APPROACH AND METHODOLOGY
The Nature Conservancy and the Inter-American Development Bank will work with a wide range of private sector, governmental and non-governmental partners in the design and implementation of Water Funds in at least five watersheds across Latin America and the Caribbean. This includes:
Conducting outreach, including refining eligibility criteria and selection of sites, opportunities for public-private partnerships to address environmental service issues, defined property land titles and engagement of local authorities.
Preparing feasibility studies (e.g., environmental services, climate change, socio-economic, financial and legal studies).
Finalizing investment strategy (including seed capital) and Water Fund structure (including Board of Directors and Technical Secretariat).
Growing and consolidating the Water Fund, including supporting watershed projects, and monitoring and communicating the results to water users, stakeholders and the public in general.
TNC-IDB consider a Water Fund consolidated when there is a diversified and sustainable stream of financial resources flowing both into the endowment and conservation projects. The amount of time and financial resources needed to reach this stage depends on many variables such as financial and investment projections, efficiency and effectiveness of the Water Fund in implementing its objectives, among others.
IMPLEMENTATION, TIMELINE, AND DELIVERABLES
September 2010 - January 2011
Conduct preliminary outreach and studies to identify five watersheds across Latin America and the Caribbean and reach agreement among stakeholders.
January 2011 - August 2012
Develop a Memorandum of Understanding and related Trust Fund documents for establishment of the five Water Funds and conduct negotiations among stakeholders. Facilitate a high-level event on the Water Funds at the Sixth World Water Forum, including the Ministerial Meeting, to demonstrate innovation in improving water management.
September 2012 - 2013
Complete start up of the Water Funds, including fiduciary arrangements, operationalizing Board of Directors and Technical Secretariat, and begin financial growth and consolidation of the Water Funds. Analysis, documentation and dissemination of results. Transition the oversight for the Water Funds to location-specific Boards of Governors (the Boards). The Boards will include representatives of parties contributing to the Water Fund, a representative from TNC and other main stakeholders who may not have contributed financially (e.g. local governments, communities). Board composition will differ, depending on the range and number of stakeholders. The Board for each Water Fund will introduce mechanisms to enable the widest stakeholder representation while ensuring a reasonably sized Board maintaining a balance between private and public institutions to allow representation from academic institutions, local NGOs, and communities. This balanced governance structure is the best way to keep consistent participation and interest from the various sectors and reduce possible dominance by any one group. The day-to-day operations of the Water Fund will be carried out by the Technical Secretariat.
Partners by Country:
Sugar Cane Association of Colombia (Asoca?a), Proca?a, Centro Internacional de Agricultura Tropical (CIAT), la Asociaci?n de usuarios del r?o Amaime -ASOAMAIME-, la Asociaci?n de usuarios del r?o Nima -ASURNIMA-, la Asociaci?n de aguas superficiales y subterr?neas de la cuenca del r?o Bolo -ASOBOLO-, la Asociaci?n de usuarios de aguas superficiales y subterr?neas de la cuenca del r?o Desbaratado -ASODES-, la Asociaci?n de usuarios de aguas del r?o Frayle -ASOFRAYLE-, la Fundaci?n r?os Tulu? Morales, la Corporaci?n para el desarrollo y paz del Valle del Cauca y norte del Cauca -VALLENPAZ- Empresas P?blicas de Medellin (EPM), Ecopetrol, Fondo Patrimonio Natural, Unidad Administrativa de Parques Nacionales de Colombia, Empresa de Acueducto y Alcantarillado de Bogot?, Sab-Miller Bavaria,
National Water Agency (ANA), MG State Forestry Agency (IEF), Extrema municipality, SOS Mata Atl?ntica (Brazilian NGO), Piracicaba-Capivari-Jundia? (PCJ) Watershed Committee, SP State Agricultural Agency (CATI), SP State Environmental Agency (SMA-SP), RJ State Environmental Agency (INEA) Rio Claro municipality, Guandu Watershed Committee, Instituto Terra (local NGO), ES State Environmental Agency (IEMA), IBIO (Brazilian NGO), BANDES (State Development Bank), MG State Environmental Agency (SEMAD), MG State Forestry Agency (IEF-MG); EMATER-DF (public company of rural technical assistance), ADASA (Brasilia Water Agency), Brasilia University, CAESB (water utility), Banco do Brasil Foundation, Agricultural Agency of Brasilia (SEAPA-DF), EMASA (water utility company), SC State Sustainable Development Agency (SDS), Bunge Natureza Project, Instituto Id?ia (local NGO), Municipalities of Balne?rio Camburi? and Cambori?, SP Municipality.
Fundaci?n FEMSA, Water Center for Latin America and the Caribbean (CAALCA), Gobierno del estado de Quintana Roo, Amigos de Sian Ka'an
Development and climate change are putting freshwater ecosystems, the most endangered of all ecosystems, under severe stress. The increased degradation, hydrological variability and changes in land use have serious consequences in the green infrastructure and associated water-related services that these ecosystems provide. Recent evidence showing shrinking clean water supplies and perceived water insecurity has made businesses and water utilities look at fresh water as they never have before - a valuable good that is produced, sold and consumed and deserves investment. Cities, such as New York, and more recently Bogota, are investing in ecosystem management to protect water quality and help ensure long-term sustainability. There is an urgent need to replicate these experiences and create funding mechanisms to offer downstream users the opportunity to be proactively engaged in collaborative processes for the conservation of upstream catchment areas.
In recognition of this opportunity, The Nature Conservancy (TNC) and local partners have worked for over a decade pioneering financial and institutional mechanisms that protect biodiversity while conserving water sources for human consumption. Water Funds are an innovative way to pay and compensate for nature's services - in this case supplying clean freshwater and providing biodiversity-related services - and reinvest that money in conservation projects that protect the healthy habitat from which these services derive. One of TNC's most successful models has been the Quito Water Protection Fund in Ecuador. Called Fondo del Agua (FONAG), this public-private mechanism was established in 2000 and is now a Fund with a capitalization of more than million that pays for watershed programs and projects around Quito's water sources.
Water Funds attract contributions from large water users such as water utilities and local industries that build up those Funds' capital, including endowments. In turn, endowments are invested in a wide range of asset categories (e.g. money market, bonds, stocks) and the financial income from those investments provides long term secure funding for conservation projects such as creating and strengthening protected areas, helping neighboring landowners switch to conservation-friendly practices, pay for conservation easements, and financing other important environmental initiatives for local communities. Species benefit from having larger and better protected territories, and communities benefit from a healthy watershed and large water users through reduced water treatment costs that result from proactively funding watershed protection.