may be potential for a watershed PES scheme to (1) inspire
incentives for improved management, (2) contribute to capacity building and vulnerability reduction for climate
change adaptation, and (3) help alleviate a critical energy problem. Given this understanding, there may be an
opportunity for PES to contribute to climate change adaptation in a broader context. This conceptual link does not
yet exist in PES literature.
The objectives of this paper are twofold. First, it will address the links between payments for ecosystem services and
reductions in climate change effects. Secondly, it will outline the institutional feasibility for designing watershed PES
in Rugezi to enhance Rwanda’s social and economic buffering capacity.
A combination of a literature review, personal interviews, and fieldwork in northern Rwanda provided the
theoretical and conceptual backing to the final policy recommendations. This document reviews white papers on
PES research, implementation, and evaluation at the local level from the following international institutions: World
Conservation Union (IUCN), Worldwide World Wide Fund for Nature (WWF), World Agroforestry Centre
(ICRAF), Katoomba Group, World Bank, International Institute for Environment and Development (IIED),
Forest Trends, Center for Environmental Economics and Policy in Africa (CEEPA), the Nile Basin Initiative
(NBI), and the Center for International Forestry Research (CIFOR). Interviews were also conducted with relevant
professionals in these organizations. Fieldwork focused on interviews with primary environmental stakeholders in
Nairobi, Kenya and Rwanda. This included Rwanda’s environmental Ministries, provincial and sector directors,
NGOs, the utility company, PEI, as well as various economists and environmentalists in the field. The Kigali
Institute for Science and Technology (KIST) assisted in the selection of regional stakeholders.
Section 1.0 of this document outlines the conceptual links between adaptive capacity, community resilience, and the
opportunity for PES to decrease community vulnerability. Section 2.0 describes the approach to designing a
feasibility analysis for local-level PES, gives a contextual assessment for the Rwanda situation, compares this to
Bond, Ivan. Payments for Watershed Services: Opportunities and Realities. Sustainable Development Opinion. International
Institute for Environment and Development. 2007.; Iftikhar, Usman Ali, Kallesoe, Mikkel, Duraiappah, Anantha, Sriskanthan,
Gaya, Poats, Susan V., and Brent Swallow. Exploring the Inter-linkages among and between Compensation and Rewards for
Ecosystem Services (CRES) and human well-being: CES Scoping Study Issue Paper no. 1. ICRAF Working Paper no. 36.
Nairobi: World Agroforestry Centre. 2007.; Pagiola, Stefano, Arcenas, Agustin, and Gunars Platais. “Can Payments for
Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America.”
World Development. 33:2, pp. 237-253. 2005
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international PES case studies, and synthesizes local field interviews. Section 2.0 also delivers PES design
recommendations for the Rugezi case study. Section 3.0 summarizes the feasibility for the PES options
recommended in Section 2.0, and first offers advantages, disadvantages, and potential social and political risks of
implementation. Second, it analyzes the use of PES to address the watershed conflict and to address climate change
adaptive capacity. This section also discusses areas for future research in feasibility design, and feasibility in the
Rwanda context. Section 4.0 offers concluding remarks.
1.0 Conceptual Links between Payments for Ecosystem Services and
Climate Change Adaptation
This section introduces the concept of ecosystem services and payment for ecosystem services. It highlights the
capacity building potential of PES schemes in order to understand the links between PES and adaptive capacity.
These links are then specified for climate risks in the Rugezi watershed case study.
1.1 Ecosystem Services
According to the Millennium Ecosystem Assessment ecosystem services are the “benefits provided by ecosystems,
including provisioning, regulating, cultural, and supporting services.”5
Provisioning services include foods, fibres, and fuels.
Regulating services include drought and flood mitigation, regulation of disease carrying organisms, moderation of
weather extremes and their impacts, purification of the air and water.
Cultural services include aesthetic beauty, parts of heritage.
Supporting services include cycling and moving nutrients and maintenance of biodiversity.
All four of these services are available at local and global scales. The frame of reference for these services depends
on the scope of the project in mind, which is determined by the size of the ecosystem and the economies involved.
1.2 Local-level Payments for Ecosystem Services
An eruption of interest in the quantification of ecosystems services followed the United Nation’s Millennium
Ecosystem Assessment (MA) report in 2003. The MA cited degradation of ecosystem services as a barrier to
improvements in human well-being and therefore to achieving the Untied Nation’s Millennium Development
Goals.6 As a result of these findings, payments for ecosystem services, has become a popular experimental policy
tool for conservation finance. Though there are risks worth weighing carefully, great interest in the overall benefits
of PES implementation exists.
PES incorporates undervalued ecosystem functions into the market economy and therefore serves to balance the
value of provisioning, regulating, supporting and cultural services within a community. Provisioning services, such
as timber, can be easily valued in traditional markets as a form of natural capital. Regulating, cultural, and supporting
services are not commodities in the traditional sense, and therefore their value is not represented in traditional
supply and demand. In order to value these services collectively, PES schemes form a new market.
5
6
Millennium Ecosystem Assessment. Ecosystems and Human Well-being: Synthesis. Island Press, Washington, DC.2005.
Millennium Ecosystem Assessment. (2005) op cit
8
In these markets, ecosystem services are quantified and sold by “sellers” to “buyers.” “Sellers” of the ecosystem
service are those who expend the effort and cost to sustainably manage the resource, i.e., landowners, governments,
or farmers. “Buyers” of the ecosystem service are those who use the resource, such as businesses, governments, and
consumers. A PES scheme formally operates between at least one buyer and one seller in a voluntary transaction. 7
At the local level, intermediaries and donor actors are also involved. International NGOs, investment groups, or
utilities can provide significant technological, educational, and organizational capacity as intermediaries.
Intermediaries can be important in managing and compensating local opportunity costs.8 In general, local-level PES
schemes require up-front donor support. Micro-credit organizations may also give a financial jumpstart to PES
schemes, especially in cases where sellers must find alternative livelihoods.9
PES markets exist at many scales, from global carbon markets, to community water markets. Hybrid markets
termed International PES (IPES) also exist to “bundle” global and local investment benefits for deeper
environmental protection.10 The context of this paper only considers community, or local-level, PES in developing
countries.
These local markets operate through a variety of structures, the most popular being self-organized private deals and
public payment schemes. The PES structure either reinforces existing environmental management and or it can
stimulate conservation behaviour through new economic incentives.11
The flexibility of PES schemes is in a large part due to the many different service buyers and site-specific
arrangement of actors. Usually sellers are small land-owners or farmers. Buyers generally include:12
 Governments and multilateral agencies in the public sector
 Private sector: Companies under offset regulation or companies that use ecosystem services for personal
gain, such as bottling companies who use watersheds
 Philanthropic donors: the Nature Conservancy for example allows individuals to invest in the purchase of
critical ecosystems to establish protected areas
 Consumers of eco-products: purchasing organic food is an example of buying an eco-product
 Utilities: some utility companies are interested in investing in environmental best practice
There is no formal standard for PES payments. The price for planting a tree, for example, varies according to
region, community, and PES scheme. Therefore market transactions have various forms of compensation.
Compensation types include




Individual monetary payments, such as cash transfers
Improvements in public services, such as health or education facilities
Local infrastructural improvements, such as roads
Improved land tenure rights
Wunder, Sven. Payments for Environmental Services: Some Nuts and Bolts, CIFOR, Occasional Paper No. 42. 2005.
Corbera, Esteve, Kosoy, Nicolás, and Miguel Martínez Tuna. Marketing Ecosystem Services Through Protected Areas and
Rural Communities in Meso-America: Implications for Economic Efficiency, Equity and Political Legitimacy. Tyndall Centre
for Climate Change Research. October 2006.
9 Bond (2007) op cit; Wunder (2005) op cit; Murali, K.S. “Microfinance, social capital and natural resource management
systems: conceptual issues and empirical evidences”. International Journal of Agricultural Resources, Governance, and Ecology.
Vo. 5, No. 4, 2006.
10 Huberman, David, and Tobias Leipprand. Developing International Payments for Ecosystem Services: A Technical
Discussion September 12 and 13, 2006. Background Paper. UNEP – ETB. Geneva, Switzerland. August 2006.; Wunder (2005)
op cit
11 Corberba (2006) op cit
12 Scherr, Sara J., Milder, Jeffrey C., and Carina Bracer. How Important Will Different Types of Compensation and Reward
Mechanisms be in Shaping Poverty and Ecosystem Services Across Africa, Asia, & Latin America over the next two decades?
CES Scoping Study Issue Paper 5. ICRAF Working Paper no. 40. Nairobi, Kenya: World Agroforestry Centre. 2007.
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1.3 Linking Payments for Ecosystem Services to Climate Change Adaptation
Payments for ecosystem services in developing countries involves local-level environmental negotiations between
the public and private sectors. The local-level PES mechanism offers direct and indirect benefits to a community.
Direct Benefits to capacity building include


Improved Environmental Management and Monitoring:
PES schemes improve the local planning, management, and understanding of natural resources.
Monitoring of natural resources is valuable to “sellers” who want to protect their capital. Increased
knowledge about ecosystem conditions and dynamics can enhance management decisions. For
example, farmers may note changes in rainfall patterns and soil conditions that inform planting
times or crop selection.
Strengthened Local Economies:
1) PES typically delivers compensation to the poor people in an economy. Rather than a handout,
payments are conditional on resource management contracts. PES schemes differ by compensation
mechanisms but payments are often tiered or delivered on a regular schedule. Therefore, there is an
incentive for the poor to maintain PES’ financial contracts and this elevates the poor’s position in
the local economy.
2) PES may help focus micro-credit lending towards long-term natural resource availability.13
Indirect Benefits to capacity building include



Improved Social Capital:
By requiring cross-sector and cross-demographic negotiations PES can bring under-represented
community members to the decision-making table. It can improve communication and human
capital among different sectors, ministries, and levels of administration, and can enhance networks
and support institutions. In this sense, PES schemes may also act as equalizers.
Support for Legal Frameworks:
Local-level PES schemes emerge where there are gaps in policy or policy implementation. PES
schemes may precede or assist the establishment of environmental and other development policies.
For instance, in schemes where land rights are a form of compensation PES may assist in the
establishment of local land rights.
Increased Human Capital:
PES can assist in the development of alternative employment, job skills, or the provision of
financing needed for the poor to move away from raw material harvest. For example, funding can
provide new agricultural technologies that minimize time spent farming, or, can supply household
technologies that minimize harvesting, such as a gas cook stove. This leaves more time for
alternative activities.
If indeed PES can contribute to local capacity building then perhaps it can act as a tool for climate change
adaptation as well.
Climate change affects the productivity, diversity, and functioning of ecosystems around the world. The poor, who
are most directly dependent on the natural resource base for their livelihoods, will feel the greatest impacts of these
changes. Helping the poor adapt to climate change therefore requires increasing their capacity to better manage and
restore ecosystems.
13
Murali (2006) op cit
10
The Intergovernmental Panel on Climate Change (IPCC) defines adaptive capacity as “the ability of a system to
adjust to climate change (including climate variability and extremes), to moderate potential damages, to take
advantage of opportunities, or to cope with the consequences.” According to the IPCC fourth assessment report,
human settlements will be more vulnerable because they will be more susceptible to, and less able to cope with,
adverse effects of climate change. Human settlements can expect three general changes: (1) climate sensitivities of
human activities will emerge, (2) human settlements will expect changes in the cost of maintaining a climate
controlled environment, and (3) human settlements will expect climate to compound existing stressors in society.
Therefore, adaptive capacity involves strengthening economic wealth, technology, information and skills,
infrastructure, institutions, and equity.14
To buffer vulnerable systems, assets, and infrastructure from climate impacts it is important to enhance
environmental management from societal and economic perspectives. There are four intuitive means to accomplish
this goal. The first buffer results from increased understanding of local natural resources and ecosystem services.
PES schemes foster resource knowledge development by valuing the ecosystem services to different actors in a
particular area. Because PES improves environmental management and monitoring it assists in creating a knowledge
buffer. The second buffer involves increasing protection of natural ecological buffers, such as forests which prevent
landslides. Most PES case studies fall short of monitoring so achievement of specific ecological goals are
inconclusive. A third buffer is the establishment of local economic incentives for sustainable resource management.
PES design ideally uses positive incentives to re-orient economic activities towards long-term sustainability. The last
buffer results from diversified and enhanced livelihoods through alternative income sources. PES can increase
human capital, such as through alternative employment opportunities. However, this link is not strongly explored in
the literature, and seems more strongly correlated to microfinance activities.
Increased local-level participation in decision-making and local control of resource management are the most
universally observed benefits of PES. These positive improvements could or would translate simply into a greater
“response-capacity” of the poor. Combined with social safety nets, greater protection of valued natural resources,
and more stable livelihoods,15 PES schemes may increase the capacity of the poor to adapt to climate change.
It is worth noting that local-level PES schemes may also undermine adaptive capacity. The initial modifications to
local economies will involve some transitional instability. This can make communities more vulnerable in the shortterm. For instance, changing or altering watershed access or timber harvest levels involves water or energy transition
costs. It will take time to stabilize alternatives. If climate is indeed less predictable in the near future, communities
may be much more vulnerable during transitional periods. Corruption is another issue. Corrupt PES stakeholders
will easily undermine adaptive capacity if objectives shift away from long-term resource sustainability and
community development.
1.4 Climate Change Risks in Rugezi Wetlands of Rwanda
Local-level adaptive capacity in Rwanda faces particularly difficult challenges. Tiny, landlocked and located in
southern equatorial Africa, Rwanda has a low natural resource base, high transportation costs, and limited land
availability. Coupled with high population growth and limited human capital development these issues underpin
Rwanda’s struggle to rebuild following civil war and genocide in the 1990s. For all of these reasons the United
Nations describes Rwanda’s development as “behind the starting line” in reference to the Millennium Development
Intergovernmental Panel on Climate Change. Climate Change 2007: Impacts, Adaptation, and Vulnerability. The Working
Group II contribution to the IPCC Fourth Assessment Report. WMO and UNEP. 2007.
15 Department for International Development. The Impact of Climate Change on the Vulnerability of the Poor. Key Sheet 03.
2004.
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Goals (MDGs). In its assessment the MDG considered it “unlikely” that Rwanda would achieve Environmental
Sustainability by 2015,16 and only offered meagre information on national progress indicators.
Rwanda’s MDG goal 1A, Poverty Reduction emphasizes population growth, governance, and purchasing power of
the poor as particularly important factors for progress towards poverty reduction. Important factors for
environmental sustainability are listed in goal 7 and include improved capacity for implementing environmental
priorities, deforestation and biomass energy dependency, monitoring, community participation, and population
growth. The need is clear. Rwanda’s environmental improvements need to integrate with governance and
investment goals, while also considering, pro-poor and population density concerns.
Achievement of the MDGs will also result from improvements to the Rwandan energy infrastructure according to
the United Nations Development Programme.17 Stable energy systems provide direct and indirect benefits for
poverty and hunger reduction, education, and livelihoods which translate to improvements in economic growth.18
Experts believe climate risk management in Africa will focus on water resources.19 Because Rwanda’s climate
change risks will primarily affect the reliability of its water sources it will, therefore, impact national dependence on
hydropower for energy. Climate change will challenge progress towards the MDGs as well as stability of the energy
sector. The International Research Institute for Climate Prediction (IRICP) considers climate information especially
important for developing hydropower energy generation and irrigation opportunities in the East Africa region. 20
According to Rwanda’s National Adaptation Programme of Action (NAPA) Rwanda risks two specific climate
change scenarios21:
1. Prolonged seasonal drought, recurring in two or three successive years
2. Intense rains but lower total precipitation in rainy seasons
Rwanda’s northern region along the Democratic Republic of Congo and Ugandan border is most exposed to
precipitation excess. Specifically, the northern districts of Gisenyi, Ruhengeri, and Byumba will feel impacts such as
high precipitation, landslides, and landslips. As consequence these areas are at high risk for floods, soil degradation,
destruction of habitat, reduced water quality, and destruction of roads and bridges. This will lead to destruction of
biodiversity in humid zones, destruction of wetland plants in riverine zones, and destruction of infrastructures in
low zones. This area has already incurred environmental degradation, disappearance of rare species, famines, human
and economic loss, erosion, threats to human and animal lives, and disturbed transport and threat to economic and
commercial sectors. Climate change will contribute to these historical anthropological and ecological issues. In
response, Rwanda intends to take preventative measures against intense precipitation and erosion in the northern
and western provinces.22
United Nations. Millennium Development Goals: Status Report on the Republic of Rwanda.
http://www.unrwanda.org/undp/rwa_mdg_report_2003.pdf. Accessed August 2007.
17 United Nations Development Program. Mainstreaming Access to Energy Services: Experiences from Three African Regional
Economic Communities. Regional Energy for Poverty Reduction Programme. Dakar, Senegal. May 2007.
18 MINIFRA. Energy Policy for Rwanda. Final Draft. Republic of Rwanda. October 2004.
19 Williams, James. Sustainable Development in Africa: Is the Climate Right? IRI Technical Report Number IRI-TR/05/1.
Position Paper. International Research Institute for Climate Prediction. Columbia University, NY.2005. ; UN Water/Africa
Division. Africa Water Vision for 2025: Equitable and Sustainable Use of Water for Socioeconomic Development. 2004.
20 Williams (2005) op cit
21 MINITERE. National Adaptation Programmes of Action to Climate Change. Republic of Rwanda. Kigali, Rwanda.
December 2006.
22 MINITERE (December 2006) op cit
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The case study project area –the Rugezi watershed–straddles districts in the northern province, and has had both
moderate floods and moderate to severe drought exposures between 1998-2000.23 In the future, this area should
expect increases in temperature, prolonged droughts, and high evapotranspiration. This will disturb the hydraulic
cycle, increase vulnerability for low river flows, and reduce water levels in lakes and rivers. Lastly, this will impact
local communities directly by declining aquatic ecosystems, creating new limitations and exposure to forest
resources, and reducing hydroelectric production in Ntaruka and Mukungwa hydropower stations.24
Concern for the recent decade’s trend of decreasing rainfall levels and shortening of both rainy seasons has caused
policy-makers to plan for this extreme in the Rugezi area.25 Any changes to rainfall patterns will affect agriculture, a
sector which currently expects two rainy seasons and at least as many harvests. Erosion will be a principle factor in
agriculture and this will impact food production and food security in the northern region. Particularly high siltation
in wetlands and waterways may result. High mountainous regions will see destruction of anti-erosive systems,
destruction of economic infrastructure, and a reduction of GDP and per capita revenues, increased food costs, and
population migration. Major socioeconomic concerns are deforestation, desertification, overexploitation of lands
and natural resources, dispersed rural habitat and high levels of poverty. In addition, Rwanda expects challenges to
food production and industrial coffee and tea production. Subsistence farming is especially vulnerable.26 Adaptation
will require significant social, institutional, and environmental buffering.
Map 1: National Erosion Risk Map for Rwanda27 *
Rugezi
Wetland
* Erosion risk increases sequentially according to the legend. Dark green areas have very low erosion potential and
red areas indicate highest erosion risk. Rugezi wetland itself has low erosion potential. However, the surrounding
highland hills have a medium to high erosion risk .
Informational Maps provided by Liza Leclerc at UNEP on the Rwanda NAPA team. Nairobi, Kenya. February, 2008.
MINITERE (December 2006) op cit
25 Uwizeye, Jean Claude and Anne Hammill. (Februrary 2007) op cit
26 MINITERE (December 2006) op cit
27 Adopted from: Musahara, Herman. Personal communication. Powerpoint Presentation: Protection des bassins versants et
conservation de l’eau et des sols au Rwanda. Kigali, Rwanda. September, 2007.
23
24
13
Three specific ecological risks for the Rugezi watershed are:
Risk 1: Hydro-potential will fall below required functioning levels. Investment in hydro-power as a national energy
source will be inefficient. Rwanda’s national energy sector will dip into further crisis.
Risk 2: Competition for quality land will increase as will the challenges in raising livestock. Fuel-wood supply will
be stressed. Rural economies will suffer.
Risk 3: Continued fuel-wood dependency will increase national carbon emissions.
In light of these concerns, the Rwanda NAPA identifies six national climate priorities listed in Table 1 below.
Table 1: Rwanda NAPA National Climate Change Priorities28
Ranked Priority
1. Integrated water resource management (IWRM)
2. Implement hydro-agro-meteorologic early
warning and rapid intervention information
systems
3. Promote income generating activities
4. Promote intensive agriculture and animal
husbandry.
5. Introduction of climate resistant crop varieties.
6. Develop alternative energy sources.
Aim
Reduce local vulnerability to quantitative and
qualitative water shortages and pollution damage
due to climate change.
Improve information system and reduce local
exposure to risks of extreme events and climate
catastrophes.
Improve adaptive capacity and promote nonagricultural activities.
Improve rural adaptive capacity through agrosylvo-pastoral systems.
Improve adaptive capacity of farmers.
Reduce dependency on, and exploitation of,
firewood; reduce vulnerability of energy sector.
According to the International Research Institute for Climate Prediction (IRICP) achievement of the Millennium
Development Goals hinges on proactive responses to climate variability.29 A quick glance at Rwanda’s climate risks
highlights how their inability to depend on stable resources will hamper consistent economic growth and
progressive rural development.30 Climate information is especially important for optimizing resource benefits and
economic planning.
2.0 Institutional Feasibility for Local-level Payments for Ecosystem
Services
Experts continue to suggest that PES in developing countries remains “poorly tested.”31 One reason for this
appears to be a lack of formalized assessment tools. This section compiles aspects of existing frameworks,
guidelines, and criteria previously proposed by leaders in the PES field in order to formalize an institutional
feasibility for local watershed PES in a developing country. A local background analysis, a case study analysis, and a
MINITERE (December 2006) op cit
Williams (2005) op cit.
30 Department for International Development. Climate Change in Africa: Increasing climate variability is compounding
vulnerability in Africa. Development planning needs to consider current and increasing climatic risks. Key Sheet 10. 2004.
31 Wunder, Sven. Are Direct Payments for Environmental Services Spelling Doom for Sustainable Forest Management in the
Tropics? Ecology and Society 11(2):23. 2006.
28
29
14
stakeholder analysis substantiate the basis for the chart design as well as the conclusions drawn from it. The
background analysis provides details on potential buyers, sellers, and community constraints, as well as a status
report on the existing environmental conditions and geographic area. The case study analysis uses these site
characteristics to compare the Rugezi watershed situation to other PES schemes which operate under similar
objectives and conditions. Finally, the stakeholder analysis discusses particular attributes of local Rwandan actors
who may fill traditional roles in a potential PES scheme. The completed feasibility chart summarizes the local
Rwandan conditions using a structured framework designed by combining various existing opinions on PES design
requirements. A complete chart for the Rugezi Watershed can be found in Appendix 1.
2.1 Institutional Feasibility Assessment Chart
Because the implementation of PES touches on non-environmental issues of poverty, health, and business
responsibility, the background assessment, international case study comparison, and stakeholder analysis are not
enough to understand the realistic feasibility for PES implementation. A more cohesive feasibility for instituting a
PES scheme in the Rugezi watershed depends on numerous factors that are only beginning to emerge in the
literature. This section describes the various analytical approaches used to describe and prioritize significant PES
implementation factors. Though PES exists within different income levels and at differing geographic scales, this
section filters this information for the local-level, developing country context. This section concludes with a
cohesive local-level PES Institutional Feasibility outline, formed by combining aspects of existing frameworks,
guidelines, and criteria previously proposed by leaders in the PES field. The complete chart can be found in
Appendix 1.
PES implementation requires five phases according to the World Agroforestry Centre (ICRAF): (1) conceptual
design, (2) scoping, (3) brokering, (4) negotiation, and (5) implementation.32 Case studies do not specify what actors
guide each phase, but it appears international NGOs, such as ICRAF, or other intermediaries take the lead, or at
least guide government or private sector involvement.
Within this process, there are four main approaches to the conceptual design for PES schemes. Conceptual design
is particularly important for identifying appropriate willingness to pay values. Willingness to pay will determine the
compensation exchange between buyers and sellers, and, more or less, suggests an opportunity cost for ecosystem
services. Therefore, assembling the criteria for the institutional feasibility of local-level PES depends on a synthesis
of these design approaches.
Conceptual design first requires a clear characterization of the PES scheme given the financial scope, geographic
scale, and conservation objective of the existing situation. The financial scope ideally includes an evaluation of
opportunity costs, or tradeoffs, for either using a resource in one way or another, or between short-term and longterm conservation planning. The design should recognize the flow of both environmental and economic benefits.
Components from cost-benefit considerations proposed by the World Conservation Union (IUCN), Center for
Environmental Economics and Policy in Africa (CEEPA), and the World Bank are useful for this feasibility.33 The
geographic scale recognizes whether the scheme intends to incorporate local, regional, or global externalities. For
example, a watershed PES scheme attempts to manage local investment and local resource goals while a climate
Iftikhar, Usman Ali, et al.. ( 2007) op cit
Pagliola, Stefano, von Ritter, Konrad, and Joshua Bishop. Assessing the Economic Value of Ecosystem Valuation..
Environment Department Paper No. 101. IUCN. Oct 2004.; The Center for Environmental Economics and Policy in Africa
(CEEPA) offers an example of this: Mkanta, William, and Mathew Chimtembo. Towards Natural Resource Accounting in
Tanzania: A Study on the contribution of Natural Forests to National Income. CEEPA Discussion Paper Series. September
2002. http://www.ceepa.co.za/dispapers/tanzanian_study.pdf; Experts at the World Bank developed a chart to organize the
impacts, costs, and benefits for a case study in China: Giupponi, C., Goria, A., Markandya, A., Sgobbi, A., "A Pilot Study on
Payment for Ecological and Environmental Services in Lashihai Nature Reserve, China", forthcoming in "Payment for
Ecosystem Services". The paper was presented at the Ninth Biennial Conference of International Society for Ecological
Economics on "Ecological sustainability and human well-being", New Delhi, India. 15-18 December 2006.
32
33
15
stabilization PES scheme attempts to manage global and local investment with global climate goals and local
forestry goals.34 The conservation objective ideally recognizes both qualified and quantified ecosystem service
improvements.
According to Sven Wunder at the Center for International Forestry Research (CIFOR), given this existing situation
a proper PES design must then ensure that the scheme (1) delivers services contingent on payments, (2) is based on
a mutual and voluntary definition or use of the resource, (3) is pro-poor by reducing inequality in the negotiation
phase or by ensuring additional financing to poverty-stricken sellers, and (4) is realistic. These criteria are widely
referenced, though they are not formally recognized, or even consistently demonstrated in PES schemes.35 These
four design criteria explicitly characterize the compensation mechanism – what the payments are, how and to whom
they are made, how they are distributed, and their frequency– and are intended to be indicators for scheme
effectiveness. A good deal of institutional stability is required for these four conditions to exist.
The design of the compensation type will rely on the capacity of individual actors and the political, social, and
private sector context. The Ecosystem Marketplace suggests several general transaction types, three of which are
applicable to a local-level PES scheme in a developing country: (1) direct public payments, (2) direct private
payments, and (3) tax incentives.36 The feasibility for these options rests with the level of government involvement.
Forest Trends also offers a useful chart that incorporates relevant conceptual design components, government
involvement, and institutional support considerations.37 The Katoomba group – a branch of Forest Trends –
alternatively uses specific, national-level, analytical charts to inventory PES in East Africa. These charts are helpful
as well, but are primarily tools for post-implementation description rather than pre-design assessment.38
Conceptual design can also relate to specific actors. The World Bank, ICRAF, and the Tyndall Center among others
are particularly concerned with the impact PES designs have on the poorest of the poor, especially concerning
equity and legitimacy of poor stakeholders.39 Some experts believe that consideration may, or should, be the makeor-break indicator of PES success. Along a different vein, WWF and Forest Trends look to incorporate big business
– important and influential investors - into PES designs. Therefore, conceptual design could include attractive
corporate marketing to entice the private sector to use PES to improve their competitive advantage.40 The feasibility
for institutional PES should consider both of these actors, their inputs, and resulting impacts.
Lastly, conceptual design must ensure additionality – the guarantee that the scheme is producing an ecological or
socioeconomic result that would not have occurred otherwise.41
Wunder (2005) op cit; Huberman, David, and Tobias Leipprand. (2006) op cit
Wunder, Sven. (2005) op cit
36 Conservation Backgrounder. Ecosystem Marketplace. http://www.ecosystemmarketplace.com. Accessed 6/14/2007.
37 Waage, Sissel, Scherr, Sara, Inbar, Mira, and Michael Jenkins. A Guide to Conducting Country-Level Inventories of Current
Ecosystem Service Payments, Markets, and Capacity Building. Forest Trends. July 21, 2005.
38 Mutunga, Clive and Samuel Mwangi. Inventory for Ecosystem Service Payment in Kenya. Katoomba Group in conjunction
with BEA International and Kenya Resource Centre for Indigenous Knowledge. March 2006; Ruhweza, Alice and Moses
Masiga. An Inventory of Initiatives/Activities and Legislation Pertaining to Ecosystem Service Payment Schemes (PES) in
Uganda. Katoomba Group, Forest Trends. Septmeber 2005.
39 Iftikhar, Usman Ali, et al.. ( 2007) op cit; Corbera, Esteve, Kosoy, Nicolás, and Miguel Martínez (October 2006) op cit;
Pagiola, Stefano, Arcenas, Agustin, and Gunars Platais (2005) op cit; Salzman, Jim. “The Promise and Perils of Payments for
Ecosystem Services.” International Journal of Innovation and Sustainable Development. 1: 1,2 2005. ; Corbera, Esteve, Brown,
Katrina and W. Neil Adger. “The Equity and Legitimacy of Markets for Ecosystem Services.” Development and Change. 38(4),
2007.
40 “Why Invest in Ecosystem Services? A Business Brief from Forest Trends”. www.forestrends.org. Accessed 7/12/07. ;
WWF. 2006. Ecosystem Services and Payments for Ecosystem Services: Why Should Businesses Care? WWF Forum to
Promote Ecosystem Services and Payments for Ecosystem Services. Accessed June 2007.
http://assets.panda.org/downloads/business_brochure_1.pdf
41 Smith, Mark, Groot, Dolf de, and Ger Bergkamf. PAY: Establishing Payments for Watershed Services. IUCN. Gland,
Switzerland, 2006.
34
35
16
To summarize, conceptual design for local-level PES should consider:








financial scope: cost-benefit analysis, opportunity costs, benefit flows
geographic scale: local-level, global-to-local-level
conservation objective: qualified and quantified ecosystem service improvements
mechanism design: (1) delivers services contingent on payments, (2) is based on a mutual and voluntary
definition or use of the resource, (3) is pro-poor by reducing inequality in the negotiation phase or by
ensuring additional financing to poverty-stricken sellers, and (4) is realistic
type and delivery of compensation
poorest of the poor
private sector involvement
additionality
The effectiveness, and therefore the feasibility, of local-level PES depends on these factors. The PES Feasibility
Chart uses twelve sections to assess these conceptual criteria. These sections include (1) background information,
(2) site ecosystem service valuation, (3) PES scheme type, (4) PES Stakeholders, (5) PES Mechanism, (6)
Institutional support for PES, (7) Scaling up the PES model, (8) PES Risks, and (9) PES Benefits, (10) Funding, (11)
Awareness, and (12) Implementation. Ultimately, this is a qualitative chart and it cannot answer “yes” or “no” to
whether the Rugezi watershed is a viable PES option. However, it can suggest a relative feasibility for Rugezi
describing the opportunities and pitfalls associated with conceptual design. The list below describes specific
assessment categories and questions included in the chart. The following Section 2.2 provides the content
information to complete the institutional analysis framed in this chart.

Background Assessment







Ecosystem Service Valuation








List of ecosystem services
Is the ecosystem service scarce or declining?
Is the economic activity linked to the ecosystem service relatively important or potentially so?
Are the substitutes for the ecosystem service expensive or unavailable?
Are there multiple suppliers who will compete to provide the service?
Are there new markets for the ecosystem service, such as consumers or companies who use more expensive
alternatives?
Is there a strong link between land use actions and watershed service? How is this demonstrated?
PES scheme type





Project location
Resource conflict
Opportunity costs
Are there existing sustainable development activities in place at the site?
List current PES in this country
Climate change risks
PES scheme type: climate stabilization, hydrologic regulation, or biodiversity benefits?
Motivation for scheme: environmental, pro-poor, other?
Scale: local, regional, national, international
Approach: (area based, public scheme, private scheme, asset-building, use-restricting, product-based)?
Stakeholders

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

Potential stakeholders
List of sellers
List of buyers
List of intermediaries
List of donors
17

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Mechanism

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
Risks

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Does a national regulatory framework support or inhibit PES?
Do landowners have clear, legal rights to sell ecosystem services?
Do community organizations have right to sell/approve/reject deals?
Is there government support for reducing the risk of PES?
Are there any additional laws/regulations/administrative rules required for development of PES?
Are there any institutions that support PES?
What institutions are needed to help support PES?
Are there local support organizations established?
Are local people able to decide how PES funds will be spent?
Scaling up

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
Potential compensation type: individual monetary payments, improvements in public services, local
infrastructural improvements, improved land tenure?
Number of shareholder transactions needed/extent of transaction costs?
Structure of the deal
How do payments flow?
Is/does the scheme: (1) realistic, (2) based on mutual voluntary definition and use of resources, (3)deliver
services conditional on payments, and (4) reduce inequality in the negotiation phase or ensuring additional
financing to poverty-stricken sellers?
Institutional support

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What are the opportunities for private sector involvement for: (1)value-added goods and services, (2) cost
saving, (3)regulation compliance, (4) voluntary PES, (5) selling ES to government agencies
Are there ecosystem service bundling opportunities?
Is there an opportunity to be part of a PES network?
Has a national assessment of potential future sites for ecosystem service deals been conducted?
Has a national assessment of buyers been conducted?
Is there technical assistance available for identifying and establishing PES markets?
What are the indicators for monitoring success?
Has a cost-benefit analysis been done?
What is needed to support PES?
Has a financial and risk analysis been conducted?
Is there potential for

loss of livelihoods and income due to restricted land uses or natural resource extraction?

reduced health and reduced food security resulting from loss of access to natural resource based
foods?

increased land prices resulting from an increased demand for land?

inequitable distribution or resource power if wealthier and more powerful groups have a greater
ability to pay or participate?

loss of cultural heritage due to abandonment of traditional resource use?

loss of employment due to reduced harvesting rights, reduced labor needs, or if excess labor cannot
be redirected to other income generating activities?

loss of control, flexibility, and/or local participation over local development options especially if
contracts specify a narrow range of management alternatives?

skewing of local power structures or power base resulting from an unequal distribution of rewards?

increased competition resulting from markets that lead to the further marginalization of weaker
groups?
How does this schemes influence the poor?: reduces vulnerability, increases access to decision-making
processes, increases access to social and health services, and improves environmental quality in addition to
enhancing material wealth.
Is there cause for concern for “moral hazards” in the type of PES incentive?
Benefits


Are there existing analyses on local benefits from the project?
Is there potential for

increased land/resource tenure or property security resulting from formalization of property rights?
18

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Funding

Awareness

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
improved human and resource health resulting from investments in medical facilities, conservation
and pollution mitigation, and decreases in environmental health risks?
strengthened social institutions resulting from cooperative arrangements that support evolving
markets?
skill development resulting from training such as in natural resource management?
improved recreation and cultural opportunities resulting from environmental conservation and the
protection of cultural heritage and religious sites?
diversified and increased rural income resulting in lessening household vulnerability and risks from
shocks, and increased diversified incomes/goods?
increased productivity resulting in more sustainable farming and forest systems for local
livelihoods?
improved human well-being and improved livelihoods due to environmental enhancement?
improved business and market organization resulting in local communities, fostering and enabling
future growth and economic development?
increased food security from sustainable farming, technology, and knowledge?
increased access to alternative or clean energy?
What type and source of financing is available?
What is the level of awareness of valuation or PES?
Who disseminates information on valuation or PES?
Are there training and education resources available?
Implementation


Are there experts in ecosystem service monitoring and evaluation in country?
What is the timeline for the design, scoping, brokering, negotiating, and implementing phases?
2.2 Rwanda Background Analysis
The local background analysis provides an ecological and social assessment that describes Rugezi watershed
ecology, local livelihoods, and the energy sector. It then looks at PES as a tool specifically for watershed ecosystem
management, PES as a tool in Rwanda, and PES as a tool in Africa. Finally it highlights relevant environmental
policies and projects of other actors.
Frequent government modifications to local political boundaries make it difficult to demarcate watershed
management responsibility. For this reason, this paper will speak of the general watershed area as “Rugezi**.”42
2.2.1 Ecology and Social Assessment
* *Rwanda has recently called this area “Rugeziruhondo” watershed as well, see www.rwandagateway.org. Accessed 2/15/08 ;
The Ramsar Convention officially terms this watershed “Rugezi-Bulera-Ruhondo”. www.wetlands.org Accessed 2/2008.
19
Map 2: 2006 Rwanda Province Map43
Lake
Bulera
Rugezi
Wetland
Tanzania
Lake Ruhondo
Democratic
Republic of Congo
Rwanda holds 8.1 million residents at an average population density of 328 people square kilometers, and a
population growth rate of 3.1%. Approximately, 83% of the population is rural, and 60% of the population lives
below the poverty line. Agriculture accounts for 43% of GDP and 90% of population employment.44 Additionally,
the 1994 genocide significantly disrupted environmental data collection, shifted community and political boundaries,
and hampered community knowledge of environmental issues. In this setting, the Rugezi watershed project area
hosts some of the country’s extreme statistics in terms of poverty, degradation, migration, and malnutrition. Below
are sections outlining the Rugezi watershed community, the Rugezi watershed catchment and ecosystem services,
and the local and national energy situation relating to the Rugezi watershed.
43
44
UNHCR. Rwanda Province Map as of June 2006. Rwanda National Institute of Statistics.
MINITERE (December 2006) op cit
20
Rugezi Catchment:
The Rugezi* wetlands sit in the northern highlands of the Northern Province, an area which straddles the former
provinces of Ruhengeri and Byumba.45 Sixty-six percent of the watershed lies in former Ruhengeri and 33% lies in
former Byumba.46 The total area of the wetlands is 6,735 hectares. Dominant topographical characteristics include
rolling hills, wetland lowlands, and a climate of 16-17 °C. The upland hills typically have slopes between 35-60%,
fragile soils, and extensive erosion. Land cover surrounding the wetlands consists of shrub plantation and rain-fed
herbaceous crop. A small percentage of forest plantation exists, mostly of invasive Eucalyptus, Pinus, or Cypress
species.47 Rwanda observes two rainy seasons per year.
As a highland peat bog (2050 meters), the health of this wetland significantly determines the rate, quantity, and
quality of gravitational water flows that supply the Mukungwa river and in turn, supply Lake Bulera* and Lake
Ruhondo resting 200 meters below. Lake Bulera and Ruhondo are Rwanda’s two deepest lakes and play a principle
role in national hydropower production. Lake Bulera occupies 5280 hectares, with a maximum depth of 174 meters,
and Lake Ruhondo occupies 2610 hectares, with a maximum depth of 68 meters. In the last decade water levels in
Lake Bulera dropped 4 meters and levels in Lake Ruhondo dropped 1 meter.48 Experts cite overall precipitation
changes and decades of anthropogenic stress in Rugezi as causes for these reductions.49
Map 3: Rugezi Watershed50
Cited in (data from 1981-1991): Republique Rwandaise. Ministere de L’agriculture, De L’elevage et Des Forets, Direction du
Genie Rural et de la Conservation des Sols. Rapport Global Definitif phase 1 Annexe 2 Etude Hydrologique. Kigali, Rwanda.
August 2002.
46 UNDP/UNEP/MINITERE. Economic Analysis of Natural Resource Management in Rwanda. 2007.
47 Musahara, Herman. Personal Communication with maps derived from the National Institute of Statistics in 2004. Kigali,
Rwanda. September 14, 2007.
* The spelling of Lake Bulera is uncertain; HELPAGE (2004) and EA II (2007)use “Bulera”, all maps use “Burera”
48 REMA. Economic Analysis of Natural Resource Management in Rwanda. With UNDP and UNEP. Republic of Rwanda.
Kigali, Rwanda. December 2006.
49 Hategekimana, Sylvère and Emmanuel Twarabamenye. The impact of wetlands degradation on water resources management
in Rwanda: the case of Rugezi Marsh. 5th International Symposium on Environmental Hydrology. Cairo, Egypt. September
2007. http://www.irst.ac.rw/IMG/pdf/Paper_for_V_International_Symposium_on_En_Hydrology1.pdf. Accessed 3/2008
50 Adopted from: Republic of Rwanda. Mission D’Etude de la Conservation et de la Gestion Intégrée du Marais de Rugezi et de
son Bassin Versant. MINALOC and HELPAGE. Kigali, Rwanda. May 2004.
45
21
Lake Bulera
Direction of water flow
“Kamiranzovu
”
RUGEZI
WETLAND
Ntaruka hydro-station
“Hondo”
Lake Ruhondo
Mukungwa
hydro-station
“Rusumo”
(Hategekimana, and
Twarabamenye 2007)
“Rusumo” (HELPAGE 2004)
In general, the northern part of Rugezi is ‘severely degraded’, whereas the southern sections are still functional.51
This is shown in Map 4. Rugezi’s principle ecological issue is a declining water storage capacity caused by
anthropogenic uses. Agriculture, drainage projects, poor land management practices, and population density greatly
contribute to erosion, vegetation changes, and soil changes. These factors directly affect turbidity of water, water
flow rates, vegetation filtration potential, soil absorption potential, and weather buffering capacity of the wetland.
Downstream, the outflow of the affected wetland carries high sediment loads and demonstrates an altered flow
pattern. Intelligent restoration of this area would involve several phases. Foremost, minimizing human impact is
key. Reducing the amount of cultivation and habitation on the wetland is a first consideration. Modifying land
management practices of existing farmers and dwellers is a second and imperative consideration. An efficient
restoration plan would target areas for both of these considerations in order to minimize cost and maximize
ecological impact. In Rugezi, these targets will likely focus on the northern Kamiranzovu region where degradation
51
Hategekimana, Sylvère and Emmanuel Twarabamenye. (2007) op cit
22
and human encroachment is highest, and or on the Rusumo region which is the source of outflow52 These targets
will play a large role in the PES scheme design; farmers in these regions would be the most likely “sellers.”
Design of a restoration plan highly depends on available hydrological, vegetative, and soil data. Without this
information it will be impossible to set baselines, targets, and efficient goals. On the other hand, some areas of the
wetland may already suffer permanent degradation. Therefore, the level of potential restoration success is uncertain
at this point in the scoping analysis.
Map 4: Degradation in Rugezi Wetland53
Data sources differ on principle characteristics of Rugezi. Firstly, conflicting nomenclature for the two principle
valleys and wetland subsections makes it difficult to understand hydrologic properties and flow directions. Input
and output flow sources are important for identifying and prioritizing restoration targets as well as identifying
downstream hydro-potential. Overall, Rugezi lacks formal, scientific data collection and a thorough hydrological
52
53
Republic of Rwanda. (May 2004) op cit
Hategekimana, Sylvère and Emmanuel Twarabamenye. (2007) op cit
23
analysis is required to assess the ecological feasibility of a conservation funding scheme. For informational purposes
available nomenclature and measurement details are listed in Table 2 and described on Map 3.
Table 2: Compilation of Available Hydrologic Data for Rugezi Water Flows
Hydrologic Data Available for Rugezi Water Flows
Rugezi ecology according to HELPAGE (2004):
The shorter, northern valley of Kamiranzovu is 9km and 2.5km at maximum width and the second, principal
valley stretches 26km and is 3 km at maximum width to the southeast. The principal valley of Rugezi splits
into two branches – to the north east the branch is called ‘Hondo’ and to the south west it is called ‘Rusumo’.
Rusumo contributes approximately 25% of the flow to Kamiranzovu.54 Flow from the southwest Rugezi
valley –Rusumo- to Lake Bulera is 2m3/s.55
Rugezi ecology according to scientists at Rwanda’s Institute of Scientific and Technological Research and the National University
of Rwanda (2006):
‘Rusumo’ refers to the northern part of the central valley of Rugezi and also names the principal outflow
stream of the wetland. Seasonal precipitation determines flow rates in Rusumo which vary between 0.43 (dry
season) and 5.72 m/s2 (rainy season). Rusumo’s outflow determines 50% of the inflow to Lake Bulera.56
Republic of Rwanda. Mission D’Etude de la Conservation et de la Gestion Integree du Marais de Rugezi et de son Bassin
Versant. MINALOC and HELPAGE. Kigali, Rwanda. May 2004.
55 CITT/KIST. Energy Baseline. UNEP-GEF Pilot Project on Reducing the Vulnerability of the Energy Sector to the Impacts
of Climate Change in Rwanda. Project Report. Kigali, Rwanda. August 26, 2006.
56 Hategekimana, Sylvère and Emmanuel Twarabamenye. (2007) op cit
54
24
Map 4: Rugezi Wetlands Cultivation and Natural Vegetation57
High cultivation
areas
High natural
vegetation
areas
57
Republic of Rwanda. (May 2004) op cit
25
The total flows from the Rugezi wetlands have international importance for the Nile River Basin. The Nile River
Basin claims 67% of Rwanda’s national territory and drains 90% if its national waters through the Nyabarongo and
Akagera Rivers. Water flows out of Rwanda
into Lake Victoria and thus contributes
roughly 8-10% to the White Nile waters. In
order to plan for continued joint resource use,
Rwanda participates in regional watershed
management and belongs to the New
Partnership for African Development
(NEPAD), the African Minister’s Council on
Water (AMCOW), the Nile Basin Initiative
(NBI), and the East African Community
(EAC).58 The Rugezi wetlands became part of
the Ramsar convention in 2001, officially
designating it as a wetland of international
importance. Additionally, degradation of this
catchment threatens 60% of the world
population of Bradypterus graueri, a warbler
species that lives in Rugezi. Regional actors
are, therefore, likely invested in the storage
capacity of Rugezi as well.
Map 5: The Nile River Basin59
Over the past century, various economic
activities have damaged the wetland
ecosystem. Up until 2001 Rwanda’s Ministry
10%
of Agriculture supported wetland drainage for
socioeconomic purposes. Over the last decade,
several international organizations tried and
Rwanda 
failed to re-engineer wetland canals and
improve agricultural development of the
marsh. General declines in water flows also
inspired the hydroelectric utility to intervene in
environmental engineering. In efforts to
improve flow to the lakes and increase flows
to the hydroelectric turbines, the electric utility drained large sections of the wetland, only to see even greater
reductions in the water table as result.60 As result of these poor policies and planning measures, Rugezi now suffers
irresolvable, permanent ecological and socioeconomic problems. Ecologically, Rugezi has abnormally high velocity,
runoff, and storm peaks that compromise flow. Recent drainage also permitted greater community access to the
wetland for agriculture, leading to increases in cultivation, and a wetland-dependent agricultural economy.
In general, Rugezi watershed performance is due to (1) poor design of water control works, (2) unclear property
rights and access to wetlands, and (3) inadequate technical skills in rural engineering. Subsequent watershed
degradation has led to (1) reduced agricultural output of downstream farmers from low water quantity or flooded
crops, (2) pollution and degradation of drinking water, (3) landslides and floods causing property damage and
MINITERE. Politique Sectorielle De L’eau et de L’Assainissement. Republic of Rwanda. Kigali, Rwanda. 2004.
Obtained from Google Maps under “Nile River Basin” search. Accessed 2/23/08.
60 Hategekimana, Sylvère and Emmanuel Twarabamenye. (2007) op cit
58
59
26
deaths, and (4) degradation of water quality and quantity. It is likely that conversion of some wetlands has resulted
in damages that outweigh benefits of agricultural output.61
Rugezi Community Assessment
The Rugezi watershed straddles the Musanze, Burera, and Byumba* districts in the Northern Province of Rwanda.
These two provinces host the highest population density of all Rwanda’s rural areas. Density statistics vary between
415 – 600 people per square kilometer in this area,62 with a total population estimated at 120,000 people.63 The
upstream watershed population in Rugezi wetland inhabits the southern part of the Burera district and a small part
of the western Byumba district. The downstream watershed population –surrounding the lakes- inhabits both the
Musanze and northern Burera districts. The upstream population has just as much responsibility for wetland and
lake management as the downstream population. However, a significant number of rural people do not technically
have rights to their land, and this affects the responsibility a household feels towards land upkeep. Rural land
tenders vary between ancestral possession where land is passed through family lines, and a more traditional,
commercial deed possession.64
The Rugezi population is entirely rural; 70% of the population inhabits or cultivates a parcel next to or in the Rugezi
wetland itself.65 Therefore community welfare depends on wetland conditions and rainfall. A recent study suggests
the majority of inhabitants manage 0.25 hectares or less, and depend on the wetland valley even if their plot is some
distance away. Since the Rugezi watershed sits in the highlands, steep slopes are also an issue. Agriculture is
practiced on slopes up to 80% grade. The local population practices subsistence farming, growing 2-3 crops at a
time, on an average of 0.75 hectares.66 Sustainable farming practices such as crop-rotation, fallow fields, and agroforestry are not well followed, which is partially due to the small size of land plots. Main crops in order of amount
produced are beans, sorghum, sweet potatoes, maize, and vegetables. Livestock in order of farmer preference are
cows, pigs, goats, sheep, poultry, bees, and rabbits.
Map 6: 2008 Rugezi Districts - Musanze, Burera, and Byumba67
Republic of Rwanda (May 2004) op cit
Republic of Rwanda. (May 2004) op cit ; MINITERE (December 2006) op cit
63 UNDP/UNEP/MINITERE. Economic Analysis of Natural Resource Management in Rwanda. 2007.
64 MINITERE. National Land Policy. Republic of Rwanda. Kigali, Rwanda. February 2004.; Republic of Rwanda. ‘Organic Law
No. 08/2005 of 14/7/2005 Determining the Use and management of Land in Rwanda’. Kigali, Rwanda. July 2005.; Musahara,
Herman. Improving Land Tenure Security for the Rural Poor: Rwanda- Country case study. FAO Support for the
Empowerment of the Poor Working Paper #7. Workshop for Sub-Saharan Africa. National University of Rwanda. 2006.
65 Republic of Rwanda. (May 2004) op cit
66Republic of Rwanda, ‘Organic Law No. 08/2005 of 14/7/2005 Determining the Use and management of Land in Rwanda’.
Kigali, Rwanda. July 2005.
67 CITT/KIST. Community Vulnerability Baseline. UNEP-GEF Pilot Project on Reducing the Vulnerability of the Energy
Sector to the Impacts of Climate Change in Rwanda. Project Report. Kigali, Rwanda. August 26, 2006.
61
62
27
Byumba
Alternative income activities for these districts have been minimized by environmental problems. A reduced water
table has nearly eliminated boat transportation and fishing from the rural economy in all but the southern tip of the
wetland. In effect, access to local markets has dropped and access to markets in Tanzania and Uganda has become
impossible. Crop agriculture, herding, fishing, artisan crafts, and honey-making have significantly declined due to
wetland degradation.68 Comparative prices for these activities in 2004 are listed in Appendix 2. Local collectives
form around these employment activities in groups of 10-33 individuals. A non-inclusive list of these collectives is
described in Appendix 3.
68
UNDP/UNEP/MINITERE. (2007) op cit
28
In Rugezi, 25% of children between 6-17 years of age have never been to school and 50% of the population over
age 15 knows how to read and write.
Women tend to have less education, but
are involved more than men in
Population
agricultural production (52% to 38%,
1998). Main diseases include Malaria,
density in Rugezi
diarrhea, intestinal parasites, Tuberculosis,
wetland
dental infections and HIV-AIDS.
According to the MDGs, Byumba has
one of the highest district rates of
malnutrition (47%). Minimal to nonexistent water piping infrastructure
supports the watershed communities.
Households typically spend at least ½
hour per day collecting water as well as
considerable time transporting it. Per
capita water consumption in rural areas is
approximately 8.15 litres, far below the 20
litres/day national standard.69
Map 7: Population Density in
Rugezi Wetland70
Population growth continues to change
the agriculture system and settlement.
This includes the decrease in land holding
size, the increased fragmentation of
holdings, the cultivation of bottom lands
and steep slopes previously used as
pasture and woodlot, and the decrease or
omission of fallow periods. A 1997
estimate of annual soil erosion suggests it is an economic cost of 2% national GDP.71 Invasive Eucalyptus species
continue to infiltrate the ecosystem, causing erosion, and a cycle of degradation for the local people who have
grown dependent on this fast-growing source of fuel-wood.72
Lack of land, lack of fertilizer, need for improved seed, and few pesticides are listed as challenges to agriculture
production. Few families invest, at least 80% of income is spent on food, and many would benefit from access to
micro-credit programs.73 Rugezi weekly per capita income was less than 1181 Rwandan Francs according to
Rwanda’s ministry of economic planning in 2002.62 Agriculture contributes 43% of the Rwanda’s GDP and
comprises 72% of exports. A recent economic analysis suggests wetland management can bring significant
contributions to economic growth; currently 15% of expected GDP growth in agriculture is due to wetlands.74
MINITERE. Sectoral Policy on Water and Sanitation. Republic of Rwanda. Kigali, Rwanda. October 2004.
Republic of Rwanda. ( May 2004) op cit
71 UNDP/UNEP/MINITERE. (2007) op cit
72 Huggins, Chris, and Herman Musahara. Land Reform, Governance and the Environment: The Case of Rwanda (Draft).
Paper Prepared for 4th Regional Session of the Global Biodiversity Forum for Africa, White Sands Hotel and Resort, Dar es
Salaam, Tanzania. African Centre for Technology Studies. Kigali, Rwanda. June 9-11 2004.
73 CITT/KIST. Community Vulnerability Baseline (2006) op cit
74 UNDP/UNEP/MINITERE. ( 2007) op cit
69
70
29
Rural Rugezi farmers feel pressures to produce agricultural yields yet environmental conditions, population
densities, and low educational and technology levels limit productivity. On the other hand, modifications to this
lifestyle and livelihood practices would involve a fair amount of household risk. In order to be “sellers” in a PES
scheme the farmers’ risks associated with modifying income streams must be extremely low. Therefore, the
compensation provided to farmers in the scheme would need to clearly outweigh the opportunity costs of changing
professions in the long-term.
Figure 1: Over-cultivation. Ruhurura, Byumba district. Northern Province, Rwanda. September, 2007.
Rwanda’s Energy Situation:
In the last few years water shortages caused an energy crisis. This has increased the number of concerned
stakeholders involved in Rugezi’s watershed management. Energy demand in Rwanda is approximately 900
megawatt-hours of electricity per day (2004).75 Hydroelectricity supplies 97% of this demand, with the remaining
3% coming from fossil fuels. Various government ministries as well as the electric utility company are now critically
aware of wetland mis-management and climate change risks.
75
REMA. (December 2006) op cit
30
The Rugezi watershed currently supplies Rwanda with 90% of its total electricity through two main hydropower
stations, the Ntaruka and Mukungwa stations located in the Rugezi watershed.76 Current stations also operate at
only 30-50% efficiency for various reasons.77 Several other, micro-hydropower stations operate in the Northern
Province, but their exact location, water sources, and energy contributions have not been formally identified.
Available details about these stations are listed below in Table 3.
Prioritizing hydropower for energy investment depends on the future of Rwanda’s energy grid mix. A review of
available data suggests hydropower is the most logical and capable energy source in the next 5-10 years. However,
thermal, solar, and methane power are future potential options for additional sources of energy. Current estimates
suggest thermal power has the potential for 170-340 megawatts. Cloudy weather prevents solar power from being
more than a minimal source but it is currently used to electrify public buildings, health centers, schools, and
governmental buildings. In the near future, with proper extraction equipment, Rwanda expects Lake Kivu to supply
500-700 megawatts worth of methane energy. In the meantime, Rwanda’s 2004 national energy policy strives to
conserve energy by reducing fuel-wood consumption by 15% in 2007, charcoal consumption by 20% in 2007, and
increase the number of urban consumers using improved stoves to 20% by 2010.78
For this PES case study, it is important to note there are major differences between urban and rural uses of energy,
and therefore differences in the distributional outcomes of an increased water table. Electricity only comprises 1%
of total energy consumption, largely in the rural areas. The majority, 94-97%, of the population use wood, shrubs,
dung, and detritus biomass for their energy needs.79The communities of the Rugezi watershed have extremely
limited electricity access and use firewood or biomass and kerosene for 100% of their needs. The required
infrastructure for this service will take at least a decade to achieve. In the short term, any improvement in
hydropower infrastructure or wetland management will benefit the urban population, mostly in Kigali who uses
60% of generated electricity.80 Because of this, urban electricity consumers are important stakeholders in this
analysis.81
Table 3: Rwanda’s Hydropower Sources
Available Data on Principle Hydropower Stations of Rwanda82
Ntaruka Station: Lake Bulera feeds the Ntaruka station which stands between Lake Bulera and Lake
Ruhondo. Since 1976 it has used three turbines for a total energy production capacity of 11.25 MW.
However, climate changes, ecosystem degradation, and human resource challenges limit production at only 1
MW. The flow rate from Lake Bulera is above 12 m3/s when all turbines are running at full capacity, which
exceeds the flow rate of water from Rugezi to Lake Bulera.
Mukungwa Station: The Mukungwa station operates at the south-western point of Lake Ruhondo from
where it receives its water flow. Although it has had the capacity to produce 12.5 MW since 1982, it produces
only 3 MW due to climate changes, ecosystem degradation, and human resource challenges. The annual
average flow rate for this station at full capacity is 5.6 m3/s.
Micro-hydropower Stations: Rwanda’s ministry of infrastructure identifies 160 potential sites for microhydropower with an expected capacity range of 20-600 kW. The Kigali Institute of Science and Technology
Uwizeye, Jean Claude and Anne Hammill. (Februrary 2007) op cit.; CITT/KIST. Energy Baseline. UNEP-GEF Pilot Project
on Reducing the Vulnerability of the Energy Sector to the Impacts of Climate Change in Rwanda. Project Report. Kigali,
Rwanda. August 26, 2006.
77 REMA. (December 2006) op cit.; UNDP/UNEP/MINITERE. ( 2007) op cit
78 MINIFRA. Energy Policy for Rwanda. Final Draft. Republic of Rwanda. October 2004.; REMA. ( December 2006) op cit
79 MINITERE. Rwanda National Environmental Policy. Working Draft. Republic of Rwanda. Kigali, Rwanda. 2003.
80 UNDP/UNEP/MINITERE. (2007) op cit
81 CITT/KIST Energy Baseline (2006) op cit; MINIFRA (October 2004) op cit
82 CITT/KIST Energy Baseline (2006) op cit; MINIFRA (October 2004) op cit
76
31
(KIST) identifies up to 1900 kWh additional hydro-potential from micro-hydropower stations currently under
construction.83
The recent crisis forced Rwanda to rely on supplemental diesel imports, leading to costs of up to $65,000 U.S. per
day for diesel generation, though only 2% of the Rwanda population uses electricity.84 Frequent power shortages
pushed some customers and businesses to buy their own generators. National electricity prices have tripled from 18
Rwandan Francs per Killowatt-hour to 42 Rwandan Francs per Killowatt-hour since 1997. In order to make
services more affordable, Electrogaz, the national para-statal energy utility company, will need to secure more
customers. However, communication and coordination between Electrogaz and government ministries is minimal
and has been cited as a major gap in policy progress for the management of the Rugezi watershed.85 On the positive
side, conservation behaviour is now widely advertised, especially for water saving strategies and electricity efficient
lighting.86 These factors play an important part in the utility’s involvement as a PES “buyer.”
Concern for declining water tables led Electrogaz to perform large-scale drainage project in the Rugezi wetland in
the last decade. The intention to increase flow quantity and rates clearly backfired – Rugezi now suffers longer term
effects, such as vegetation and soil changes. In addition to this event, Kigali’s Center for Innovations and
Technology Transfer (CITT) lists the following factors as highly responsible for reductions in Rugezi’s hydropotential87:






Increases in energy demand, largely in urban areas
Reduced flow of tributaries to and water levels of Lake Bulera and Lake Ruhondo
Insufficient rainfall and drought
Poor land practices
Inadequate servicing and maintenance of stations, and the age of stations
Increases in agro-processing (principally coffee, tea, wheat, pyrethrum, maize)
The principle ecological issue – as much as data suggests – is that these factors have significantly limited the storage
capacity of the wetland. In turn, this affects groundwater recharge rates, the filtrations capacity, and flow
characteristics. In response, the Rwandan government is strongly considering temporarily ceasing hydropower
production at Ntaruka and Mukungwa stations for up to 3 years in order to reinstate normal water levels. This is
realistical if other micro-hydropower operations, solar, thermal, or methane energy can relieve national energy
demand.
Alternatively, the government can invest in hydropower management. Immediate priorities for the hydropower
sector are (1) reinstating adequate water flow levels, (2) enhancing station production efficiency, and (3) monitoring
rainfall patterns.88 The energy sector can also expect additional stress from climate change impacts. Expected
reductions in rainfall and increased rain intensity will further stress the water table, wetland functions, and alter flow
rates. The utility company and the ministries of the Rwandan government have a very clear interest in using
KIST’s list of hydropower and micro-hydropower stations currently under construction are listed in Appendix 4. Geographic
locations are not given. Mutabazi, Richard. Personal Communication. KIST. Kigali, Rwanda. November 1 2007.
84 Poverty Environment Initiative. Guidelines for Mainstreaming Environment in the Economic Development and Poverty
Reduction Strategy. REMA. Kigali, Rwanda. 2007.
85 Disi, Denis. Personal Communication. Electrogaz. Kigali, Rwanda. September 11, 2007.; Musahara, Herman. Personal
Communication. Kigali, Rwanda. September 14, 2007.; Kabutura, Michael. Personal Communication. Center for Resource
Analysis. Kigali, Rwanda. September 13, 2007.
86 Electrogaz website: http://www.electrogaz.co.rw/. Rwanda’s national para-statl hydroelectric utility company. Accessed
2/25/2008.
87 Uwizeye, Jean Claude and Anne Hammill. (Februrary 2007) op cit
88 CITT/KIST. Energy Baseline. (2006) op cit
83
32
environmental management to offset the current crisis. Economic growth will certainly depend on the potential
development of both the electric utility and water infrastructure. Right now, these two objectives depend on
wetland management in Rugezi.
2.2.2 Watershed PES and the African Context
PES schemes differ by four principle objectives: climate stabilization, biodiversity protection, aesthetic beauty, and
hydrologic regulation.89 The Rugezi watershed case study assesses local-level ecosystem services; therefore this
paper only analyzes the potential for a PES scheme to support hydrologic regulation. The first part of this section
highlights components of watershed PES that differ from a standard PES scheme. The second part of this section
outlines the specific ecosystem services attributed to the Rugezi watershed. Despite the prolonged overuse of the
Rugezi area, the United Nations Environmental Program only recently collaborated with Rwanda’s environmental
ministry to value its wetland ecosystem services. On the other hand, although the PES concept only emerged a
decade ago in Africa, a few recent developments suggest Rwanda’s interest in it may be timely. Development of
regional PES networks and major interest by large agencies, such as the World Agroforestry Centre, provide context
for scheme development in Rwanda. The final portion of this section reports on current PES work in Eastern
Africa.
Watershed Payments for Ecosystem Services
Typically, the distribution of government revenues and not the value of the ecosystem services determine
investment for watershed management.90 Watershed PES reverses this perspective; the value of the services
determines the investment and direction of environmental management. Clearly, under this scenario, valuation will
differ by watershed and this determines institutional design.91 This aligns well with Africa’s Vision 2025 project
which envisions “institutional arrangements” and “demand-responsive approaches” to be the future drivers of water
resource development.92 Forest Trends, a leader in research on watershed PES emphasizes that innovation “is the
name of the game” in watershed management. As testament to this motto, there are three popular methods for
financing watershed management. These differ principally by level of government involvement93:



self-organized private deals : These occur when there is individual private sector incentive to invest and
there is little to no government involvement in watershed management. These deals are usually managed by
an intermediary NGO.
trading schemes : These occur when governments set standards or caps regarding water quality or
emissions pollution.
public payment schemes : These occur when the public sector or government pays for the ecosystem
service of a local watershed through taxes, bond issues or user fees.
Decisions over scheme design also relate to the size of the watershed. Leaders in the watershed PES field note that
smaller watersheds tend to benefit more from private deals, larger ones from public initiated systems.94 By
population levels and international impact potential, Rugezi is a large watershed. But targeting sections of the
Kamiranzovu region can narrow PES scheme management.
Wunder (2006) op cit
* The term “PES for hydrologic regulation” is interchangeable with “watershed PES”.
90 Johnson, Nels, White, Andy, and Danièle Perrot-Maître. Developing Markets for Water Services from Forests: Issues and
Lessons for Innovators. A collaboration of Forest Trends, World Resources Institute, and the Katoomba Group. 2001.
91 Postel, Sandra L. and Barton H. Thompson, Jr. Watershed protection: Capturaing the benefits of nature’s water supply
services. Natural Resources Forum. 29 (2005).
92 UN Water/Africa Division. Africa Water Vision for 2025: Equitable and Sustainable Use of Water for Socioeconomic
Development. 2004.
93 Johnson, Nels, White, Andy, and Danièle Perrot-Maître. (2001) op cit
94 Johnson, Nels, White, Andy, and Danièle Perrot-Maître. (2001) op cit
89
33
Competing Demands for Rugezi Watershed Ecosystem Services
A value conflict exists for the Rugezi wetland. The wetland currently has two uses: it is a community resource and a
source for national energy development. Upstream wetland inhabitants desire improved water quality and quantity.
Downstream utility stations and national electricity consumers want increased water flows from Rugezi. Both
objectives would benefit from proper, natural, wetland management. However, upstream users have no income or
livelihood alternatives than to use the wetland for agricultural or handcraft purposes. The utility also sees no other
option than to support agricultural prohibition and immediate, extensive rehabilitation. The immediate needs of the
local community are incongruous to the immediate national energy needs.
In the long term, the Rwandan government wants stable energy infrastructure and an intact wetland. Additionally,
Rwanda wants to increase its national tourism sector from $26 million U.S. to $100 million U.S. by 2010 – with a
large focus on ecotourism. Improving access and marketing of rural areas such as Rugezi can play an important part
in this objective, especially near Rusumo falls which can be accessed on the way to Volcano National Park.95
However, current policy structures, funding shortages, and meagre technology are not able to encourage behaviours
that could achieve either wetland objective. The Rugezi watershed continues to lose ecosystem services while
reduced water flows from the Rugezi headwaters, sedimentation build-up around the hydropower facilities, and
changes in rainfall patterns all increase the demand for Rugezi’s ecosystem services.
There is good, fundamental reason for this conflict. The Rugezi watershed is a rich ecosystem and it supports many
services. Table 4 below outlines Rugezi’s current ecosystem services according to the Millennium Ecosystem
Assessment categories – provisioning, regulating, supporting, cultural services. In some ecosystems service studies,
data on tradeoffs for these different service uses exist. Rwanda currently does not have such an analyses but a
collaboration of United Nations Development Program, United Nations Environmental Program, Rwanda’s
environmental ministry, and local economic consultants recently started producing a literature foundation for this
sort of study.96
CITT/KIST. Community Vulnerability Baseline. (2006) op cit; UNDP/UNEP/MINITERE. ( 2007) op cit
See: Poverty and Environment Initiative. Project. Pilot Integrated Ecosystem Assessment of Bugesera.
UNEP/UNDP/GOR. Kigali, Rwanda. January 2007.
95
96
34
Table 4: Rugezi Watershed Ecosystem services97
Ecosystem Services of the Rugezi Wetlands




Provisioning:
Medicinal plants
Building materials
Hunting/fishing
Biomass for fuel
Water for downstream hydropower facilities
Agricultural production: food crops, tea
Regulating:
Stabilizing river banks and lowering the potential of landslides
Water quantity-related:

Flood prevention, control and mitigation

Regulating runoff /sediment control

Supporting water storage in the soil

Facilitating groundwater recharge/water supply
Water quality-related:

Withholding sediments

Reducing erosion

Improving water infiltration

improving the quality of surface water and groundwater/waste processing
Supporting:
Biodiversity

Fish spawning grounds

Habitat for migratory birds

Possesses 60% of the World’s population of Bradypterus graueri
Cultural:
Recreation
Aesthetic
Spiritual benefits
In Table 4 the regulating, supporting, and cultural services are the non-marketed ecosystem services which would
find value through a PES scheme.
Watershed Payments for Ecosystem Services in Africa
PES is a tool for watershed management around the globe. Schemes exist most extensively in Latin America and, in
the past 10 years, have gained momentum in South East Asia and Eastern Africa. In East and South Africa the
Katoomba Group and ICRAF are largely responsible for research and operation of PES. However, neither operates
in Rwanda.
Since the late 1990s, the Katoomba group – an international working group that also runs the Ecosystem
Marketplace - has built an East African PES network. Consequently, they lead in the understanding of ecosystem
services and implementation of payments for ecosystem services at the local level in this region. Katoomba
97
Adapted from: UNDP/UNEP/MINITERE. ( 2007).; REMA. (December 2006) op cit
35
monitors the implementation of multi-resource, local-level PES schemes in Tanzania, Kenya, Uganda, Madagascar,
and South Africa. These programs exist in various states, but are mostly just getting off the ground. Operational
barriers largely rest on the failure of money to actually change hands between buyers and sellers.98 Trust and
perception of risk are major causes of this. Despite these setbacks, the establishment of a PES network that includes
Malawi, Ethiopia, Namibia, Zimbabwe, Botswana, Lesotho, Swaziland and Zambia is underway.99 The most
successful and direct projects in these areas involve ecotourism, where communities find very direct benefits from
resource management. However, despite the energy and investment available to develop PES in Africa, PES has still
been described by Katoomba journalists as “slow and complicated.”100 Recent experiments with bundled forestry
and carbon PES in Tanzania and Uganda may be enough to turn the tide on this.101
PRESA (Pro-poor Rewards for Environmental Services in Africa) is a new information sharing network coming
into official form in January 2008 through ICRAF. ICRAF intends to operate core and associate PES sites across
Kenya, Tanzania, Uganda, and Guinea largely based on watershed management.102
Though Rwanda is not a country currently considered103 for exploration by these networks, its geographic proximity
to Tanzania, Uganda, and Kenya invite the possibility for shared-learning and adaptation. Regional PES networks
also facilitate support for integrated and trans-boundary schemes which are a real issue for Eastern African
countries who share major resources and water basins.
2.2.3 Rwanda Environmental Policy Context
In the environmental policy arena, Rwanda has a few initiatives and a few gaps. A few recent developments
characterize Rwanda’s environmental regulation framework: (1) the establishment of an implementing agency
underneath the environmental ministry in 2005 (Rwanda Environmental Management Authority), (2)
decentralization of environmental responsibility, and (3) the establishment of a National Fund for the
Environment.104 These efforts should increase Rwanda’s ability to handle environmental challenges.
However, continuous modification to the environmental policy structure in the last decade hampers Rwanda’s
ability to monitor, implement, and manage environmental conditions and projects. In particular, communication
between the relevant ministries – environment, infrastructure, economic planning and finance, agriculture, and
tourism - is inefficient or non-existent. As result, involvement of the private sector in environmental management is
extremely limited. Two examples of this are particularly relevant for understanding PES design involving climate
change. First, although the environmental implementing agency now requires environmental impact assessments the
private sector is still not responsible for best management practices105 and suffers no penalties. Second, the Ministry
of infrastructure rather than the ministry of environment monitors climate change issues. As result, feedback
mechanisms for climate concerns are weak. Communication barriers also limit enforcement capacity, which is a
particular concern for the parties involved in the Rugezi watershed problem.
Alice Ruhweza, director of Katoomba East Africa, explains that Katoomba does not currently have partners or members on
the ground in Rwanda, and this limits its inclusion in the network. Personal Communication. July 2007.
99 See http://www.katoombagroup.org/africa/pes.htm. Accessed August 23, 2007.
100 Austin, Jennifer. March 15, 2006. Payments for Ecosystem Services in Rural Africa. Katoomba Group, Ecosystem
Marketplace, Online Community Forum. http://www.ecosystemmarketplace.com/pages/newsletter/cf_africa_07.html
Accessed August 1, 2007.
101 Katoomba Group Newsletter. http://www.katoombagroup.org/documents/newsletters/Vol2_No1.html. Accessed.
2/24/2008.
102 Yatich, Thomas. Personal Communication. ICRAF. Nairobi, Kenya. September 6, 2007.
103 Ruhweza (July 2007) op cit
104 Republic of Rwanda, ‘Organic Law No. 04/2005 of 8/04/2005 Determining the Modalities of Protection, Conservation and
Promotion of Environment in Rwanda. May 2005. Kigali, Rwanda. 2005
105 Best Management Practices (BMPs) : commonly referred to as effective programs, standards, methods, or technologies, for
preventing, reducing, or removes pollution.
98
36
Funding is another issue. Financially, the environmental sectors (environment, agriculture, energy, and water and
sanitation) roughly receive 2.5% of GDP, of which an average of 50% is realized.106 The Rwandan government
created the environmental implementing agency in 2005 to expand funding and infrastructure to enhance sufficient
environmental policy.107 But cost-benefit analyses for the environment are not formal procedure.108 Recent
decentralization offers a new community development fund structure which would reallocate 5% of their budget to
environmental management activities.109 The new National Fund for the Environment is another tool for
conservation and pollution prevention. Both projects are still struggling to be effective. The environmental ministry
would likely support PES as a means to enhance infrastructure and secure funding for wetland projects.110 PES also
may instill improved resource utilization attitudes, stimulate productivity, and have the ability to engage in economic
market reforms.
Current resource policies also present noteworthy boundaries to the Rugezi watershed issue. Table 4 below lists
additional, specific policy concerns relevant to PES design in the Rugezi watershed. The table compares the national
water policy, land policy, land law, agriculture policy, and energy policy, paying particular attention to the regulatory
structures, focal issues in the coming years, and gaps in the policies relevant to wetland management.
Overall lack of procedures, standards, and enforcement mechanisms could be both an opportunity and a limitation
for a PES scheme design. With governmental support, PES could assist Rwanda to achieve conservation objectives
and create incentives for policy transition. However, without proper government support, or under a poor design, a
PES scheme might confuse these objectives. Specific land and agricultural policy objectives suggest additional PES
design concerns.
Land tenure is a huge issue and often limiting factor to implementation of PES schemes. Significant numbers of
landless persons farm scattered plots in the Rugezi watershed due to a lack of registration systems. Continued
existence of customary and written land law poses challenges for development. Existence of numerous small
landholdings will make transaction costs high for PES schemes. Use of local Land Bureaus will be essential for a
PES scheme to consolidate costs and transactions. However, the transfer of land tenure rights could be used as
compensation in the PES scheme. At the local level ensuring that the poor are included in national land policy
requires investment in farm micro-credit, supporting cooperatives for supply and marketing, and creation of
extension services for implementation of land policy.111
Associations and cooperatives could play a primary stakeholder role in the organization of transactions and
collection of fees in a PES funding scheme. Creating supporting infrastructure for an agriculture system would
create a needed off-farm employment and alternative incomes. Indirect benefits of PES have been seen to enhance
this sort of institutionalization. A mandate of 50 meter wetland buffer already exists, but is poorly monitored, and
weakly enforced. Lack of a policy infrastructure opens the opportunity for PES to serve as an incentive for better
wetland environmental management. However, a watershed PES scheme may be inhibited by the lack of
organization and institutional monitoring mechanisms.
Table 4: Specific Policy Measures Which Relate to Watershed PES in Rugezi, Rwanda
Poverty and Environment Initiative. (January 2007) op cit
REMA. Poverty-Environment Indicators and Strategy for Monitoring them within the framework of the EDPRS. Center for
Resource Analysis Limited. Kigali, Rwanda. March 2007.
108 Poverty and Environment Initiative (January 2007) op cit
109 CITT/KIST. Community Vulnerability Baseline (2006) op cit
110 REMA. (March 2007) op cit
111 Musahara, Herman. Improving Land Tenure Security for the Rural Poor: Rwanda- Country case study. FAO Support for the
Empowerment of the Poor Working Paper #7. Workshop for Sub-Saharan Africa. National University of Rwanda. 2006.
106
107
37
National Policy
Water Policy (2004)112
Operation





