Improving watershed management programs

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized December 2 2001 No.29 T Agriculture . *Technology Notes Rural Development Department (RDV) (a The World Bank Improving Watershed Management Programs Why isa watershed approach necessary? Watersheds have become increasingly important elements in the Bank's natural resource management policy Programs such as the Bank-Netherlands Water Partnership Program that emphasize improving water resource management recognize watersheds as one of the major aspects of an integrated approach to water management. A recent study by the Operations Evalua- i tion Department found that lives have been significantly improved as a result of several watershed projects such as the Loess Plateau in China and the Land Management 11 project in Brazil. This Note discusses the major issues and challenges involved in watershed management. From the point of view of the WSM Program, the terms watershed and catchment are interchangeable. They both refer to an area that supplies water by surface or sub-surface flow to a given drain- _ age system, be it a stream, river, or lake. On the higher slopes common in upper watersheds, land-use changes tend= to generate downstream effects to which other stakeholders in the watershed are subjected. The magnitude of these effects depends on many factors, including the size of the watershed. Although the effects of changes in land use are most readily felt in smaller areas, it is important to understand their direction and magnitude, which is no easy task. The direction and magnitude of the land-use effects on water resources are often controversial and fraught with misconceptions. Watersheds are also water supply and distribution systems in which a finite water resource is made available to a range of users (e.g., for primary production, domestic and industrial consumption, transportation, or power generation). Watersheds provide many important water-related functions and services to - a. - . 2v ~~~~~~~~~~~~~~~~~~~~~~ u Rice planted on a terraced hillside in Indonesia provides good protection against erosion. many stakeholders. They are directly or indirectly affected by changes in the quantity and quality of water available at any point over time. Why UpperWatersheds? Watershed management activities necessarily focus on upper catchments because the areas with the most dynamic land-water interactions are invariably located on steeper slopes (commonly the headwaters and lateral margins of the typical catchment profile). As a result of the normal pattern of human settlement and infrastructure development in settled catchments, both the underserved communities of rural poor and the remaining forest resources tend to be located in marginal uplands and remote catchment headwaters. Left untended, at higher population densities these combinations of isolation, poverty, and increasingly scarce (and valuable) forest products often conspire to extensively denude the land. Although soil erosion and forest degradation are frequently most severe in the more fragile upper portions of the catchment, it must be recognized that resident upland communities offer real opportunities to improve natural resource RDV Technology Notes management and minimize downstream not receive compensation for such participation explain some of these prob- effects if efforts to alleviate poverty and local institutional development are effective. services or consider them when making a land-use decision. lems, but where externalities were at play, uplanders also had insufficient incentives Elements ofWatershed The basic policy principle is straightforward - the polluter pays and the provider gets. Where watershed treat- to permanently change their land-use patterns. Many opportunities exist to develop markets for environmental services, but ments distribute costs and benefits unevenly, it stands to reason that those who bear the costs of generating positive externalities will support the intervention (including beyond the project period) only if they are appropriately compensated for adopting good land management practices. Alternatively, where watershed degradation is not yet serious, it may well be more effective to facilitate agreements and institutions that enforce a system of they may encounter complex problems. Management Mianagement Watershed management incorporates three closely-related elements that involve improving: * natural resource management by communities resident in upper catchments; * local development management by their local governments; and * management of the externalities inherent in every catchment because human settlements generate important effects that increasingly characterize upstreamdownstream hydrological relationships. Environmental services Hydrology relates to water availability water distribution atd wavailablity, water quality. ing the value of exotic species, as well as the value of ectooirispie and bio-prospecting. Carbon sequestration includes One core strategy to reduce rural poverty and improve watershed management is to improve the sustainable productivity of natural resources in upper catchments through improved community resource management. Better management also requires that upper catchment (upland) communities have access to essential economic and social services such as micro-credit, all-weather roads, potable water, basic health services, and functional The classic example of externalities in a watershed is erosion from bill farming that deposits sediment behind dams and i canals, reducing their life expectancy and efficiency at a high cost to downstream users and the education. Facilitating community re- national budget. Technological Aspects source management and reducing rural poverty therefore require improvements in the capability to manage development of rural communities and their local governments, possibly including their ability to extract compensation for the important 'environmental services' they can provide. The relationships among efficiency, equity, and sustainability objectives in natural resource management assume special importance in watersheds because multiple and diverse users and externalities are