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Local Markets for Payments for Environmental Services: Can Small Rural Communities Self-Finance Watershed Protection?

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  • Michael Kaplowitz
  • Frank Lupi
  • Oscar Arreola

Abstract

Payment for environmental service (PES) programs are innovative approaches for watershed and natural resources management that increasingly are being used around the world. Most well-studied PES examples rely predominately, if not entirely, on large governmental and outside non-governmental organizations for financial and management assistance. We examine the potential for using a locally-financed PES scheme in a small, agricultural community in a developing country as a means to preserve environmental services of watersheds, namely clean drinking water. A dichotomous choice, contingent valuation survey is used to examine the community’s demand for protection of the headwaters of the nearby river, the source of their drinking water. The survey results demonstrate local water users’ substantial willingness to pay for increased protection of the watershed environmental services. We find that a local-market PES scheme for watershed services, even in a relatively low-income context, may be sufficient to protect ecosystem services independent of external financial resources. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Michael Kaplowitz & Frank Lupi & Oscar Arreola, 2012. "Local Markets for Payments for Environmental Services: Can Small Rural Communities Self-Finance Watershed Protection?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(13), pages 3689-3704, October.
    • Handle: RePEc:spr:waterr:v:26:y:2012:i:13:p:3689-3704
    DOI: 10.1007/s11269-012-0097-y
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    2. Jianmei Zhang & Jiwei Zhu & Yu Liu & Nan Lu & Wenxing Fang, 2022. "The Economic Impact of Payments for Water-related Ecosystem Services on Protected Areas: a Synthetic Control Analysis," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(5), pages 1535-1551, March.
    3. Won-Seok Lee & Seung-Hoon Yoo & Jeehyeong Kim, 2013. "Measuring the Economic Benefits of the Tap Water Supply Service in Urban Areas: The Case of Korea," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(2), pages 619-627, January.
    4. Min Fan & Hideaki Shibata, 2014. "Spatial and Temporal Analysis of Hydrological Provision Ecosystem Services for Watershed Conservation Planning of Water Resources," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(11), pages 3619-3636, September.
    5. William Vásquez & Dina Franceschi, 2013. "System Reliability and Water Service Decentralization: Investigating Household Preferences in Nicaragua," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(14), pages 4913-4926, November.
    6. Helge Bormann & Jürgen Steinbrecher & Ingrid Althoff & Hubert Roth & Julian Baez & Carlos Frank & Mariana Gonzalez & Carlos Huenchuleo & Lisa Lugo & Ricardo Mata & Manuela M. Portela & José M. Reicher, 2016. "Recommendations for Capacity Development in Water Resources Engineering and Environmental Management in Latin America," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(10), pages 3409-3426, August.
    7. Min Fan & Manjiang Shi & Yunfeng Liu & Wen Chen & Yue Deng & Meiling Wang, 2022. "Implications of spatial priority areas for hydrological ecosystem services through coupling hydrology model and Zonation model under different economic costs of water utilizations in northernmost of J," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(1), pages 1-35, January.

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