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Water Funds: Protecting watersheds for nature and people

Goldman, Rebecca L.; Benitez, Silvia; Calvache, Alejandro; Ramos, Aurelio

Over the last decade, The Nature Conservancy’s (TNC) Northern Tropical Andes (Northern Andes) program (a geography covering the northern parts of the Andean Mountain countries), in collaboration with numerous partners, has initiated a series of ecosystem services projects called water funds. Water funds are based on the premise that natural ecosystems and conservation management practices by people living upstream in the watershed can help provide a clean, regular supply of water and that downstream service users (including water utility companies, hydropower companies, and other industries) who depend upon these services should pay for their maintenance and persistence. Given the relatively simple nature of a water funds approach, there is potential for this model to be implemented in other geographies. Water fund projects in theNorthern Andes have increased 7 fold (from 1 to 7) in 8 years with another 6 in the design phase within the same time period. In this report, we highlight the major characteristics and components of existing water funds in theNorthern Andes.Understanding the region’s biophysical characteristics, the history of the water fund projects, and the funds’ common features may provide insight into the effectiveness of these projects. We also highlight the challenges to replicating water funds and identify improvements that can enhance them as a conservation mechanism.