present. Improving the management of externalities is critical to watershed management because improving equity becomes a prerequisite to improving the efficiency and sustainability of watershed investments. Externalities may be pervasive in a wide variety of situations because upstream and downstream land and water users are linked by hydrological relationships. Such links exist at every catchment scale within the watershed hierarchy, from the entire river basin to very small'zero-order'micro-catchments. appropriate disincentives for negative externalities in line with the principle of 'the polluter pays'. Failure to address externalities helps to explain the persistence of land degrading practices in upper catchments and the failure of many early watershed projects. Watershed management can be achieved by using a variety of technologies such as vegetation conservation (including hedgerows and grass contours) and physical structures (including terracing and stone bunds). In Bank projects, the former were usually favored. This supports the global trend that favors choosing technologies that are low-cost and more farmer-friendly. Successful adaptation of technology in Bank watershed projects was also achieved by involving farmers in the choice of technologies, a strategy that helps to employ technologies that are more compatible with existing land uses and surrounding environments and that meet farmer needs. Most Bank projects have opted for an integrated and multidisciplinary approach that considers management in upland areas provided activities. Such approaches have been very inadequate incentives and resulted in low adoption and poor maintenance so that improved practices disappeared when projects ended. Land tenure problems, inappropriate technology, and inadequate successful in raising agricultural yields and fostering local environmental improvements such as reduced soil loss, improved flood control, increased vegetation cover, and improved soil fertility. Environmental Services and Externalities 'Environmental services' is a generic term for positive externalities or off-site benefits that are generated by a particular land use. Typically there are no markets for environmental services, so land users do page 2 Externalities in watershed management Early efforts to improve land and water the value of carbon removed from the atmosphere by planting or maintain- ing forest or plant cover tiat reduces the effects of climate chainge induced by carbon dioxide emissions. Scenic beautty considers the value of landscape preservation for tourism and recreation. multiple agricultural actions and other December 2001 Economics of watershed management - a downstream perspective from Madagascar In the highlands of Madagascar, siltation of canals and reservoirs from high sediment loads is a major constraint to irrigation development. Does it 6,000 5,000 4,000 3,000 2,000 1,000 0 make sense for irrigators to invest in controls such as slope stabilization and hedges that would r educe erosion and decrease sediment load and maintenance costs? To obtain a rough estimate of the economic feasibility of such activities, investment costs and reductions in rehabilitation and maintenance costs were estimated (watershed managemiient, WSM) and compared to the current costs of regular maintenance and periodic rehabilitation of the infrastructure (maintenance). From a downstream perspective, the ratio of irrigated area to watershed area is an important factor in determining the economic feasibility of watershed management. For typical ratios in Madagascar (1:30 to 1:100), the costs of watershed protection are substantially higher than maintenance costs. For smaller ratios (1:5), costs for watershed protection are comparable or lower than the maintenance scenario. This estimate must be Costs inUS $ per ha irrigated treated with caution because other essental factors were not taken into account in this simple calculation. The results suggest, however, that it does not always pay to invest in watershed management solely from the perspective of downstream irrigators. Rather, downastreamii benefits when complemiiented by upstreamii benefits must be large enough WSM Maint. WSM WSM to merit the investment. 1:5 1:30 1:100 Institutional Approaches to Watershed Management Rural poverty and natural resource degradation are frequently linked in a vicious cycle that is active in the critical headwaters of many watersheds. Poverty alleviation requires that the rural poor gain access not only to the means of production but also to basic services and essential social and economic infrastructure. This requires that rural communities become organized and empowered to negotiate adequate access to the land with other interest groups from local and higher levels. Effecting this change in the status quo is proving muclh more difficult than introducing technical interventions or even basic services that can improve crop yields or primary healthcare. . Commumntyi resourceqmanagement. Interventions are Initially required to build the capacity and capability of rural communities and their local governmlenits to sustainably improve natural resource management in critical headwaters and denuded uplands. These interventions must be comnmunitv-based because natural resource management decisions are typically taken at this level. Local development management. Concurrently, facilitation isneeded to help local governments improve their capacity to manage area development, including incorporating watershed management considerations into assessment se planning activities. One of the most critical issues in watershed management projects is ownership of a project by the community and its life thereafter. Community-based managemiient and strengthening local government implies a clear-cut mobilization and empowerment strategy so that project managemiient structures operate through existing decentralized institutions that are purposely strengthened by the project process. Managnexted nalities areements bewen afetednarties. re tnec er mana rties . Wherethe numer of ties s isa eatu and extent of the externality is clear to all, forging sc ageo ementsayibe Asimpl matter ofaone-on-one negotiation. Ascoin- Some