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Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
Water Funds
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Water Funds
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Water Funds

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Latin American Water Funds Partnership Experiences from Scaling Up Watershed Conservation

Latin American Water Funds Partnership Experiences from Scaling Up Watershed Conservation

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  • Water fund general model including financial flow andoperational process. A wide variety of water users and other donorshave invested money in water funds. Depending on the fund, portionsof investments are directly invested in operational activities andconservation activities (protection and restoration) while the rest ofthe fund money is invested in an endowment fund. Capital from theendowment fund similarly funds operational and conservationactivities.
  • The score map, activity cost data, and stakeholder preferences are combined to produce an investment portfolio, which shows the best places to invest in different activities to maximize return on investment, for a given budget level from the WF. Budgets can be annual or multi-year, and can be allocated based entirely on ROI or can be preallocated among activities.This water fund is considering how much it should spend on restoration, so to maximize returns, can assess ROI - same process for 5 different possible budgets, from 3 to 10 million US$. We used the InVEST sediment model to compare the baseline service provision with what would be achieved if the portfolio were implemented
  • These diverse kinds of investments are paying dividends, for the communities in the catchments, the environment, and the downstream beneficiaries of the water services
  • Water Funds have the potential to provide significant benefits for investors, upstream and downstream communities, and the natural world. However, these benefits are not guaranteed by the creation of a Water.To ensure that investments are having their anticipated impacts and to enable corrections to management strategies, Water Funds must include robust monitoring programs to track the environmental, economic, and social impacts of their actions.Water Funds operate under the assumption that activities carried out to protect and restore watersheds will provide the intended benefits defined in the Fund’s goals and objectives.The extent to which these goals and objectives are achieved depends on the efficacy of models that are used to estimate benefits, the effectiveness of the activities, the efficiency of implementation, the return on investments that occur, and the influence of environmental and socioeconomic factors external to Water Fund activities that can have significant impacts on results.Monitoring efforts are focused on climate and hydrological monitoring, water quality assessments.
  • Also biological monitoring of watershed and aquatic ecosystem health and biodiversity and monitoring of impacts on community livelihoods are receiving increasing attention. # families benefited upstream
  • Collective understanding of scaled up real benefits to d/str beneficiaries and upstream communities
  • Momentum lead to formalised partnership
  • Vision for LAWF Partnership focused on scaling up and leveraging benefits of water fund adoption for people and natural systems
  • IDB - The InterAmerica Development Bank is the main source of multilateral financing in Latin America. It provides solutions to development challenges and support in the key areas of the region.CAF is a Multilateral Development Bank currently owned by 18 countries in Latin America, the Caribbean and Europe as well as 14 private banks from the Andean region. CAF’s objective is to support sustainable development and regional integration within Latin America in order to make its economies more diversified, competitive and responsive to social needs. This is achieved by financing economic and social infrastructure projects, encouraging foreign investment and capital markets development in the region, promoting the expansion of regional trade and exports and supporting the development of small and medium-size enterprises.CAF is the main source of multilateral financing for infrastructure in Latin America.Andean Development Corporation (CAF). .
  • Today, the Water Funds model is our leading tool for financing watershed conservation to improve water security for cities. We are currently involved in more than 40 Water Funds in Latin America, North America and Africa in cities like Bogotá, Cali, Medellín, Monterrey, Nairobi, Quito, Rio de Janeiro, and Santa Fe (New México).—including 14 funds that have been launched and are operational, though only 1 of these can be considered mature (i.e. with Financial sustainability and Consolidation of field activities and monitoring)These replicating funds allow us to scale up watershed conservation efforts and leverage experience gained to levels that can achieve significant positive impact.Water funds are sufficiently transparent, structured and robust for diversity of local contexts and needs to be replicated successfully. Key challenges appear to lie in:Ensuring that watershed interventions are deployed at right scale to secure positive impact in the basin(s) of the water supply systemMonitoring and demonstrating effectiveness of fund in meeting its objectives for watershed protection/restoration
  • Transcript

    • 1. Water Funds Latin American Water Funds Partnership Experiences from Scaling Up Watershed Conservation Fernando Veiga Rebecca Tharme The Nature Conservancy 1
    • 2. Investing in Green Infrastructure Ecosystems provide services to society Growing evidence that the conservation and restoration of ecosystems are key to guarantee water security for human needs, and in many cases represent the most cost-effective solutions Water funds rely on concept of ecosystem services e.g. erosion abatement; sediment reduction; nutrient filtration; flow regulation; flood control - clean reliable water sources Water Funds invest in conserving watersheds to improve or maintain waterrelated benefits and regulate water-related risks 2
    • 3. Water Funds Users ECOSYSTEM SERVICES MODEL Providers Water Fund Board $ Financial Fund $ Quito Ecuador Population 2 million Condor Bioreserve & Surrounding farmlands WATER SERVICES WF is a conservation trust fund that finances watershed protection 3
    • 4. Water Funds are effective tools for watershed conservation because they: • Connect suppliers of ecosystem services with beneficiaries, providing direct benefits downstream and improved livelihoods upstream (efficient) • Mitigate water scarcity and pollution problems at the source rather than end-of-pipe treatments (effective) • Provide a sustained funding mechanism with a flexible governance structure to allow for adaptive management of risks and opportunities (sustainable)
    • 5. Business case São Paulo, Brasil • Most important water supply area in Brasil - 50% of São Paulo metropolitan area, 9 Mill people • Poor land-use practices in sensitive areas undermining system capacity to serve growing demand • Invest models estimated mean erosion rates and sediment loads – 14 300 ha of priority areas (3% of total area) for water fund investments = 50% of sediments abated = 600 000 tons per year • US$ 4.9 million/year of potential reduction in water treatment and drainage costs (excl. other potential benefits e.g. contaminants reduction) 5
    • 6. Business case Cauca Valley, Colombia - Most important sugar cane production area in country (200 000 ha) - Increased pressure on water resources - potential future reduction from 5 to 4 irrigation cycles with current degradation trends 18 Sugar cane harvest (million tons) 8.7% decrease in productivity 15 12 Loss of $33 million / year Loss of $250 / ha / year 9 6 Sugar cane mills are main funders - for water supply assurance 3 0 2006 2007 2008 Production Caña 5 Riegos Producción dewith 5 cycles 2009 2010 Promedio Production with 4 cycles Producción de Caña 4 Riegos Source: Sugar Cane Research Centre - Cenicaña – estimations Asocaña 6
    • 7. Feasibility Study Economic Rationale Bogotá, Colombia 50.0 m3/ha/año m3/ha/year Ton/ha/year toneladas/ha/año 40.0 10:1 Reducing sediment loads Water quantity Cantidad agua 2 Million tons by Quantity de sedimentos Cantidadof sediments (Component of Quality) 30.0 RegulationProjected savings significant but not quantified USD 3.5 M per year in treatment costs 20.0 10.0 0.0 Conserved Conservado Area Uses inside Uso actual (con Protected Area política ambiental) Sources: CIAT 2007, Bogota Water Fund Outside Uso fuera parque Protected Area (sin política ambiental) 7
    • 8. Proof of Concept Quito Water Fund • Páramo and forest as biodiverse natural water tower • 80% of water for the city of Quito, Ecuador, from three protected • areas and their buffer zones Conversion with land pressures reducing ability to provide services Importance • 2 million residents • Condor Bioreserve: 2.5 million acres, exceptional biodiversity, inc. 760 bird spp.; 28 rivers Fund Progress • 2000: $21 000 start-up 2013: ~ $13 000 000 • Since 2006, 2% of the water utility revenues • Annual investments of nearly $2-3 million (leverage) Partners • EMPAAQ (Quito’s Water Agency); Quito Electric Company; USAID; Swiss Development Corporation; Cerveceria National (beer company); Tesalia Springs Co. (water bottling company) 8
