Lessons from Applying Market-Based Incentives in Watershed Management

Watershed management is a complex activity with constraints on funding and human resources in many parts of the world, and there is a need for global effort to identify strategies that can work. To complement regulatory approaches, attention is now also being given to market-based incentives because of their potential cost-effectiveness. This study seeks to provide impetus to the use of the most successful market-based incentives to promote sustainable watershed practices through strengthening and increasing direct participation by local communities and the private sector. To identify proven market-based incentives for use to catalyze local community and private sector participation, a review of a sample of 26 purposively selected case studies from different contexts in Africa, Asia, