The Program on Forests (PROFOR), the World Bank and the Global Environment Facility (GEF) launched a Forest Trends report titled, ‘Charting New Waters: State of Watershed Payments for 2102' analyzing innovative mechanisms for financing improved watershed management.
17 January 2013: The Program on Forests (PROFOR), the World Bank and the Global Environment Facility (GEF) have launched a Forest Trends report, titled “Charting New Waters: State of Watershed Payments for 2102,” which analyzes innovative mechanisms for financing improved watershed management.
The report, the second in the series, examines US$8.17 billion in financing for 205 projects in wetlands, streams and forests aimed at the provision of water-related ecosystem services. Over half of the projects reported on are located in China and the US. In China, the report attributes the high number of projects to the prominence of ‘eco-compensation’ within the national Five-year Plan.
In other regions, the report notes that Latin America is rapidly increasing investments in water funds, large investment funds aimed at conservation and restoration, while the bundling of ecosystem services is emerging as an important mechanism for watershed finance in countries such as the Colombia, Indonesia, Kenya, Tanzania, the US and Viet Nam.
With regard to types of payments, the report addresses bilateral agreements, beneficiary-pays funds, trading and offsets, and instream buybacks. Within these mechanisms, main payers include beneficiaries of water ecosystem services, polluters making compensation payments and ‘public good payers’ such as NGOs and others not benefiting from the direct use of watershed services. Of these, excluding China, polluters account for only 3% of transactions.
Looking forward, the report projects that watershed payments will increase, including in Latin America and the US, which have seen a slow down in financing over recent years. The report also expects increased experimentation with the bundling of ecosystem services and the enhanced integration of climate change, which are related concerns. However, the report indicates that the limited participation of the private sector will continue and expresses concern over the number of planned projects in Africa that fail to be implemented. [Forest Trends Press Release] [PROFOR Press Release] [Publication: Charting New Waters: State of Watershed Payments for 2102] [Publication: Executive Summary – Charting New Waters: State of Watershed Payments for 2102]