    • 9. Proof of Concept Quito Water Fund Conservation Progress Benefits to People • 85 000 ha of public lands protected • 19 000 ha of private lands restored and/or under Best Management Practices • Permanent support through various programs to communities close to the water sources • Enrolled 30 500 children in environmental education programs • Over 200 families engaged in community development projects in rural basins 9
    • 10. Steps to establish a Water Fund Prefeasibility and Evaluation Which ecosystem services? Where is the area of influence? Who are the stakehold ers? Design Feasibility studies: Environment al Socioeconomic Institutional and legal Operation Negotiatio n Institution al arrangem ent Partners’ commitm ent (financial and technical) Contracts with local stakeholde rs Field activities Fundraising Maturity Financial sustainabili ty Consolidati on of field activities and monitoring Monitoring 10
    • 11. Science-based approach Contribution to aquifers Contribution to flows Sediments Coverage Biodiversity connectivity Highest priority areas for conservation Sistema Water for life and sustainability Río Río Río Río Río Río Amaime Bolo Desbaratado Fraile Nima Tuluá TOTAL Área ronda del río (250 mts cada lado) (Has) 7.126 2.210 1.016 2.792 1.642 13.234 28.020 Área en cobertura natural para conservación (Has) 3.135 1.414 772 2.345 1.133 5.426 14.226 % 44 64 76 84 69 41 Área intervenida para restauración (Has) 3.991 796 244 447 509 7.808 13.794 % 56 36 24 16 31 59 11
    • 12. Investment Portfolio
    • 13. Investments Private and communal lands 1. 2. 3. 4. 5. 6. Conservation agreements Best agricultural and cattle ranching practices (silvopastoral systems) Riparian forests Reforestation and restoration Income generation Environmental education Public areas 1. Implementation of management plans 2. Park guards 13
    • 14. Peru Ecuador Colombia Brasil 14
    • 15. WATER MONITORING Water Monitoring Sites Quality • 9 sites • 9 parameters Precipitation • 3 sites Parâmetro Analítico Flow • 3 sites Community Engagement PH Turbidez DBO Cor Coliformes Termotolerantes Oxigênio dissolvido Nitrogênio amoniacal Fósforo Total Temperatura 15
    • 16. Biodiversity Monitoring • Importance of riparian areas •Terrestrial monitoring of páramos and forests also showing first encouraging results (e.g. forest bird species in restoration areas) Paulo Petry 16
    • 17. Community monitoring 4218 families benefited upstream in watershed
    • 18. Monitoring of multiple water funds ongoing
    • 19. TNC, FEMSA Foundation, IDB and GEF Launched in 2011
    • 20. The vision Over the next 5 years $27 million in Seed Capital will support direct investment of $143 million in 32 Water Funds, leveraging additionally $500 million providing long-term payments for environmental services to rural communities, and securing clean and sufficient water and effectively conserving 7 million acres for 50 million people in Latin America 20
    • 21. Goals 1. Support the establishment and strengthening of the WFs 2. Identify and share best practices 3. Development of regional projects 4. Support monitoring initiatives 5. Keep developing the business cases 6. Raise awareness (Where Does Your Water Come From?) 7. Support the green infrastructure approach in water sector loans (IDB and CAF) 8. Partner with water regulators with the aim of including the watershed conservation costs in water tariffs (ADERASA – PE, CR, BR)
    • 22. Water Funds as at June 2013 Status 15 in evaluation 14 in design 13 operating 1 mature Opportunities • Exchange lessons learned • Regional players (public and private) – reduction of transaction costs • Diversity and cooperation • Upscale (implementation channel) • Expand to new geographies (Africa, USA)
    • 23. Thanks www.fondosdeagua.org 23

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