GUATEMALA WATER FUND:
Partnering with the Private Sector for
Biodiversity Conservation in the
Sierra de las Minas Biospher...
Guatemala Water Fund
Project Objectives
• Achieve long term financial sustainability in the
conservation and management of...
Guatemala Water Fund
Mesoamerican Caribbean Reef (MAR) Ecoregion
Guatemala Water Fund
Sierra de las Minas Biosphere Reserve

• Declared in 1989 the jewel of the PAS in
Guatemala.
• 592,80...
Management of SMBR
Guatemala Water Fund
Sierra de las Minas Water Users Market

Two watersheds selected
because:
• 21 industry plants
• Water...
Guatemala Water Fund
Project Concept

PES MECHANISM
PES Financial Mechanism
Market Study
Industries categorized by:
• Geographic location:
21 industries in Motagua basin
(loc...
PES Financial Mechanism Design
Assumptions
• Well-known cause-effect
• Very low fixed cost
• Mix of financial instruments
...
Financial Mechanism Design
Implementation Structure

Policy level

BOARD OF DIRECTORS

Sector Committees

NGO’s

Industry ...
Financial Mechanism Design
Implementation Structure
INDUSTRY

SOURCE

$

$

$

$

Other sector
accounts
P
R
O
J
E
C
T
S

+...
Financial Mechanism Design
Implementation Structure
Investment
decisions and
supervision

Investment
Committee
by sector

...
Investment Committee
Financial Mechanism Design

Financial Feasibility (Projected Cash Flow in US$)
INCOME

Y1

Y2

Y3

Y4

Y5

Y6

A. User fee...
Project Update
• Built data base starting 1995
• Conducted awareness, research and information activities with key
stakeho...
WWF & Coca-Cola Activities
• Share lessons learned in PES projects driven by Coca-Cola and WWF
• Share industrial experien...
WWF-TCCC Areas of work

Manchaguala

Pueblo Viejo
chic
Rio Polo

rr
Sie

don
ren
e
aM

ec
amel
io C h
R

Sierra de las Min...
Believe it or not,
branding a PPT is
easier than dancing
with an elephant.

GRACIAS!

© WWF-Canon / Martin Harvey
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
Guatemala Water Fund:  Partnering with the Private Sector for Biodiversity Conservation in the  Sierra de las Minas Biosph...
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Guatemala Water Fund: Partnering with the Private Sector for Biodiversity Conservation in the Sierra de las Minas Biosphere Reserve (SMBR) through a Payment for Environmental Services (PES) Mechanism

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7th GEF Biennial International Waters Conference in Barbados Presentation on Guatemala Water Fund by Karin M. Krchnak

Published in: Technology, Business
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Guatemala Water Fund: Partnering with the Private Sector for Biodiversity Conservation in the Sierra de las Minas Biosphere Reserve (SMBR) through a Payment for Environmental Services (PES) Mechanism