Land Policy (2004)113




Land Law (2005)114






Agricultural Policy
(2005)116



Energy Policy (2004)117






Governed by ministry of health
Relies on collaboration with other ministries (economic planning and finance,
agriculture, infrastructure, health, education, community development)
Recently decentralized; funding for rural water supply and sanitation ties to
community development funds
Limitations: monitoring, deforestation, erosion, adequate financing, human capital,
and firm decentralization mechanisms
Objectives of NAPA IWRM: increase lake and river levels and water flows and
protect humid zones, protect basin sides, ensure satisfactory drinking water, ensure
satisfactory irrigation and industry water supply, reduce land loss due to erosion.
Governed by the ministry of environment
Lakes, waterways, natural reserves and parks, and natural reserve marshlands
considered public lands; State private land includes economically viable marshlands.
Agricultural activities must be located 50 meters lake banks and 10 meters from
rivers. Buildings must be 20 meters away. Reserved swamps are protected from all
activities
Land policy faces three major challenges 1) land titling, 2) land scarcity/degradation,
3) land distribution.
Strong customary land laws exist outside of a formal deed structure
Seeks to consolidate family plots into areas of 1 ha or more
The definition of marsh or ‘swamp’ land is vaguely given as the “plain area between
hills or mountains with water and biodiversity, papyrus or carex or plants of their
species.”
Wetland boundaries are defined as “where the marsh grass ends.” 115
Environmental impact assessments are now required for any marshland
development project, and there is increased scrutiny on the appropriateness of crop
types for this ecosystem.
Annual district-level re-distribution of marshland forces landholders into a shortterm management mindset.
Governed by the ministry of agriculture.
Seeks to increase crop specialization in wetland areas (rice, maize, potatoes, soy,
beans, tea, and coffee)
Focused on professionalism, commercialization, and promotion of agri-business for
cereals, in of fishing, apiculture, and agriculture.
Reducing agricultural employment by 50% by 2020 is a national goal.
National cooperatives exist for tea, rice, and cattle breeding
Governed by the ministry of infrastructure
Relies on collaboration of five ministries (infrastructure, economic planning and
finance, agriculture, public service)
Rural energy policy focuses on 1) energy efficiency in irrigation and agro-processing,
2) energy alternatives and reductions in biomass as fuel, 3) using electrification to
promote small-scale industry, and 4) linking energy policy and agricultural policy
objectives.
An agency regulates national utilities.
MINITERE. Sectoral Policy on Water and Sanitation. Republic of Rwanda. Kigali, Rwanda. October 2004.
MINITERE. National Land Policy. Republic of Rwanda. Kigali, Rwanda. February 2004.
114 Republic of Rwanda. (July 2005) op cit
115 KIST. Personal Communication. Ruhurura, Northern Province, Rwanda. September 2007.
116 MINAGRI. Nationale Politique Agricole. Republic of Rwanda. Kigali, Rwanda. 2007. www.minagri.gov.rw Accessed
October 22, 2007.; MINAGRI. Strategic Plan for Agricultural Transformation in Rwanda. Republic of Rwanda. Kigali, Rwanda.
October 2004.
117 MINIFRA. Energy Policy for Rwanda. Republic of Rwanda. Kigali, Rwanda. October 2004.
112
113
38
Rwanda’s agricultural policy presents a different, long-term challenge. It prioritizes marshland for specialized crops
and irrigation system development in order to increase production efficiency and to meet economic goals. Vision
2020 has fixed the following specific national objectives for the period 2002 to 2020 1) 90% of land will be
protected against erosion, 2) 10000 ha of land on hills will be irrigated, 3) 40000 ha of marsh land will be
developed, 4) 140 valley dams and water reservoirs on hillsides will be constructed.118 If these issues are not
incorporated for planning, a PES scheme may fall apart when rural protection is overridden by growth policy.
These objectives suggest conflict between the needs of local communities, agricultural development, sustainable
wetland management, and hydropower needs. Specification of a timeline and procedure for these types of goals is
crucial to maintaining a functioning PES scheme. PES may, alternatively, invite modifications to policy objectives
such as irrigation plans. Detailed cost-benefit analyses can lay out these options more effectively.
Transboundary water policy is a final consideration for PES schemes in northern Rwanda. The East Africa Great
Lakes Region considers regional interconnection and integration of power systems essential for economic growth
and long-term planning. Regional cooperation and collective reliance on energy security is part of Rwanda’s national
energy policy. As such, it is a member of the Nile Basin Initiative (NBI), the East African Community (EAC), and a
member of the African Union (AU) which operates the Africa Energy Commission (AFREC). Discussions are
underway for the construction of energy lines between Sudan, Egypt, Ethiopia, DRC, Rwanda, Burundi, Uganda,
Tanzania, and Kenya, which are all members of the Nile Equatorial Lakes Subsidiary Action Project (NELSAP).
Efforts are also being made to create a Kampala-Kigali pipeline.119 NELSAP soon plans to implement a
hydroelectric power project on the Kagera River that shares borders with Tanzania, Burundi and Rwanda.120 A
regional approach to the energy situation is viewed as both cost-effective and a strategic way to attract international
investors.121 Rwanda also participates in the African Ministerial Conference on Water (AMCOW) to create transnational cooperation, mechanisms, and dialogue for water management systems. Regional councils and regional
PES networks in East Africa may find some interesting overlaps; incorporating long-term basin planning into
Rwanda’s PES design may be a good idea.
Considerations for long-term PES will need to analyze the impact PES could have on regional water goals and
conversely the impact regional water projects could have on PES. A PES scheme would need the support of these
local organizations and would likely use the funds to channel compensation. Rwanda’s national environmental fund
could streamline such a watershed PES scheme. Alternatively, regional collaboration could impede any PES
implementation. Largely, the status of domestic policy institutions, ministries, and funds suggest there is support
and motivation for a PES mechanism in Rwanda.
2.3 Case Study Analysis
This section uses an international case study comparison to situate the potential Rwanda project among other
operational PES projects. A case study comparison should indicate if Rwanda's institutions – despite the support
and limitations identified in Section 2.2.3 – provide a practical, feasible context for PES design. Secondly, it offers a
contextual feasibility for watershed PES in Rugezi. Because PES schemes differ across a broad range of themes this
comparison uses five principle characteristics of the Rugezi case study to identify other comparable schemes. These
principle PES scheme characteristics are:



involvement of a watershed (ideally a wetland catchment with excess agriculture production)
involvement of a hydropower utility company
poor upstream communities
MINAGRI (October 2004) op cit
United Nations Development Program. Mainstreaming Access to Energy Services: Experiences from Three African
Regional Economic Communities. Regional Energy for Poverty Reduction Programme. Dakar, Senegal. May 2007.
120 Nile Basin Initiative. Nelsap to Implement $200 Million Power Project. News.
http://nelsap.nilebasin.org/index.php?option=com_content&task=view&id=16&Itemid=49 Accessed 11/2/2007.
121 MINIFRA. Energy Policy for Rwanda. Final Draft. Republic of Rwanda. October 2004.
118
119
39


existence of minimal regulatory frameworks
situated in a developing country
Three challenges impact the effectiveness of this comparison. First, differences in scale, scope, and objectives make
it difficult to compare projects on a relative plane. For example, the relative involvement of a buyer depends on
complex combinations of local political, economic, and social inputs that differ by country. Secondly, the typical
PES analysis format is a non-standardized observational review. Most analysts describe only a few parts of the
scheme crucial or comprehensible to that particular author. Thirdly, it is not always clear what level of operational
success a case study has. PES schemes have different benchmarks for success and are not formally monitored.
These three literature gaps limit the completeness and structure of this analysis. Therefore, this section summarizes
general trends in the case studies, and then highlights a few specific examples which particularly align with the
Rugezi context.
An in-depth literature review uncovered 14 watershed PES schemes existing across Latin America, Asia, and Africa.
Below, Table 5 summarizes the 14 case studies fulfilling developing country watershed PES criteria.
Table 5: Summary of Comparison PES Case Studies in Developing Country Watersheds
Location
Relevant, Principle Factors of the PES scheme
LATIN AMERICA
State of Paraná, Brazil122
Colombia123
Costa Rica124
Quito, Ecuador125



















$ channelled from national to municipal government
Competition exists between municipalities for funds
National government finance project
Private companies are not permitted to initiate watershed management plans
Hydroelectric utility involved
Private sector involved
Watershed tax exists
$ channelled through decentralized government agencies
National hydroelectric utilities involvement
(Energía Global, Compañia de10 Fuerza y Luz, Hidroelectrica)
Local hydroelectric utility involvement (Heredia Public Utility Company)
Use of a national environmental fund (FONAFIFO)
Use of a local trust fund
Local NGO (FUNDECOR) is the intermediary
Direct monetary payments fund sellers
Direct investments fund infrastructure, including water system development
Water supply utility involved as buyer and intermediary
Private sector involved (a local brewery)
Use of an environmental fund (FONAG)
Direct payments fund projects and infrastructure
Johnson, Nels, White, Andy, and Danièle Perrot-Maître (2001) op cit
Perrot-Maître, Danièle and Patsy Davis, Esq. Case Studies of Markets and Innovative Financial Mechanisms for Water
Services from Forests. Forest Trends and the Katoomba Group. May 2001.
124 Perrot-Maître, Danièle and Patsy Davis, Esq. (May 2001) op cit ; Redondo-Brenes, Alvaro and Kristen Welsh. Payment for
Hydrological Environmental Services in Costa Rica: The Procuencas Case Study. Yale School of Forestry and Environmental
Studies. Tropical Resources Institute. Tropical Resources Bulletin. Vol. 25. 2006.
125 Poats, Susan V. Report on the Latin American Regional Workshop on Compensation for Environmental Services and
Poverty Alleviation in Latin America. April 26-28 2006. Quito, Ecuador. ICRAF Working Paper no. 33. World Agroforestry
Centre. Nairobi, Kenya. 2007.
122
123
40
Pimampiro, Ecuador126



Users pay water service fees
$ channelled through municipal governments
Direct payments fund landowners
















Tourist visitor tax
$ channelled through municipal government
Direct monetary payments fund farmers for watershed management
Private sector involved (Aluminum mining company)
District government is the seller
Use of local environmental fund (Nature Conservation Fund Lake Toba)
Water supply utility involved (PDAM)
Private sector involved (Lombok Inter-Rafting Company)
Land and forestry tax exists
$ channelled through government to local administrators
Direct payments fund local administrators functions and farmers
Water utility (PDAM) and a water infrastructure company (KTI) involved
Private sector involved (Steel company)
$ channelled through local government forum (Cidanau Watershed Communication
Forum)
Local fund is used through this Forum
Direct payments fund communities
Energy crisis caused by environmental degradation
Hydroelectric utility involved
Land tenure rights given as compensation by government (Social Forestry Program)
Direct payments from donors and utility fund communities
Direct payments from donors and utility fund farmers
Forested land is state owned, but locals have user rights
Hydroelectric utility involved
$ channelled through decentralized government agencies (District Development
Committees)
Local fund is used (Environmental Management Special Fund)
Direct payments fund communities for projects and infrastructure




One catchment supplies 60% of Kenya’s electricity through hydropower (Mt. Kenya)
Hydroelectric utility is involved (Nairobi City Water and Sewage Company)
Direct payments fund individuals and communities
Direct payments fund projects
ASIA
Lashihai Nature Reserve,
China127
Lake Toba, North Sumatra,
Indonesia128
Rinjani National Park, Segara
River basin, Lombok,
Indonesia129
Cidanau Waterhsed, Banten
Province, Indonesia130
Sumberjaya Watershed,
Indonesia131
Kulekhani, Nepal132










AFRICA
Nairobi, Kenya133
Poats, Susan V. (2007) op cit
Giupponi, C., Goria, A., Markandya, A., Sgobbi, A., "A Pilot Study on Payment for Ecological and Environmental Services
in Lashihai Nature Reserve, China", forthcoming in "Payment for Ecosystem Services". The paper was presented at the Ninth
Biennial Conference of International Society for Ecological Economics on "Ecological sustainability and human well-being".
New Delhi, India. 15-18 December 2006.
128 Suyanto, S., Leimona, Beria, Permana, Rizki Pandu, and F.J.C. Chandler. Review of the Development Environmental
Services Market in Indonesia. ICRAF. RUPES. 2005.
129 Suyanto, S., et al. (2005) op cit
130 Suyanto, S., et al. (2005) op cit
131 Suyanto, S., et al. (2005) op cit; Suyanto, S. Conditional Land Tenure: A Pathway to Healthy Landscapes and Enhance
Livlihoods. RUPES Sumerjaya Brief No. 1. ICRAF. Bogor, Indonesia. 2007.
132 Upadhyaya, Shyam. “In Kulekhani, Nepal, a hydroelectricity scheme that used to rely on ‘command and control’ relations
with the upland communities in their catchment now face more critical ‘sellers’.” Site Profile: RUPES Kulekhani. ICRAF.
Bogor, Indonesia. 2007.
133 Yatich, Thomas. Personal Communication. ICRAF. Nairobi, Kenya. September 6, 2007.
126
127
41
Ga-Selati River, South Africa134
Morogoro Region, Uluguru
Mountains, Tanzania135








Transnational catchment involved
Water supply utility involved (Lepelle Water Board)
Private sector involved (Palabora Copper Mine, FOSKOR mine)
Government is a buyer through the Department of Water Affairs and Forestry
Project currently in the planning phase
Water supply utility involved (DAWASCO)
Private sector involved (Coca-Cola, and others)
Direct payments fund communities
Ten of the 14 case studies involve a water utility in the watershed funding scheme. Of these 10 water utilities, five
describe themselves as hydroelectric utilities and five describe themselves as water supply or water infrastructure
utilities.
Table 6 tallies the specific motivations for the 14 PES projects. Most projects have overlapping motivations and
most did not directly list or prioritize goals, therefore, goal summaries are based on project content. In six and seven
cases respectively, hydroelectric or commercial needs motivate watershed PES schemes.
Table 6: Watershed Management Goals of Case Study PES Projects
Goal of case study PES projects
Flow stabilization
Hydro-potential improvement
Water quality improvement*
Water quantity improvement*
Commercial water demand**
Resource sustainability/preservation
Overall watershed management
Ecotourism demand
Disaster prevention
Corporate Social Responsibility
Incomplete, unknown or unspecified goal
Total Number of Projects
Number of
projects
motivated by
this goal
4
6
14
13
7
7
5
1
1
1
2
14
*Commercial and/or residential consumption
**’Commercial’ includes both industrial and manufacturing companies. Listed firms include an orange grower and
processor, a brewery, mining companies, a beverage manufacturer, a steel manufacturer, and an outdoor rafting
company. These may or not be state-owned entities.
Unfortunately, explanations of existing regulatory context for PES case studies are brief, if included at all. As result,
it is not clear what actor initiates the implementation of the PES schemes at the local level. In some cases, creation
of environmental funds or a new resource tax may inspire the PES funding mechanisms through government and
private sector negotiations. Theoretically, watershed PES falls into one of three categories mentioned in Section
2.2.2 – the self-organized private deal, the trading scheme, or the public payment scheme. Realistically, the 14 cases
indicate adaptive arrangements combining aspects of self-organized private deals and public payment schemes are
Wise, Russell M., and Josephine K. Musango. November 2006. A Framework for decision-making using a cost-effectiveness
approach: a case study of the Ga-Selati River. CSIR, Stellenbosch, RSA and IIED, London, UK.
135 Tesierra, Julio. “Equitable Payments for Watershed Services: A Joint CARE-WWF-IIED Programme funded by DGIS &
Danida.” Presentation PEP Meeting. Copenhagen, Denmark. June 19 2007.
134
42
most common in watershed management. Complete methodological understanding of these arrangements is fairly
limited because observational project descriptions are brief. None of the case studies involved trading schemes.
In nine of the 14 case studies, local or regional government is responsible for payment distribution. In four of these
nine cases, the government’s role in the PES scheme links to larger decentralization plans. In three of the 14 cases,
the role of the government is unclear. In seven cases, taxes on a natural resource contribute to the funding scheme.
NGO intermediaries - either multinational, local, or both - are used in eight cases. PES schemes incorporate
environmental funds in 6 cases.
The mechanisms of these PES schemes overlap several political and financial boundaries. This section will not
compare these mechanisms in depth because in depth transaction methods, payment schedules, and operational
timelines are not a thorough feature of any case study. Table 7 below serves to organize the fundamental
components of the 14 schemes. It lists types of buyers, sellers, and the varieties of compensation mentioned in the
case study schemes. Socioeconomic status of buyers and sellers is not listed in most cases, but status of sellers is
likely to be middle to lower class at developing country standards. For the most part, schemes tend to have one or
two buyers and one seller. Terms listed are those used in the case study themselves.
Table 7: Case Study Analysis of Watershed PES Mechanism








Organization of Watershed PES Mechanism
Buyers
Sellers
Compensation type
Hydroelectric utilities
 Private landowners*
 Continuous monetary
payments** ($6-45/ha/yr***)
Water supply utilities
 Local landowners
 Lump sum monetary
(small, medium, large)
Industrial water users
payments**
 Forest owners
Water service users
 Land tenure
 Village administrators/Water
Eco-tourists
 Fund distributions (yearly
user Associations
Farmers who use irrigation
monetary payments or