issues emerging from India The landless poor as a group usually participate in waterslhed management only through wage employment, preferablv relevant to the resource management program. There is recognition that in upper catchments landless poor (particularly women) could also gain recognized usuflict rights to common property, community lands, or forest lands, under conditions commensurate with inproved natural resource management. In arid and semi-arid zones more than 80 percent of water loss is due to evapotranspiration or runoff, and the best method of conservation is percolation facilitated by trenches and gully controls in the upper cthet.Hwvr newtri catcments. However, once water is stored underground, equity issues become very proia ineole h sthould wtoever drills a boreole liave the it? Should boreholes be used for irriaton orebelestrictedtoo drinking water? How should equitable access and payments for irrigation water be legislated? How should transfer paymelents be mandated so that the landless receive incentives to improve percolation on tomimprovetpercoaTin nd otler equity issues must be carefully considered. page 3 RDV Technology Notes Further Reading Markets for environmental services Environmental Services Johnson, Nels, Andy White, and Daniele Perrot-Maitre. 2001. Financial Incentivesfor Watershed Management: Issues and Lessons for Innovators. Washington, D.C.: World Resources Institute. Patel-Weynand, Toral. 1996. Sukhoimajri and Nada: Managing Common Property Resources at the Village Level. In Natu- Well-publicized watershed projects in India and the Dominican Republic are good examples of markets for environmental services. These markets play an important role by giving all parties an interest in watershed development, as well as generating benefits to landless people who make critical contributions to successful watershed management but enjoy few direct benefits. In Sukhomajri village, India, a project was designed to provide irrigation water from a small run-off pond. Landless families used the pond's catchment area for grazing, but the resulting lack of vegetative cover caused ral Resource Economics: Concepts and erosion that threatened the pond with siltation. To satisfy the interests of everyone, villagers proposed that landless families receive rights to valuable irrigation water in exchange for not grazing their animals in the catchment area. These families could then sell their water share or use it on leased farnilanid in the lower watershed. In the Dominiican Republic, the FIRENA project successfully encouraged farmers to adopt soil conservation techniques without subsidies by tying conservation to access to irrigation, Applications to India (Kerr, J.M., D.K. Marothia, K. Singh, C. Ramasamy, and W.R. Bentley, eds.). Forthcoming. New Delhi: Oxford and IBH. Murray, Gerald. 1994. Technoeconomic, Organizational, and Ideational Factors as Determinants of Soil Conservation in the Dominican Republic. In Economic and InstitutionalAnalyses of Soil Con.servation Projects in Central America and the Caribbean(Lutz, Ernst, Stefano decisionmaker in control of the watershed, but rather a more or less amorphous group of stakeholders, each of whom makes decisions separately, thus negotiating solutions to externalities becomes very complex. While each stakeholder's interests and activities may have insignificant effects on others downstream, the aggregate effects can be quite large. Intermediary institutions are needed to bring the parties together to develop and implement mutually acceptable arrangements. Entirely new catchment institutions may be required to manage externalities (including the possible levy and distribution of transfer payments in return for environmental services), but given the ubiquity and diversity of watershed externalities, some form of permanent local institutional arrangements is needed. Payments for environmental services by managemiient between upstream and downstream stakeholders. Payments may take a variety of forms, ranging from direct compensation to indirect measures aimed at giving upstreamn communities a stake in watershed conservation (such as voting a budget to improve village water supplies and schools that facilitate uplander access to services that reduce their poverty and support adoption of sustainable land uses). Building understanding and mechanisms for institutionalization of such mutually supportive interactions is a central challenge of watershed management. downstream users is one option to distribute benefits and costs of watershed Pagiola, and Carlos Reiche, eds.). XVorld Bank Environment Paper Number 8. Washington, D.C.: World Bank. HydrologicalImpacts Ian Calder. 2000. Land Use Impacts on Water Resources. Background paper for the FAO E-Workshop on Land-Water Linkages in Rural Watersheds. http:// wNviv.fao.org/landandwater/watershed/ papers/calder.pdf Watershed Management Programn The Watershed Management Program is one of numerous Bank-Netherlands Water Partnership Program funding opportunities. It provides financial assistance to task managers interested in incorporating waterslhed management issues in their operational projects. For further information, please contact Fernando Gonzalez at fgonzalez@ worldbank.org, Jin Smyle at jsmyle@ worldbank.org, or Hiba Ahmed at [email protected] Agriculture Technology Notes provide up-to-date infornation on selected topics to World Bank professionals. Cees de Haan coordinatesthe series. This note is published unlder the Watershed Management Window, BNWVPP Participantsinclude Fernando Gonzalez, James Smyle, HibaAhmed,John Dalton,JohnKerr, Benjamin Kiersch, and S.P Tucker To obtain copiesoftthis orotherNotes, orto enquire about theseries, please call (202) 473-0464. The most recent Notes in this series include: Investing in Pastoralism Project-Related Training MonitoringLand Quality SustainableAquaculture Integrated Nutrient Managenment Comiipetitive Research GrantPrograms Autonomy for Agricultutral Research Organizations Livestock-In-KindCredit Investing in Rural ProducerOrganizationis Editedby Seth Beckerman, Business and Technical Communication.s, Pittsburgh,PA. 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