  1. 1. GUATEMALA WATER FUND: Partnering with the Private Sector for Biodiversity Conservation in the Sierra de las Minas Biosphere Reserve (SMBR) through a Payment for Environmental Services (PES) Mechanism Karin M. Krchnak WWF-US October 27, 2013
  2. 2. Guatemala Water Fund Project Objectives • Achieve long term financial sustainability in the conservation and management of the SMBR through implementation of a PES mechanism. • Implement an innovative financial mechanism linking downstream water users with upstream watershed management and conservation to ensure an abundant and clean water supply.
  3. 3. Guatemala Water Fund Mesoamerican Caribbean Reef (MAR) Ecoregion
  4. 4. Guatemala Water Fund Sierra de las Minas Biosphere Reserve • Declared in 1989 the jewel of the PAS in Guatemala. • 592,800 acres • Oldest mountain range in the region • Altitude ranges from sea level to 10,496 ft • 66% of mammal species in Guatemala, including endangered species like the resplendent Quetzal, jaguar, yellow-cheeked warbler, ocelot • “Gene bank” for economically important coniferous species 63 permanent rivers originate in core zone • Approximately 500 poor communities in buffer zone
  5. 5. Management of SMBR
  6. 6. Guatemala Water Fund Sierra de las Minas Water Users Market Two watersheds selected because: • 21 industry plants • Water is important input in industrial processes • Significant water quantity and quality reduction during dry season (Montagua Valley is one of Central America’s most arid zones) • Industry’s willingness to pay • Existing base information
  7. 7. Guatemala Water Fund Project Concept PES MECHANISM
  8. 8. PES Financial Mechanism Market Study Industries categorized by: • Geographic location: 21 industries in Motagua basin (located in 3 of 82 sub-watersheds) • Extraction techniques: surface (rivers) and underground (wells) • Water is important input in industrial processes • Size Large (Coke bottling plant, Rum plant, Paper, others) 6 Medium (hydro-power, agro-industry, others) 10 Small (hotels, others) 5 21
  9. 9. PES Financial Mechanism Design Assumptions • Well-known cause-effect • Very low fixed cost • Mix of financial instruments • Custom made to market needs • Balance between conservation and development objectives • Balance between short- and mid-term results: Micro  Direct impact to industry  Focus on water and energy use optimization (reduction of effluents)  Short-term impact Macro  Conservation and management of watershed  Focus on PA or forest owners  Community projects  Mid-term impact
  10. 10. Financial Mechanism Design Implementation Structure Policy level BOARD OF DIRECTORS Sector Committees NGO’s Industry sector Donors Other Sectors + Investment Policies
  11. 11. Financial Mechanism Design Implementation Structure INDUSTRY SOURCE $ $ $ $ Other sector accounts P R O J E C T S + Industrial account $ Trust fund or endowment Investment policies DONORS Investment technical committee $ Management account Investment decisions and supervision Management and operation of Guatemala Water Fund
  12. 12. Financial Mechanism Design Implementation Structure Investment decisions and supervision Investment Committee by sector Director Financial Accountability Unit Management and supervision of Water Fund Technical Unit Outsourcing Specialized support • Financial audit • Marketing • Technical experts (e.g. hydrology) • Monitoring Project proposal (technical support)
  13. 13. Investment Committee
  14. 14. Financial Mechanism Design Financial Feasibility (Projected Cash Flow in US$) INCOME Y1 Y2 Y3 Y4 Y5 Y6 A. User fees (membership) 75,000 120,000 134,000 148,000 152,000 152,000 B. Donations 165,000 150,000 150,000 75,000 75,000 75,000 C. Interest earned 15,555 77,903 110,373 128,563 128,563 128,563 Total Income 257,305 351,903 401,123 361,063 367,813 370,563 EXPENSES Y1 Y2 Y3 Y4 Y5 Y6 D. Project allocations 120,000 180,000 220,000 220,000 220,000 220,000 E. Endowment transfer 35,000 45,000 55,000 55,000 55,000 55,000 F. Management costs 90,000 85,000 85,000 85,000 85,000 85,000 Total Expenses 245,000 310,000 360,000 360,000 360,000 360,000 Cash Flow (accumulated) 12,305 54,208 95,330 96,305 104,205 114,768
  15. 15. Project Update • Built data base starting 1995 • Conducted awareness, research and information activities with key stakeholders • Ongoing conservation activities to preserve high biodiversity areas in basin • Clearly identified cause-effect relationship on at least three subwatersheds showing clear dependency on upper watershed • Identified users’ willingness to pay through market studies • Established 10 community-based watershed committees • Signed agreements with three main industries (Paper plant, and rum and Coca Cola bottling plants) • Completed diagnosis and business plans to optimize water use and reduction of effluents in all three plants
  16. 16. WWF & Coca-Cola Activities • Share lessons learned in PES projects driven by Coca-Cola and WWF • Share industrial experience of BMP’s in water use implementation promoted by Coca-Cola and WWF-Other bottling plants • Present Water Savers Tool Kit developed by WWF and Coca-Cola • Share BMP’s training initiatives developed by WWF and Coca-Cola to date for water use optimization and analyze training needs at ground level • Phase 2 Core Basin: 2013-2020 • Freshwater Conservation, Value chain & Valuing Nature
  17. 17. WWF-TCCC Areas of work Manchaguala Pueblo Viejo chic Rio Polo rr Sie don ren e aM ec amel io C h R Sierra de las Minas Rio ua otag M Teculutan on
  18. 18. Believe it or not, branding a PPT is easier than dancing with an elephant. GRACIAS! © WWF-Canon / Martin Harvey
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