Upstream
communities
systems
infrastructural support)
Downstream communities
Government ministries and/or
decentralized agencies
*Landowners largely reside in critical watershed areas.
**Monetary payments may be earmarked for specific activities, i.e. terracing, cultivation, and/or infrastructure, etc.
***2001-2007 U.S. dollars
PES case studies notoriously lack indicators for project success. These 14 case studies are no exception. As Section
1.3 of this document suggests, a few indirect benefits of PES stand out. In particular, several cases imply PES
contributes to decentralizing government natural resource management. Environmental taxes, environmental funds,
and NGO intermediaries are also common individual or joint components to watershed PES designs; PES may
support these political components. High demand for PES – as represented in 10 different management goals
(Table 7) – does not indicate success, but does suggest optimism for PES as a flexible conservation tool. However,
lack of success indicators goes hand in hand with the lack of risk indicators. In only one case, the Morogoro
watershed in Tanzania, is a PES cost-benefit analysis performed. In this case, the PES design - based on a private
deal with the Coca-Cola beverage company- forecasts water treatment cost reductions of 10% over 11 years, and
60% increases in land productivity in four years.136 Risk assessment and difficult monitoring really need further
evaluation in the case studies. At the bottom line, understanding the feasibility for PES design in Rugezi cannot be
based on past “successes.” Instead, the feasibility can be understood by examining cases that face similar challenges
to the Rugezi watershed case.
136
Tesierra, Julio (2007) op cit.
43
Four case studies particularly resonate with the socioeconomic conditions of the Rugezi watershed: the Colombia
government PES watershed management, the ICRAF PES projects in the Cidanau and Sumberjaya watersheds of
Indonesia, and the Ga-Selati River project in South Africa. These four deal with decentralized watershed
management, community encroachment, hydro-power energy crisis, land tenure, and transnational catchment issues.
Decentralized watershed management – a goal similar to Rwanda’s environmental ministry and its new community
agencies137 - is most clearly presented in the Colombia PES case study. In the last ten years, the Colombian
government established regional agencies in order to improve watershed management. The national government, as
well as local municipalities, contribute to funding these agencies. Therefore, both public and private revenues
contribute to water quality, water quantity, and hydro-potential improvement. Specifically, this watershed PES
scheme relies on a revenue stream comprising 1% of the total municipal budgets, 3% of hydroelectric utility
revenue, and 1% of industry investments. Additional income pooling balances funding distribution across poor and
wealthy watersheds.138
ICRAF addresses alternative livelihoods in two PES projects. These cases specifically model PES schemes around
water utility needs and community encroachment on the wetland. ICRAF, through their regional PES network,
RUPES, manages both the Cidanau Watershed, in the Banten Province and the Sumberjaya watershed in Indonesia.
Both of these watersheds face intense agricultural production and encroachment of the local population onto
wetlands. The Cidanau watershed uses a newly established watershed association to manage payments from the
water utility companies who improve environmental management. Management techniques include planting forest
cover in wood and fruit tree varieties which contribute to alternative incomes for the local population. Potential for
industrial involvement exists in the future. The Sumberjaya watershed is most similar to the Rugezi context in that it
faces landslide and soil erosion risk and pressure from an energy crisis due to disrupted water flows. In effect,
Sumberjaya faces the same ecosystem valuation conflict as Rugezi – managing the livelihoods of inhabitants while
supporting stable hydroelectric infrastructure. This PES scheme uses land tenure as compensation for best
environmental practices. The model is designed to allow a government environmental ministry to distribute land
tenure, while the utility company distributes payments to communities for infrastructure and environmental
management projects.139
The South African case is the only study which discusses transnational water issues. South Africa, Botswana,
Zimbabwe, and Mozambique share the Ga-Selati river catchment. Demand for water quality, quantity and flow in
these areas is increasing, and regulations have not been effective at watershed management. As result, the PES
model combines incentives of two mining companies, a water board, and a government environmental ministry –
the buyers- to support a conservation organization, a local community, and an irrigation association – the sellers.140
These four case studies suggest it is plausible to initiate a PES scheme to address wetland encroachment and
hydroelectric utility conflicts, to potentially involve transboundary water users, and to design a model to establish
revenue using a decentralized government framework. None of the Rugezi watershed characteristics is unique to a
PES scheme, except that it is based in Rwanda. It appears that it is institutionally feasible to adopt Watershed PES
to the Rugezi context.
2.4 Stakeholder Analysis
Rwanda recently established Community Development Funds to improve distribution of environmental funds and
management of environmental practices. Other decentralized agencies now also exist within specific ministries, such as Land
Bureaus and Watershed management groups.
138 Perrot-Maître, Danièle and Patsy Davis, Esq (2001) op cit
139 Suyanto, S et al (2005) op cit; Suyanto, S. ( 2007) op cit
140 Wise, Russell M., and Josephine K. Musango (2006) op cit
137
44
Rugezi’s specific stakeholder pool describes areas of potential resistance and areas of potential support. The
stakeholders involved in the Rugezi context include local watershed farmers, the private sector, the para-statal
hydroelectric utility, water consumers, government ministries, local agencies, and other agencies. The ease of
managing the local negotiations, i.e. transaction cost, tends to be a barrier for PES scheme implementation. For
each stakeholder, this section will describe (1) their level of interest in a scheme, (2) their level of influence in a
scheme, (3) their role in the scheme, (4) their likely position on watershed PES, and also (5) the transaction costs
involved to include them. Assessment of stakeholder opinions is in part based on personal communication, but,
largely, these assessments are based on personal observation and contextual analysis.
Local Watershed Landowners
Farmers in Rugezi prioritize stable shelter, food production, and stable natural resource access (wetlands, forest,
lakes). They will be highly interested in a PES scheme if it enhances their livelihood in these ways and if it does so in
a low-risk, long-term way. The potential PES scheme will compensate farmers for reducing encroachment on the
wetlands and for completing sustainable resource practices. Farmer interest in PES will also depend on the
opportunity costs of the compensation – they will have a high interest if compensation exceeds the alternative
option which is continuing farming and inhabiting as usual; they will have a low interest if the scheme and/or policy
does not offer suitable alternative incomes, or if these alternatives are not distributed fairly in the region. Getting
farmers on board is crucial to the scheme; if this sector wavers, the PES model will be weak. The farmers have a
strong influence on the PES scheme. Clearly, these farmers will act as sellers in the PES model. It is unclear how
many sellers are necessary; potentially, only those farmers working in areas of highest degradation will be needed.
Still, depending on this number, organization and negotiation costs of the transaction is likely to be high. Farmers
are likely to support a scheme if it is designed well and fairly.
Private Sector
The private sector includes mining companies (gold and columbo-tantalite), agro-processors (tea, coffee, rice and
pyrethrum), agricultural cooperatives, and local collectives. Other PES case studies reveal the private sector tends to
have an interest in watershed management if it impacts their direct supply. In Rugezi, the interest of mining
companies and agro-processors is likely, but data is unavailable for how the water table and flow affects their
production and bottom line. Agricultural cooperatives and local collectives are likely to have an interest especially if
reduction in wetland farming limits particular crops. The opportunity for both industrial and agricultural producers
to contribute revenue to the scheme is high. In this case, their inclusion would have a strong influence on the PES
model. In a potential scheme, the private sector would act as buyers of watershed services. Data collection for the
Rugezi case study did not include interviews with the private sector. Unfortunately, it is not clear whether the
private sector would support the scheme or not, or to what extent. Negotiations with the private sector should be
simple, and incur low transaction costs.
Para-statal Hydroelectric Utility
Without official and implementable wetland policy the hydroelectric utility is likely to look beyond government
support for resolution and relief to consumer demand pressure. The interest of the utility in a PES scheme is likely
to be high, especially since firms have no authority to manage the sustainability of their natural resource supply
chain in Rwanda. The utility’s influence on the project is necessary; the model will be inefficient if the utility
organizes management outside of the model. The utility would fulfill the role of a buyer in the PES scheme. The
utility has a strong incentive to support speedy recovery of the Rugezi wetland to enhance water flows and levels in
the lakes. They will likely strongly support the scheme in order to reduce wetland encroachment; the government
describes ceasing hydropower production as the only short-term alternative. Transaction costs with the utility would
be small.
Water consumers
In many watershed PES schemes, a water user tax is placed on the water supply or electricity services. Coupled with
a recent tripling of national electricity prices, an environmental tax will be an unpopular, and likely, unfeasible
45
option in Rwanda. Contributions of consumer support could greatly influence both the PES revenue stream as well
as the environmental ‘attitude’ of the country. Consumers would act as buyers in the PES scheme. The 2% of the
population who use electricity may have income levels that could support the scheme. However, it is likely that they
would not support the scheme from an income standpoint. Transaction costs would be minimized since the tax
could be included in existing electricity bills.
Government ministries
Government ministries may have a strong interest in using PES to support increasing environmental regulation. The
Ministry of infrastructure which monitors and manages climate change impacts, the ministry of agriculture, and the
ministry of environment will have stakes in PES because it might impact the water table, community organization,
agricultural production, and environmental management. The government tourism agency may have an interest as
well since PES could benefit Rugezi as an eco-tourist destination. The Rugezi area already anticipates ecotourism
development following the electrification provided by new local micro-hydro plants.141 The case studies suggest the
government influence will be high since frequently ministries are responsible for distribution of compensation.
Because no cost-benefit data exist to describe impacts to the private sector, and they themselves do not perform
noteworthy environmental monitoring activities, it can be expected that the PES scheme will rely on government
support. The government may act as a buyer or intermediary in both. The government will likely have a medium to
high interest in PES to support environmental regulation; current policies are ineffective and pressure in the
situation continues to build. Transaction costs for government involvement will be low to medium. Lack of interministry communication may delay negotiations for the project.
Local Agencies
Local NGOs and environmental NGO programs which individually support environmental protection projects may
find a PES scheme supportive to their missions. These projects may be able to influence the fluidity of PES scheme
implementation. Since several environmental projects in Rugezi are subcontracted through government agencies
they may have the power to influence the design and performance of the scheme. These actors would likely fulfill
the role of intermediary – and agent responsible for supporting negotiations between buyers and sellers. Local
agencies will theoretically have the most realistic sense of the feasibility of compensating farmers for different
practices, and thus investigation into their position is important. Local agencies may be supportive or resistant to a
PES project depending on how a scheme could disrupt stability and management. Negotiation with local agencies is
likely to be smooth, and involve low transaction costs.
Other Agencies
The Nile Basin Initiative – a regional watershed organization – may have an interest in supporting PES schemes
that improve water management for the Nile River.
In summary, four of seven stakeholders – farmers, the private sector, the utility, and the government ministries –
likely have a high interest and high influence in the PES scheme, and would play a supporting role in its
implementation. Local agencies may have significant interest while electricity consumers will likely be resistant to
water user fees. Quantitative data could demonstrate these relationships more effectively. But because cost and
revenue data is mostly unavailable no cost-benefit analysis could be performed within the scope of this study.
2.5 Local-level PES Institutional Design Options in Rugezi Watershed
This section presents two general options for PES design in the Rugezi watershed given assessment criteria from
the PES Institutional Feasibility Chart, a background assessment, climate change risks, a case study analysis, and a
stakeholder analysis.
Pierre, Tuyambaze. Personal Communication. Executive Secretary Butaro Sector. Kabahura, Northern Province, Rwanda.
September 12, 2007.
141
46
Option 1: Rugezi Public Payment Scheme
The hydroelectric utility and or the private sector directly pay an environmental tax to the government through the
environmental Ministry. The government determines the size of the tax based on a water use or watershed
dependency ratio. The environmental Ministry could distribute this tax to decentralized agencies for improved
environmental management, population relocation, and climate change monitoring related to hydropower. Taxes
could also feed directly through the National Fund for the Environment in Rwanda. Using the national fund could
leave the opportunity for scaling-up PES to involve carbon sequestration, ecotourism, or broader hydropower PES
into the future. Demand studies could determine whether electricity consumers would agree to an environmental
premium on their utility bills for the service and whether this would affect accessibility and growth of the service.
Decentralized agencies would be responsible for managing payments distribution. The Rwanda government needs
to decide if compensation would be primarily monetary, or would include infrastructural improvements, or land
tenure rights. This is called the “Public Payment Scheme” because it is initiated by the government.
Option 2: Rugezi Private Payment Scheme
The hydroelectric utility and or the private sector directly pay local landowners to relocate and improve
management practices. This amount is determined through cost-benefit analysis on the current and future economic
losses incurred by these actors for continued watershed degradation. Payment distribution would be managed by
intermediaries and/or decentralized local environmental agencies. The hydroelectric utility, intermediaries, and
decentralized agencies need to determine the most effective form of compensation. Intermediaries also would
manage the transactions, administration, and environmental monitoring required for this scenario. This is called the
“Private Payment Scheme” because it is voluntarily initiated through the private sector.
Scaling Up
There may be future opportunities to scale-up a watershed PES scheme using additional investments from
ecotourism, carbon sequestration projects, and or other watersheds. Rwanda’s tourism bureau wants to increase
long-term, high-end, eco-tourist, explorer, and individual business person visits, bringing the industry to $100
million U.S. by 2010. The Ruhengeri province in the Rugezi watershed is one area cited for eco-tourist
investment.142 Secondly, the Reducing Emissions from Deforestation and avoided Degradation (REDD) policy may
permit watershed preservation activities that impact forestry (as Rugezi’s would) to receive funding for sequestered
greenhouse gas emissions. Depending on Rwanda’s capacity for reforestation or avoided deforestation future
revenue streams to the global carbon market may be viable.143 Thirdly, trans-boundary water management with
countries in the Nile River basin (Uganda, D.R.C., Tanzania, Kenya, and Burundi) and with the Nile Equatorial
Lakes Subsidiary Action Project (NELSAP) – an integrated water resources management program -offers the
potential for watershed PES support.144
3.0 Feasibility Summary
The Rugezi watershed faces several hydrological issues. It suffers a depleted water table, overly intense cultivation,
and population encroachment on principle basin wetlands, significant erosion, and poor land quality management.
USAID. Rwanda Tourism Strategy, 2003.
http://rwanda.usaid.gov/images/Docs/biodiversity/Rwanda%20Tourism%20Strategy.doc. Accessed October 13, 2007.
143 Olander, Lydia P. and Brian Murray. A new opportunity to help mitigate climate change, save forests, and reach
development goals. Nicholas Institute for Environmental Policy Solutions. Duke University. NI WP 07-03. July 2007.
144 Nile Basin Initiative. http://www.nilebasin.org. Accessed 2/23/2008.; Nile Equatorial Lakes Subsidiary Action Program.
http://nelsap.nilebasin.org Accessed 2/23/2008.
142
47
In the future, this area is likely to contend with increased length and frequency of droughts. Climate change will also
have an impact on society’s food production, income alternatives, and have an influence on population migration
and health. In order to resolve and manage these issues, Rwanda must weigh the tradeoffs between short-term
livelihood needs and long-term resource benefits. If Rwanda is able to conserve the Rugezi wetland and improve
environmental management in this region, water quantity and quality should improve. As result, Rwanda will
increase, to some extent, the value of the wetland’s provisioning, regulating, supporting, and cultural services.
Improved ecological values would lead most directly to financial benefits for the hydroelectric and tourism sectors.
The aim of this document is to evaluate whether watershed PES in Rugezi would (1) inspire incentives for
improved management, (2) contribute to capacity building and vulnerability reduction for climate change
adaptation, and (3) help alleviate a critical energy problem. Determining whether PES can achieve these objectives
rests on four feasibilities: feasibility of PES as a tool, feasibility of hydrologic response, feasibility of climate change
adaptation, and a cost-benefit feasibility. This section develops recommendations for using PES towards these
objectives. First, the section looks at the recommendations considering the potential for PES to contribute to
climate change adaptive capacity. The second section looks at the feasibility of the Rugezi institutional structure to
foster a PES tool. The last section looks at the feasibility for PES to achieve real hydrologic improvements, and
therefore contribute to increased hydro-potential and overall energy sector resilience.
3.1 Feasibility for Climate Change Adaptive Capacity
Climate change predictions in Rwanda will require communities to adapt to higher precipitation intensities and less
rainfall. Communities should expect increased erosion, decreases in land utility, higher sedimentation, and changes
to water flow patterns. Agricultural cultivation will need modification for precipitation-specific crops and new land
use patterns. The likelihood that local PES could buffer these impacts is mixed. Table 8 compares local PES’
contribution to adaptive capacity and whether these positive effects are additional – meaning whether they would
occur anyway. Information in Table 8 refers to both schemes outlined for Rugezi in Section 2.5: the Public Payment
Scheme – based on government initiation – or a Private Payment Scheme – based on private sector/utility initiation.
Table 8: Potential for Watershed PES in Rugezi to Achieve Adaptive Capacity Goals
PES Capacity
Building
Improved
Environmental
management &
Monitoring
Strengthened Local
Economies
Impact of Watershed PES in
Rugezi
Would this Occur Without
A PES Scheme?
The scoping phase of watershed PES
in Rugezi is likely to identify specific
wetland areas for efficient, costeffective management. This will
improve the foresight and planning
related to agricultural production, and
even crop selection. If compensation
is contingent on population relocation
there could be immediate ecological
benefits to the watershed, or at least
these would be easier to initiate.
Ideally, compensation to farmers
would diversify their incomes, or (with
or without the help of micro-credit
organizations) it could enable new
livelihoods. This is highly dependent
Not likely.
The conflict between the
hydropower utility and the
inhabitants of the wetlands
has remained static or
increased in the last years.
Not likely.
No other income generating
activity is known in this area.
Will this increase
community resilience and
reduce livelihood
vulnerability caused by
Climate Change?
Possible, if management
techniques, such as crop
choices, are applied to local
food production needs. But
not if environmental
management prevents
income activities.
Probably. But it is uncertain
whether the resulting
economic improvement
would be a significant
buffer.
48
Improved Social
Capital
Support for Legal
Frameworks
Increased Human
Capital
on a regular payment schedule.
Delivery of land tenure rights could
greatly support economic growth and
the organization of infrastructure
development.
PES negotiations are likely to support
decentralization of Rwanda’s
environmental management agencies,
and give an incentive for different
actors to come to the table.
Communication between the
government ministries (primarily
environment, infrastructure, health,
and planning), businesses (such as
mining companies and agroprocessors), and the utility company
will logically increase or commence.
Farmers who do not have a strong
political voice may find one.
Watershed PES does support
integrated water management trends
of the NAPA, and encroachment
reductions in the Land Policy.
Ideally, government distributed
funding for sustainable environmental
practices can develop new
environmental management jobs and
can initiate infrastructure work as well.
Not likely.
The best chance for
improved social capital in
Rugezi without PES is the
new community
development committees
and decentralized
government agencies.
However, these do not
currently receive serious
mention in current
government documents.
Possible, if it improves
institutions, knowledge, and
equity.
Unknown how much
support legal initiatives will
have, or how strict they have
the capacity to be.
Not likely.
This is a current static
problem for the Rugezi
wetland communities.
Possible, if institutions and
systems are supported.
Possible, if institutions and
knowledge develop.
Local PES used for improving climate change adaptation capacity shows high additionality. Positive impacts to
environmental management and monitoring, strengthened local economies, improved social capital, and human
capital are not likely to occur without the positive incentives provided by a PES scheme. It is unknown whether
legal initiatives would develop such outcomes on their own, or at least, whether they could do so under the same
timeline. Improvements in environmental management and monitoring and strengthened local markets are two
outcomes of PES that have the highest probability of contributing to adaptive capacity.
Outside of this analysis there may be a conceptual risk involving a PES scheme in climate change. Climate change
impacts are unpredictable. If the declining water table in Rugezi has significantly more to do with declining rainfall
then anthropogenic issues in Rugezi, the scheme mechanism – where people receive compensation to relocate - may
suffer. In this case, the payment scheme may be better suited to incorporate an environmental price premium on
electricity consumer bills, than to compensate farmers to relocate or assume best practices. On the other hand, if
agricultural modifications do contribute to an improved water table, calculating the improvement attributed to PES
is logical, but statistically difficult. Long time series quantitative hydrologic models are really the only (impractical)
way of resolving this dilemma. The elusiveness of this sort of data is the policy curse of PES. Rwanda’s
environmental regulations will likely strengthen in the coming years. But the supplemental benefit of PES as a policy
tool remains uncertain. In this case, it is helpful to remember that local PES is not designed to be a panacea for
environmental management, but rather a supplement to existing local policy.
3.2 Institutional Feasibility
49
This paper defines institutional feasibility as the readiness of the political structures, the potential for successful PES
design, and the reality of PES based on an international case study comparison. Politically, Rwanda offers a weak
environmental policy framework. The environmental ministry is relatively young. Its overall communication with,
and authority over, private and public agencies is uncertain. In addition, different governmental ministries seem to
have conflicting plans for the Rugezi watershed. For instance, the ministry of agriculture plans to specialize in
wetland crops while also greatly consolidate small farm plots. Alternatively, national land, water, and environmental
policy intend to implement various wetland improvement projects and establish a wetland boundary to minimize
use. Despite these overlaps, the Rwanda government would likely support implementation of a local-PES scheme as
a supplement to environmental and economic policy. Given the steadily rising severity of the watershed energy
crisis and lack of economic alternatives it has few other options.
The political structure shows mixed ability in, but high motivation to, fulfill local PES design criteria. The first three
design criteria – financial scope, geographic scale, and conservation objectives – are somewhat in place. Escalating
consumer electricity bills for PES buyers and income streams on the side of the seller offer preliminary opportunity
costs. But the government needs a complete cost-benefit analysis to define the short-term and long-term costs
associated with present and future degradation of the Rugezi watershed. This is important because the geographic
scale of a Rugezi PES project has two options. A PES scheme could exist within the Rugezi watershed involving
regional buyers and sellers. Or the scheme could involve the utility company’s national consumer base. Uncertainty
in the causality for the water table decline (precipitation verse anthropogenic use) limit detailed conservation plans.
This information will help determine the scale of an appropriate scheme. This will also help fulfill the third criteria –
determining specific conservation objectives and targets in order to restore the Rugezi water table. Despite these
gaps, a PES scheme seems likely to fulfill the additionality criteria for conservation objectives (Table 8).
Potential for successful PES design also rests on a proper payment mechanism. According to experts, Rugezi
Watershed PES would ideally (1) deliver services contingent on payments, (2) be based on a mutual and voluntary
definition or use of the resource, (3) be pro-poor by reducing inequality in the negotiation phase or by ensuring
additional financing to poverty-stricken sellers, and (4) be realistic. Under the Public Payment Scheme option, the
environmental tax would make PES non-voluntary. Under the Private Payment Scheme option, private sector and
utility company involvement would be voluntary. Neither approach in this design phase could realistically ensure
that services would be contingent on payments or that negotiations would be pro-poor even if they are designed
this way. This seems to be an on-going objective of other PES projects. Selecting an appropriate compensation
method for buyers and sellers can help. For Rugezi, it seems likely that a mixed compensation package of
infrastructural support (i.e. water pipelines, or cook stoves), land tenure rights, and financial payments (exceeding
wetland agriculture benefits) would be necessary to overcome opportunity costs of wetland residents. A cost-benefit
analysis could provide details for this selection. Regional Rwandan officials are keenly aware of the importance of
contingent payments and pro-poor approaches.
The potential for successful PES design is mostly positive. The greatest uncertainties exist because the project lacks
cost-benefit data. Despite this, a stakeholder analysis indicates the majority of actors have a high interest and high
influence in the PES scheme, and would play a supporting role in its implementation.
In reality, 14 international case studies existing in Africa, Asia, and Latin America operate in similar context to the
Rugezi watershed. These projects operate under similar constraints, with similar actors, and with similar motivations
and similar environmental objectives. Cost-benefit data does not appear to have been a limitation for
implementation of these PES designs. Four case studies particularly resonate with the socioeconomic conditions of
the Rugezi watershed: the Colombia government PES watershed management, the ICRAF PES projects in the
Cidanau and Sumberjaya watersheds of Indonesia, and the Ga-Selati River project in South Africa. These four
address decentralized watershed management, community encroachment, hydro-power energy crisis, land tenure,
and transnational catchment issues. Given these similarities Watershed PES design in Rugezi is feasible.
50
However, Watershed PES also invites various institutional risks. Improper design can cause concern for equity,
poverty, and sustained environmental management.145 In particular, the Rugezi watershed could increase
demographic issues if compensation (monetary, infrastructural, or land tenure) is delivered to one section of the
wetland and not the other. In this case and especially considering historic ethnic conflict, it is crucial to ensure
inhabitants are fairly brought to the decision-making table. In option 1, the Public Payment Scheme, the
government will be responsible for careful negotiation. In option 2, the Private Payment Scheme, both the private
sector and local authorities will incur this responsibility. Columbia’s national scheme handled equity pro-actively by
pooling funding to ensure equitable watershed management and payment distribution across a larger geographic
area. This case can be a useful guide. Conversely, relative instability in the Rwandan government - such as via
frequent changes in ministry responsibilities and political boundaries – imply that the national organizational
systems may not be realistically efficient at absorbing the changes a PES scheme would require. The likelihood that
transaction costs in Rugezi will be high – due to both high population density and a nascent decentralized
management structure – is another point for consideration. Largely, these are detailed mechanism questions
appropriate for the second phase in the PES implementation process. As suggested above, other international case
studies seem to manage such risks within an on-going development approach.
One risk factor – availability of land tenure - is a particularly “hot-topic” in developing country PES schemes. There
is a global debate over the existence of land or property rights as a requirement for PES effectiveness. It appears
that land tenure can simplify the PES mechanism in some cases, but complicate it in others. Another debate angle
hinges on differences in management of common property resources and whether lack of property rights facilitates
the management or detracts from it.146 The Rugezi watershed would clearly need to prepare for the existing
challenges facing this factor. A thorough analysis of the ecosystem service ‘ownership’ of sellers, the level of
collective ownership and the power relationships that result is vital to stability in the Rugezi area.147 On the other
hand, land tenure may be an effective carrot for previously unregistered plot tenders to integrate into Rwanda’s
formal land policy. The Sumberjaya watershed takes this approach in Indonesia, using the assignment of property
rights as a reward for participation, and it will be a good model for Rwanda’s PES potential regarding land tenure
compensation.
3.3 Hydrologic Feasibility
It is uncertain if PES could achieve hydrologic goals in the wetland. Stabilizing hydro-electric production means
improving water quantity and quality. It is highly probable that relocating large portions of Rugezi’s dense
populations outside of the wetland will improve vegetation and reduce soil erosion. This is likely to improve
Rugezi’s non-marketed ecosystem services -such as groundwater recharge, filtration, flow regimes, and landslide
reductions – which are essential for reducing sedimentation and increasing the water table. But by how much or on
what timeline is uncertain. Such a policy will also be socially and financially costly. A feasible, and maximally
effective, PES design will not include the entire wetland population, but rather specific locations. Locations of
ecosystem service “sellers” are determined by their potential ecological contribution. Because retrievable documents
offer conflicting flow data and outflow locations for Rwanda it is uncertain where a scheme should target, and what
restoration potential can be expected. Rwanda needs more formal, scientific analysis of the Rugezi watershed
hydrology in order to form baselines, targets, and potential for restoration. Some areas of the wetland may be
beyond restoration, or may take many years to restore. Because the social costs are high, neither the Rwandan
government nor the electric utility should fund a program without an outline of benefits or timeline for restoration.
3.4 Next Steps
Corbera, Esteve, et al (2006) op cit; Pagiola, Stefano, et al (2005) op cit; Salzman, Jim (2005) op cit; Iftikhar, Usman Ali
(2007) op cit
146 Wunder, Sven. (2006) op cit; Corbera, Esteve, Brown, Katrina and W. Neil Adger. The Equity and Legitimacy of Markets
for Ecosystem Services. Development and Change. 38(4), 2007.
147 Corbera, Esteve et al (2007) op cit
145
51
To move forward with a PES project actors should confirm hydrologic data and outline a blueprint for wetland
restoration. Following this, decision-makers should dig deeply into the significant risk areas – land tenure, climate
factors, population density and transaction costs – as well as into stakeholder positions, especially within the private
sector. These are areas that case study projects address with careful planning. Cost-benefit data will be especially
helpful for short and long-term planning.
4.0 Conclusions
Like many other East African nations, Rwanda must buffer its hydropower industry from the impacts of climate
change. But effective and efficient environmental planning will come with social and economic tradeoffs at the
community level. Successful implementation of watershed PES in Rwanda will depend on careful scheme design
and persistent trust-building in order to harmonize wetland inhabitant and electric utility needs. Existence of
contextually parallel projects in Indonesia, South Africa, and Columbia, give evidence that these challenges can be
creatively overcome. Findings show that Rwandan decision-makers will need more hydrologic data to make
ecologically informed and efficient decisions and to set targets. With several necessary conditions in place,
watershed PES in Rugezi might be a tool for climate change adaptation and energy sector resilience. However, there
is considerable room for cost-benefit analysis to clarify short term, long term, and distributive costs and benefits of
such a project.
52
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57
Appendices
Appendix 1 : Institutional Feasibility Chart for Rugezi Watershed PES
Scheme Attribute
has this been considered? In what capacity?
Location
Rugezi Wetlands, Burera and Byumba districts, Northern Province, Rwanda.
Resource Conflict
1)Upstream and downstream users desire improved water quality and quantity which
can only come from proper, natural, wetland management. However, upstream users
have no other income alternative than to use the wetland for agricultural purposes.
BACKGROUND ASSESSMENT
2) Downstream hydropower facilities require increased water flows from Rugezi to
supply demand. However, this requires agriculture prohibition and immediate
extensive rehabilitative measures be put in place.
3) The immediate needs of the local community are incongruous to the immediate
national energy needs. Due to policy structures, lack of funding, and a lack in
technology, there are no incentives to initiate behaviors that could achieve either goal,
or work to ameliorate the tense situation.
Opportunity Costs
Are there sustainable
development activities already in
place at the site?
Current PES in Rwanda




