Capitalizing five Municipal Water Funds to improve livelihoods in the Santa Cruz Valleys

2010 Winner

Fundación Natura Bolivia was created in 1997 and is recognized as a private civil non-profit organization. Its mission is to conserve critical ecosystems and improve the quality of life of the Bolivian people through alternative and innovative mechanisms of conservation and sustainable development. It specializes in the development of financial mechanisms for conservation, particularly those which compensate local communities for the opportunity-cost of protecting environmental services.


With the funding of Swiss Re Foundation Natura Bolivia wants to help five local municipalities to capitalise five Municipal Water Funds to maintain drinking and irrigation water supplies, mitigate and adapt to climate change, and improve livelihoods in the Santa Cruz Valleys.

Project Description

Climate change is already visible in Los Negros. The community and the local municipalities led by Pampagrande and Mairana are aware of this fact. Pampagrande and Mairana want to take back control of their water and protect their headwater forests. Therefore they need to start compensating landowners for the opportunity cost of watershed conservation. In the Santa Cruz Valleys, compensating upstream landowners for the environmental services they provide is not a theoretical economic model, like the so called “payments for environmental services”. Rather, such “reciprocal agreements” seem to be the best way for locals to take back their water, and to take back their forests. Using Swiss Re Foundation funds, Natura Bolivia plans to establish/refine five Water Funds/reciprocal agreement schemes in Bolivia’s Santa Cruz valleys, and initiate provision of in-kind compensation packages to help upstream landowners meet the opportunity cost of conservation and enhance their incomes. Natura Bolivia has three primary deliverables over two years: 1) Two new reciprocal watershed agreement schemes initiated (by June 2010) 2) Five funds capitalized to invest in upper watershed protection (by March 2011) 3) Deforestation reduced in the buffer zone of Amboró National Park (by December 2011) Major activities will include the following: design and establish/refine Water Funds/reciprocal agreement schemes with municipal leaders and local community members; identify land parcels important for water provision, and promote scheme to landowners; negotiate in-kind reciprocal deals (such as bee hives, fruit trees, improved pasture); measure and map conservation parcels to determine compensation amounts; deposit consolidating/seed capital into dedicated water fund accounts; deliver compensation packages and monitor results; and undertake internal monitoring of the project every six months. As well as protecting water supplies and aquatic ecosystems, the project will conserve 15,000 ha of forest in the buffer zone of Amboró National Park. In addition to maintenance of water supplies and a reduced risk of flooding, (both of which have a disproportionately positive impact on the poor), the reciprocal agreements will contribute to poverty alleviation by providing an alternative source of income, such as honey production. There will be approximately 1000 upstream beneficiaries. By ensuring local management of the Funds, local institutions such as the Municipality and Water cooperatives will be strengthened. Approximately 5000 downstream water users will benefit from more secure water supplies. The project will also help mitigate climate change by innovatively combining: 1) Water source protection and climate change mitigation (maintenance of forest cover) 2) Climate change adaptation (development of alternative income sources) 3) Alternative financing sources for mitigation and adaptation (capitalization of the water funds by downstream water users)

Country / Region

The eastern slopes of the Andes support some of the world’s most bio-diverse forests. Los Negros borders Amboró National Park, home to 10% of all the bird species on earth. The 260 km² Los Negros Valley itself supports 235 bird species, more than in the entire United Kingdom. These forests provide other services too: Amboró provides drinking water to the 1.5 million residents of Santa Cruz, supply irrigation water and flood protection to the fertile lowlands where soy and rice producers drive Bolivia’s agricultural export economy, and by sequestering carbon, help mitigate effects of climate change.

Information about local context

But all is not well in eastern Bolivia. Amboró National Park is increasingly threatened by illegal land incursions. Encouraged by farmers’ unions and local leaders, landless migrants from the Bolivian Altiplano are entering the buffer zone and the park to clear “water producing” cloud forests for agriculture. Meanwhile, SAGUAPAC, the Santa Cruz City Water Cooperative asserts that current drinking water supplies will run out by 2015, by which time the city will have 2 million residents. Deforestation in the Mosqueras and Vilcas watersheds of Cruceño Valleys in-creased by almost 500% between 1986 and 2004, while downstream flooding over the same period caused $250 million in damages.

Chances / Risks

The project will be designed and implemented by local governments on behalf of the communities they represent. Inability to work with national government would be unfortunate, but would not preclude achieving the objectives. Water users will not pay into scheme, or willingness to pay for environmental services is less than willingness to accept. Target communities reject PES incentive schemes.

Participation of the communities

The communities are actively involved in the project from the beginning.

Project monitoring

Internal monitoring of the project will be done every six months. Concurrent the auditor of Natura Bolivia will assess whether expenditures correlate with advances.

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Fundación Natura Bolivia
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Winner 2010 Bolivia

Fundación Natura Bolivia
Nigel Asquith