The document summarizes the Water and Nature Initiative, which aims to improve watershed health and livelihoods by applying an ecosystem approach to river basin management. It discusses the initiative's goals, partners, projects in various basins, and tools to assess environmental flows and the economic value of ecosystems. The initiative applies these tools in partner regions and builds lessons on setting environmental flows, valuing ecosystem services, and using valuation to inform payments for ecosystem services and management decisions. Challenges include valuing non-use values and complex biophysical relationships between ecosystems and human activities.

1. Balancing water needs: the experience of
the IUCN Water and Nature Initiative
Danièle Perrot-Maître
Seminar on “Ecosystems as Water Suppliers”
UNECE-BUWAL, Geneva, 13-14 December 2004

2. The Water and Nature Initiative:
A Learning Initiative
GOAL :To improve watershed ecosystems health and livelihoods
PURPOSE: To learn and demonstrate how to apply the ecosystem
approach into river basin planning and management
HOW TO ACHIEVE THIS?
 Governance and Law
 Participation and Empowerment
 Economics and Finance
 Information and Knowledge
 Learning and Communication

3. The Water and Nature Initiative in
Figures
– 5-year (2001 - 2006)
– US$ 80 million budget
– 80 partner organisations
– 30 projects
– 30 countries
– 10 river basins

4. The Workspace
(www.waterandnature.org)

5. The Tools
CHANGE-Adapting to climate
change
FLOW - The essentials of
environmental flows
VALUE-Counting ecosystems as
water infrastructure

6. What is an environmental flow?
Environmental flow is the water regime provided within a
river, wetland or coastal zone to maintain ecosystems and
their benefits where there are competing water uses and
where flows are regulated.
The outcome is an improved management regime that
guarantees the longevity of the system and finds the
optimal balance between the various uses.
Source: FLOW, The Essentials of Environmental Flows,
IUCN-WANI, 2003

7. How to establish environmental flows ?
• Define water requirements (defining objective,
selecting trade offs scenarios and EF method)
• Modify water infrastructure
• Finance
• Create a policy and legal framework
• Generate political momentum
• Build capacity for design and implementation

8. Applying environmental flow in the
Water and Nature Initiative
1. Toolkit “FLOW”
2. Training, field application and testing of
toolkits in 4 regions:
 Tacana riverbasin, Guatemala, Mexico. allocation
 Pangani River basin, Tanzania and Kenya: water
pricing
 Huong River Basin, Vietnam: importance of wetlands
for shrimp aquaculture and local livelihoods
 Volta River Basin, Ghana and Burkina Faso
3. Develop case studies and lessons learned
4. Building a global and regional community of
practice

9. What is the economic value of ecosystems?
Direct values
Outputs that can be
consumed directly,
such as fish,
medicines, wild foods,
recreation, etc.
Indirect values
Ecological services,
such as catchment
protection, flood control,
carbon sequestration,
climatic control, etc.
Option values
The premium placed on
maintaining resources
and landscapes for
future possible direct and
indirect uses, some
of which may not be
known now.
Existence values
The intrinsic value of
resources and landscapes,
irrespective of its use such
as cultural, aesthetic,
bequest significance, etc.
Non useUse
Total economic value of ecosystems

10. Economic value of ecosystems:
what does it tell us?
• How much does an ecosystem contribute to economic activity or society? Ex.
forests in Med countries provide at least US$50 annually per capita. On
average forest benefits in the region amount to about 1 percent of GDP.
Indirect use value such as watershed protection contributes about 35% of total
estimated value. Or:
Wild forest-based pollinators increased coffee yields by 20% on farms located within 1
km of forest in Costa Rica and in 2002-03, pollination services from two forest
fragments (46 and 111 ha) translated into about US$60,000 per year for one study farm
in Costa Rica.
• What would be the benefits and costs of an intervention that alters the
ecosystem (conservation investment, development project, regulation or
incentive)?
• How are costs and benefits of a change in ecosystem distributed?
• How to make conservation financially sustainable?