lost agricultural revenue
lost land availability for housing and population growth
reductions in national energy supply and infrastructure
reductions in GDP growth
Yes. IMCE, REMA, Ramsar Convention, PEI, COOCASTER, ACCESSA are
individually performing environmental and economic analyses, strengthening local
institutions, focusing on decentralization, and enhancing alternative income options.
These actors do not work together for the most part.



No formal PES exists in Rwanda.
Rwanda’s 2004 Environmental Policy prohibits cultivation and inhabitation
of wetlands 50 meters from wetlands; Compensation has been proposed for
the relocation of rural farmers in the form of 1)cows, 2)housing, 3)housing
materials. This has not been done, nor is their a plan for how to obtain the
funding for this.
Relocation recently occurred around lake Kivu where families were one-off
compensated at the sector level with building materials and land. Details of
this event would be beneficial for the Rugezi scenario.
58
Climate Change Risks





Reductions in water quantity and quality, and the increased incidence of
water-born disease
loss of carbon sinks due to deforestation and wetland cultivation
increased energy stress due to the dependency on fuel-wood which is
vulnerable to climate
impacts to food and fiber production
significant alterations to the nation’s hydro-potential and energy
infrastructure development
Risk 1: Rainfall levels will continue to drop due to global warming causing water levels
in Lake Bulera and Ruhondo to fall farther. Hydro-potential will fall below required
functioning levels. Investment in hydro-power as a national energy source will be
inefficient. Rwanda’s energy sector will dip into further crisis.
Risk 2: Un-monitored climate variability will impede local farmer’s ability to develop
stable local economies. Harvests and prices may be largely incongruous to changing
climate characteristics. A dry climate will likely exaggerate current erosion levels and
decreasing soil quality, thus reducing agricultural yield. Competition for quality land
will increase as will the challenges in raising livestock. Fuel-wood supply will be
stressed. Rural economies will suffer.
Risk 3: Local communities will not be prepared for increases in rainfall. Increased
precipitation may significantly increase erosion, limit agricultural capacity without new
technology or seeds, and impact local infrastructure such as housing and roads,
especially those on steep slopes. Fuel-wood supply will be stressed. Rural economies
will suffer.
Risk 4: Excessive, continued deforestation will further reduce Rwanda’s ability to
mitigate carbon emissions due to lost sequestration capacity. Continued fuel-wood
dependency will increase national carbon emissions.
ES VALUATION
List of Ecosystem Services



Provisioning:
Medicinal plants
Building materials
Hunting/fishing
Biomass for fuel
Water for downstream hydropower facilities
Agricultural production: food crops, tea
Regulating:
stabilizing river banks and lowering the potential of landslides
Water Quantity-Related:

Flood prevention, control and mitigation

Regulating runoff /sediment control

Supporting water storage in the soil

Facilitating groundwater recharge/water supply
Water Quality-Related:

Withholding sediments

Reducing erosion

Improving water infiltration

improving the quality of surface water and
groundwater/waste processing
Supporting:
Biodiversity
59




Cultural:
-
PES SCHEME TYPE
Fish spawning grounds
Habitat for migratory birds
Possesses 60% of the World’s population of Bradypterus
graueri
Recreation
Aesthetic
Spiritual benefits
Is the ecosystem service scarce
or declining?
Yes. Water flow has decreased, water levels in Rugezi have decreased, biodiversity has
decreased, soil erosion has increased. Various ES have been seen but not measured to
have reduced functions.
Is the economic activity linked
to the ES relatively important or
potentially so?
Yes. Both the energy sector and the agricultural sector will see significant affects.
Are the substitutes for the ES
expensive or unavailable?
Non available. There is a potential that methane extraction from Lake Kivu could
relieve the hydropower sector as prime energy source, however, this project is still in
the design phase, and is likely to take years to achieve adequate production.
Are there multiple suppliers who
will compete to provide the
service?
No. To make an impact on water levels collective action is required among all
suppliers.
Are there new markets for the
ES, such as consumers or
companies who use more
expensive alternatives?
No. However, ecotourism is a potential new sector in the Rugezi area.
Is there a strong link between
land use actions and watershed
service? How is this
demonstrated?
It is assumed that agricultural activity significantly impacts water turbidity and flow to
Lake Bulera and Ruhondo. Quantification of this impact is not available. It is also
uncertain what impacts water flow more, drops in rainfall or agriculture.
PES scheme type: climate
stabilization, hydrologic
regulation, or biodiversity
benefits
Hydrologic Regulation
Motivation for scheme:
(environmental, pro-poor, etc.)
Environmental, pro-poor/livelihoods, development, diversified energy base
Scale: (local, regional, national,
international)
Local/Regional; There are also potential implications for trans-boundary water system
models.
60
Approach: (area based, public
scheme, private scheme, assetbuilding, use-restricting,
product-based)
















Potential Stakeholders
Electrogaz
Mining companies
Tea, coffee, and rice processing plants
MINIFRA
MINAGRI
MINITERE
REMA
National Consultative Forum on Environment
District Environmental Officers
District/town Land Bureaus
CDCs
Community collectives/associations
CITT/KIST
IISD
PRESA, Katoomba Group
UNEP, GEF, USAID, DFID, IFAD
Community development Committees and agricultural associations of: Burera and
Byumba districts and their 18 sectors, principally the northern sectors of: Kindoyi,
Musama, Kayange, Kabona, Bukaragata, and Ruhanga where agriculture production,
population density, and environmental degradation are highest.62
List of Sellers
STAKEHOLDERS
Potentially defined in these ways: area based, public scheme, private scheme, assetbuilding, use-restricting
List of Buyers
1) Electrogaz, 2) mining companies, 3) cooperatives: tea (FERWATHE),
rice(UCORIRWA), livestock (IMBARAGA) and coffee, 4) agricultural associations, 5)
community organizations,
List of Intermediaries
KIST/CITT, IISD, PRESA, Katoomba, ACCESA, IMCE, PEI, COOCASTER,
MINITERE (through FONERWA and CDF funds)
List of Donors
UNEP, GEF
What are the opportunities for
private sector involvement for:
1) The agricultural sector is undergoing development to a more intensive and productoriented operations. In particular tea, coffee, livestock, and dairy processing plants are
expanding. The sector has an incentive to ensure water and land needs for this growth.
1)Value-Added
Services
Goods
2) Cost Saving
3)Regulation Compliance
4) Voluntary PES
5)Selling ES to Government
Agencies
and
2) Electrogaz has a good potential for cost-savings related to increased water flows,
ability to meet demand, and reduced need for technological fixes.
3) PES would foster environmental assessment, and this would help meet the new
national requirements for EIAs. Additionally, Rugezi must meet conditions under the
Ramsar Convention, and PES would further enable that.
4) It is unlikely that voluntary PES would be initiated. Electrogaz, for example, has no
legal ability to manage the wetlands or lake areas near their facilities and will not
undertake efforts on its own.Error! Bookmark not defined.
5) Uncertain. However, the exchange of land tenure or water piping infrastructure for
environmental management practices could be considered this type of involvement.
61
MECHANISM
Potential Compensation Type:

(Individual monetary payments,
Improvements in public
services, Local infrastructural
improvements, Improved land
tenure rights)

Number
of
shareholder
transactions needed (describes
transaction costs)


monetary payments from CDFs, FONERWA, Electrogaz, or private sector
to farmers
payments from CDFs, FONERWA, Electrogaz, or private sector for
development projects
land tenure rights in exchange for performing/completing environmental
management plans *similar to Sumberjaya watershed project in Indonesia
Water piping infrastructure in local communities for performing/completing
environmental management plans (this is an infrastructure example, selected
based on development need and MDGs)
This could be broken down in different ways.




Total population for the area is 120,000 people.
Collective action among the 2 districts = 2 shareholders
Collective action among the 18 sectors = 18 stakeholders.
If the PES scheme was isolated to the northern sectors of Burera in extremely
critical condition, transaction costs could be lowered to 6 sectors.
62
Structure of the Deal
Option 1:
Electrogaz could pay an environmental tax to the central government through
MINITERE. MINITERE could distribute this tax to the districts and sectors
responsible for environmental management, relocation, and climate change monitoring
related to hydropower. Electricity consumers could see a premium on their utility bills
for the service. Taxes could feed directly to the National Fund for the Environment in
Rwanda (FONERWA). Using the national fund could leave the opportunity for
scaling-up PES to involve carbon sequestration, ecotourism, or broader hydropower
PES into the future.
REMA, and Environmental District Officers would be responsible for increasing
decentralization of funding, projects, and management. CDCs/CDFs would be
responsible for distributing funding to relevant individuals or local community
development projects and infrastructure.
Option 2:
Electrogaz could directly pay local community members (likely those in the northern
Rugezi) to relocate and improve management practices. These payments could be
made directly to District Environmental Officers or CDCs/CDFs who could
determine the best use of funds as either individual payments or as infrastructural
investments. This option is likely to see faster improvements in water quality and
quantity as well as more direct support for the local population. Intermediaries such as
KIST/CITT, local NGOs could manage the transactions, administration, and
environmental monitoring required for this scenario.
Option 3:
Similar to the above, however other private sector actors and agricultural cooperatives
could also incur the tax in a ratio related to water-use (Option 1), or could directly pay
the District Environmental Officers or CDCs/CDFs (Option 2).
Option 4:
MINITERE/REMA offers rural people land rights and/or water piping infrastructure
in exchange for environmental management.
How do Payments flow?
Consumers pay fees to the utility. Utility and private sector pays FONERWA.
FONERWA directs District Environmental Officers or Land Bureaus who distribute
compensation to Sectors via CDCs and CDFs. CDCs and CDFs compensate sellers
through monetary payments, land rights, or public water infrastructure.
63
Is/does the scheme
1) the scheme is logical
1) realistic,
2) Electrogaz and the private sector may view their role as a buyer as a voluntary
position. Due to regulation to cease agriculture 50 meters from wetlands local people
are not considered volunteers in this arrangement.
2) based on mutual voluntary
definition/use of resources,
3) deliver services conditional on
payments, and
4) reduce inequality in the
negotiation phase or ensuring
additional financing to povertystricken sellers?
Does a national regulatory
framework support PES?
Does a national regulatory
framework inhibit PES?
INSTITUTIONAL SUPPORT
Do landowners have clear, legal
rights to sell ES?
148
3) Rugezi residents are unlikely or unable to relocate without compensation.
4) Participation and local representation on environmental committees is absolutely
required for any plan implementation; PES would likely enhance negotiation between
different levels of political geography such as between cells, sectors, districts within the
Northern Province.

There is no wetlands policy, therefore there is an opportunity for PES to fill
this gap.

Goals of MINITERE, MINIFRA, and MINAGRI support decentralization,
diversified non-agriculture incomes, and improved monitoring and
education. It is likely that these government institutions will support PES as
a means to accomplish these objectives.

Environmental policy currently prohibits anyone other than MINITERE to
perform environmental management projects. Therefore there is an
opportunity to use financial incentive to promote environmental
management using MINITERE as one intermediary.

Current policy mandates that local people relocate from the wetlands. This
inhibits the ‘voluntary’ requirement of the formal PES scheme.

Land policy has largely not distributed land tenure rights. This may challenge
the formalization of a PES scheme on the sellers’ end.
No. Rural people do not have land rights. However, wetlands products and ES have
traditionally been permitted as commodities.
Do community organizations
have rights to
sell/approve/reject deals?
Uncertain. The status of community organizations is unknown, or nascent. These
community organizations will need to determine WTP values for the ES.
Are there government agencies
that regulate and manage the
ES?
REMA exists for this function. However, REMA was created in 2005 and many
projects and initiatives are in embryonic stages.
Is there government support for
reducing the risk of PES?
PES would be considered one tool towards enhancing livelihoods, development,
environmental management, and energy diversification. The risks of the Business As
Usual scenario, are perhaps equal to the risks of initiating a scheme, with the potential
for change being greater with PES.
Are there any additional
laws/regulations/administrative
rules required for development
of PES?
MINITERE would need to instate a fee/tax on utility/private sector water use (option
1), or Electrogaz/private sector would need to establish a payment value based on
local economics.
Are there any institutions that
support PES?
KIST/CITT, IISD, UNEP, GEF, Sector executive secretaries. The ACCESA steering
committee is researching broad interest in PES.148
What institutions are needed to
help support PES?
Local NGOs, PEI, MINITERE, MINAGRI, MINIFRA, COOCASTER, IMCE,
Electrogaz,
ACCESA Steering Committee. Personal Communication. September 13, 2007. CITT/KIST. Kigali, Rwanda.
64
SCALING UP
RISKS
Are there local support
organizations established?
As part of Rwanda’s decentralization plan, local organizations have received more
authority and governmental support, but financially and structurally these entities are
still young.
Do local people able to decide
how PES funds will be spent?
If funds are distributed through CDFs then local people should be able to determine
where funding is spent or how infrastructure is created.
Are there ES bundling
opportunities?
Potentially.
Is there an opportunity to be a
part of a PES network?
 Depending on the capacity for reforestation or afforestation, there could be an
opportunity for acquiring carbon credits.
 A funding link could be established with ecotourism projects.
 Possibilities for trans-boundary water management with countries in the Nile
River basin, e.g. Uganda, D.R.C., Tanzania, Kenya, and Burundi PES suggest
an opportunity for a regional scheme.
 Creating a nation-wide, networked, hydropower scheme similar to those of
Costa Rica and Kenya may have real potential.
Yes. There are two options. The Katoomba group operates an east and southern
Africa network including South Africa, Malawi, Tanzania, Uganda, Kenya, Madagascar.
ICRAF operates PRESA (Pro-Poor Rewards for Environmental Services in Africa) in
Kenya.
Has a national assessment of
potential future sites for ES
deals been conducted?
No.
Has a national assessment of
buyers been conducted?
No.
Is there technical assistance
available for identifying and
establishing PES markets?
Katoomba, PRESA, UNEP/UNDP, PEI, and national environmental economic
specialists (Center for Resource Analysis, National University of Rwanda)
Has a financial and risk analysis
been conducted?
No.
Potential for loss of livelihoods
and income due to restricted
land uses or natural resource
extraction :
Yes. There is likely to be a transitional period for some of the population.
Potential for reduced health and
reduced food security resulting
from loss of access to natural
resource based foods :
Yes. But it is uncertain how access to wetland for provisioning service will be affected.
s
Potential for increased land
prices resulting from an
increased demand for land:
N/A
65
Potential for inequitable
distribution of resource power if
wealthier and more powerful
groups have a greater ability to
pay or participate:
The potential scheme would need to evaluate differences between large land holders
and small, as well as between those with long-standing land rights, and those with
none. Equity is a critical issue.
Potential for loss of cultural
heritage due to abandonment of
traditional resource use:
Yes. But it is uncertain how access to wetland for provisioning service will be affected.
s
Potential for loss of employment
due to reduced harvesting rights,
reduced labor needs, or if excess
labor can not be redirected to
other income generating
activities:
Possible. However, compensation may lead to increased jobs, such as through
infrastructure labor needs. Enhancement of the private sector should also improve offfarm employment.
Potential for loss of control,
flexibility, and/or local
participation over local
development options especially
if contracts specify a narrow
range of management
alternatives:
The potential PES scheme should enhance decentralized environmental management
Potential for skewing of local
power structures or power base
resulting from an unequal
distribution of rewards:
Possible. Potential unknown.
Potential for increased
competition resulting from
markets that lead to the further
marginalization of weaker
groups:
Potential unknown.
How does this scheme influence
the poor:
(reduces vulnerability, increases
access to decision-making
processes, increases access to
social and health services, and
improves environmental quality
in addition to enhancing
material wealth)
 Reduces vulnerability: Provides direct economic support and funneling of
funds to local people at the sector and district level; Potentially diversifies
local economy by enhancing beekeeping, artisanal crafts, intensive agriculture,
and support of private sector development (e.g. tea and coffee production).
 Increases access to decision-making processes and access to services:
Enhances local participation, communication, networks and institution
building, and overall decentralization.
 Improves ES: Improves sustainability of wetlands, encourages opportunity for
ecotourism, operates to increase fish and wildlife levels.
66
BENEFITS
Is there cause for concern for
“moral hazards” in the type of
PES incentives?
Rwanda’s environment, poverty, and population is so dire that a “moral hazard”
related to the environment is not a priority.
Are there existing analyses on
local benefits from the project?
No.
Potential
for
increased
land/resource tenure or property
security
resulting
from
formalization of property rights
land :
Formalization of property rights is a potential real benefit
Potential for improved human
and resource health resulting
from investments in medical
facilities,
conservation
and
pollution
mitigation,
and
decreases in environmental
health risks :
Possible.
Potential for strengthened social
institutions
resulting
from
cooperative arrangements that
support evolving markets:
Local organizations, agricultural cooperatives, community development committees
and governments should see improved communication, coordination, and valuation of
local ecosystem services; increased support for local markets for agriculture, fish, and
artisanal crafts should also occur.
Potential for skill development
resulting from training such as
in
natural
resource
management:
Improved education and awareness is a benefit of PES schemes; improved ability to
monitor for climate change impacts should result.
Potential
for
improved
recreation
and
cultural
opportunities resulting from
environmental conservation and
the protection of cultural
heritage and religious sites:
Improved wetlands management and reduction in encroachment should enhance
conservation, wildlife, biodiversity, scenic beauty, and the opportunity for ecotourism.
Potential for diversified and
increased rural income resulting
in
lessening
household
vulnerability and risks from
shocks, and increased and
diversified incomes/goods:
Increases and diversification of income should result from supporting alternative nonagricultural employment, enhancement of private sector, and increase in reliability and
spread of water infrastructure and/or electricity. The ability to prepare for climate
change should also help stabilize agricultural production.
67
FUNDING
AWARENESS
Possible. Improved climate monitoring should improve agricultural planning.
Potential for improved human
well-being
and
improved
livelihoods due to environmental
enhancement:
Yes.
Potential for improved business
and
market
organization
resulting in local communities,
fostering and enabling future
growth
and
economic
development:
PES will support needs of Electrogaz and development of the private sector, and
agricultural processing
Potential for increased food
security
from
sustainable
farming,
technology,
and
knowledge:
Possible.
Potential for increased access to
alternative or clean energy
PES intends to improve water flows for hydropower stability and thus reduce
dependency on biomass for fuel, and increase access to alternative and clean energy;
for the short-term, these results will be seen largely outside of Rugezi and in the urban
areas; in the long-term these results may be seen for the rural communities in areas
such as Rugezi.
What type and source of
financing is available?
National funds for the environment (FONERWA)
What is the level of awareness of
valuation and PES?
Minimal.
Who disseminates information
on valuation and PES?
MINITERE
Are there training and education
resources available?
No.
Are there experts in ES
monitoring and evaluation incountry?
Not enough.
IMPL
EME
NTAT
ION
Potential
for
increased
productivity resulting in more
sustainable farming and forest
systems for local livelihoods :
68
What is the timeline for the
design, scoping, brokering,
negotiating, and implementing
phases?
Phase I: Design and Scoping – This is underway. More economic analysis is needed to
determine specific costs, benefits, and willingness-to-pay. This should be completed by
2009
Phase II: Brokering and Negotiating – This phase could be initiated 2007-2009. In
particular, engagement with the private sector, Electrogaz, and agricultural
cooperatives should begin immediately. Regional networks and international donors
should be contacted as well.
Phase III: Implementing – Could be initiated immediately following Phase II.
What are indicators for
monitoring success?
Success for this project is determined as
1)decreases in vulnerability to climate impacts,
2) improvements in environmental resource quality and quantity,
3) enhanced energy sector diversity and stability,
4) enhanced livelihoods.
Indicators for these could be:

Has a Cost-Benefit analysis
been done?
What is needed to support PES?
Agriculture/food security: crop yield, crop mix, household nutrition,
household food supply

Ecosystem: forest cover, water levels, water quality, soil fertility/quality,
siltation

Water Resources: hydro-potential, siltation rate/levels, water supply mix,
river flow rate, lake level, water quality

Rural Employment Mix

Health: incidence of malaria/disease149
No. A partial cost-benefit analysis of Rugezi environmental economics is under review
at MINITERE. (“Economic Analysis of Natural Resource Use in Rwanda with a Case
of Land and Water Resource use in Rugezi Wetlands”).






Education
Technical assistance
Case study review
Economic analysis
Engagement of Electrogaz and the private sector
Approval of MINITERE/REMA and local district/sector governments
Appendix 2: Commodity (2004) prices in Rugezi Wetlands150
Crop
Potatoes
Sorghum
Beans
Price
40 FRw/kg
150 FRw /kg
130 FRw /kg
# of seasons/yr
NA
1
NA
*Notes*
Maintains an extremely stable market.
CITT/KIST. Community Vulnerability Baseline. UNEP-GEF Pilot Project on Reducing the Vulnerability of the Energy
Sector to the Impacts of Climate Change in Rwanda. Project Report. August 26, 2006
150 Republic of Rwanda. Mission D’Etude de la Conservation et de la Gestion Integree du Marais de Rugezi et de son Bassin
Versant. MINALOC and HELPAGE. Kigali, Rwanda. May 2004.
149
69
Peas
Maize
Fish
180 FRw /kg
80 FRw /kg
50 FRw /batch
2
1
Water level dependent
Boat
transportation
1000 FRw /day
Crafts
Tiles – 40 FRw
Mats – 750 FRw
Ropes – 50 FRw /bundle
Pads – 5000 FRw
Sold at markets 2x/week
Honey
700-800 FRw /liter
Medicinal
Plants
N/A
Each hive typically
produces 5 liters, and each
owner possesses 10 hives.
N/A
Formally existed as an important
employment. Now only employs 1% Rugezi
population. A batch (or tige of fish ranges 520 fish). Sufficient water levels permit catches
of 20 batches/night; poor water levels
minimize this to 10 batches/night.
This employment existed in the past, but
water levels no longer permit market trading
between Rwanda, Tanzania, and Uganda or
between Rugezi communities. Boat
transportation is now only possible in the
southern tip of the Rugezi valley which is far
less degraded.48
This indicates the wetland supplies a
significant income contribution to the local
people. These activities are organized into
local cooperatives or associations. Crafts are
produced by women.
Produced largely during the dry season. Local
cooperatives organize up to 1200 hives.
N/A
Appendix 3: Community Associations in and around Rugezi (not all inclusive)151
Community Associations
DUHAGURUKE
DUFATANYE
DUKUNDANE
DUFATANYE
DUHUZIMBARAGA II
Sector/District
Kinyababa/Burera
Kinyababa/Burera
Kinyababa/Burera
Kinyababa/Burera
Kinyababa/Burera
DUKANGUKIRE AMAJYAMBERE
DUTERIMBERE
KARANINGUFU
Kinyababa/Burera
Butaro/Burera
Butaro/Burera
INGOBOKA
INSHUTI
TWUBAKIRANE
N/A
DUSHYIGIKIRANE
MUVANDIMWE
TWITEGANYIRIZE IMINSIMIBI
DUSHYIGIKIRANE
UMURAVA
Butaro/Burera
Butaro/Burera
Kagogo/Burera
Kagano/Burera
Gacaca/Musanze
Gacaca/Musanze
Gacaca/Mukungwa
Gacaca/Mukungwa
Gacaca/Mukungwa
Function (Members)
Profit-sharing fishing collective (17)
Goat and sheep rearing collective (30)
Farmers, animal husbandry, and handicrafts (20)
Irish potatoes and beans collective (15)
Farmers & animal husbandry; everyone possesses a
goat or sheep (23)
Farmers & animal husbandry
Irish potatoes and tomatoes collective (18)
Profit-sharing; keeps a certain amount of money in a
pool each month (18)
Handcraft arts for disabled men (23)
Irish potatoes and sorghum collective (17)
Tile collective
Meetings about tomatoes and Irish potatoes (18)
Irish potatoes and beans collective (17)
Irish potatoes collective (17)
Irish potatoes collective (33)
Agriculture collective (14)
Savings and credit collective (33)
CITT/KIST. Initiate Engagement with Communities Located in the Watershed Areas. UNEP-GEF Pilot Project on
Reducing the Vulnerability of the Energy Sector to the Impacts of Climate Change in Rwanda. Project Report. August 26, 2006.
151
70
DUFATANYE
MUDAHEMUKA
RAGIRA INTAMAZANJYE
DUSABANE
TEGANYAEJO HAZAZA
URAMA
TERIMBERE
DUTERIMBERE
DUFATANYE
AMIZERO
TWUNGANIRANE
ABISHYIZEHAMWE
DUTABARANE
TWITEZIMBERE
BANYARWANDAKAZI
ASHYIZEHAMWE
ATAVEBU
DUHUZE
Sorghum Association
Gacaca/Mukungwa
Gacaca/Musanze
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Kivuye/Burera
Burera/Burera
Kivuye/Burera
Kivuye/Burera
Butaro/Burera
Collective on development (31)
Tiles collective (23)
Irish potatoes & Sorghum collective(16)
Potatoes & Maize collective (16)
Maize & Potatoes collective (42)
Potatoes, maize, & beans collective (12)
Potatoes, maize, & Sorghum collective (10)
Potatoes, wheat, sorghum & beans collective (16)
Potatoes, wheat, sorghum, & beans collective (10)
Maize, beans, & sorghum collective (11)
Maize & potatoes collective (23)
Maize, potatoes, & sorghum (24)
Sheep, potato, & sorghum collective (10)
Maize & potato collective (14)
Kinyababa/Burera
Kinyababa/Burera
Gacaca/Mukungwa
Kinyababa/Burera
Self help credit project collective (N/A)
Maize & Potato collective (27)
Maize & potato collective (19)
Sorghum collective (29)
Appendix 4: List of Hydropower plants supplied by KIST152
1. The Hydropower plants under construction:
Mukungwa II (2.5MW)
RUGEZI (2,2 MW)
RUKARARA (9,5MW)
Nyabarongo (27,5MW) to be started in January 2008,
2. The Micro Hydropower plants under construction:
Janja (200kw)
Mutobo (200kw)
Gashashi (200kw)
Nyabahanga (200kw)
Nyirabuhombohombo (500kw)
Nshili I (400kw)
Agatobwe (200kw)
3. The existing Micro and hydro power plants (not necessary operational at the time):
Mukungwa I
Ntaruka I
Rusizi
Nyamyotsi
152
Mutabazi, Richard. Personal Communication. KIST. Kigali, Rwanda. November 1 2007.
71