11. Ecosystem valuation results can provide valuable input
into many types of water management decisions
• Investing in infrastructure development (design, management,
investment appraisal) taking into account the cost of ecosystem
maintenance
• Allocating water to various economic users including the
ecosystem
• Land use planning: investing in ecosystems for water supply
and quality
• Accounting for cost of ecosystems protection in water prices
and price of water-based products
• Designing incentives mechanisms such as payments for
ecosystem services (and removing inadequate incentives)
• Designing new financing mechanisms

12. Applying ecosystem valuation in the Water
and Nature Initiative
1. Toolkit “VALUE”
2. Training and field application and testing of
toolkits in 5 regions:
 Costa Rica: hydropower development and public
budget allocation
 Mekong: livelihood impacts and co management
 Huong River Basin, Vietnam: importance of
wetlands for shrimp aquaculture and local livelihoods
 Sri Lanka, Kola Oya Basin: investment decision for
irrigation, water supply and sanitation infrastructure
 Okavango Delta, Botswana: livelihoods impacts
 Pangani River basin, Tanzania and Kenya: water
pricing
3. Case studies and lessons learned
4. Building a global and regional community of
practice

13. Lessons and challenges of ecosystem
valuation
• Most published studies focus on the direct use values of marketed products
• Non-use values (existence values) are even harder to capture, due to high uncertainty
• Economic valuation handles very large scale and long term problems rather poorly
(analysis less robust as scale increases and role of discounting increasingly determinant)
• Valuation runs into trouble when environmental change is irreversible or when resources
have no acceptable substitutes
• Economic valuation not always useful for managers and policy makers
because
 Conducted as snap-shot rather than with comprehensive time series
 Total valuation studies say nothing about values of marginal changes
linked to realistic alternatives
 Ecosystem services are rarely valued or unreliably valued, due to poor data on
biophysical relationships

14. Watershed services: supply and demand
Supply of services:
Upstream land uses affect the Quantity,
Quality, and Timing of water flows
Demand for services:
Possible downstream
beneficiaries:
• Domestic water use
• Irrigated agriculture
• Hydroelectric power
• Fisheries
• Recreation
• Downstream ecosystems
Source: World Bank 2003

15. Applying ecosystem valuation to payment for
ecosystem service: simple in theory
Benefits to
producers
Costs to
offsite
populations
Conventional
resource use
Conservation
with payment
for service
Payment
Conservation
without
payment
Minimum payment
Maximum payment
Source: World Bank 2002

16. In practice not so simple…
complex biophysical linkages (Brand 2003)

17. In practice still not so simple…valuing effects of change in
ecosystem conditions on agricultural production
Impact on ecological
function & service
Physical impact of change
in functions
Socio-economic effects
of physical impact
Overall impact of
Socio-economic effects
Intervention
Reduction in water:
floods & drought
Increased erosion
Increase in crop
damage (in kg)
Decrease in crop
yield (in US$)
Increase use fertiliser
& pesticides (in kg)
Increase production
costs (in US$)
Increase in crop
production (in kg)
Increase in crop
yield (in US$)
Reduction of
forest cover
Reduced
pest-control &
pollination
Deforestation
Change in Economic
Value of Agriculture
(in US$)
Impact on ecological
function & service
Physical impact of change
in functions
Socio-economic effects
of physical impact
Overall impact of
Socio-economic effects
Intervention
Reduction in water:
floods & drought
Increased erosion
Increase in crop
damage (in kg)
Decrease in crop
yield (in US$)
Increase use fertiliser
& pesticides (in kg)
Increase production
costs (in US$)
Increase in crop
production (in kg)
Increase in crop
yield (in US$)
Reduction of
forest cover
Reduced
pest-control &
pollination
Deforestation
Change in Economic
Value of Agriculture
(in US$)

18. Ecosystem valuation in practice
An example: Application to payments for watershed protection
US$10-42 per ha per year in Costa Rica
US$100 per acre per year in the USA (Catskills case)
US$230 per ha per year in France (Vittel case)
$AUD 85/ha/yr for forest conservation or $AUD 17 per
million liters of transpired water in Australia (New South
Wales)

19. Putting IWRM in practice: a
balancing act….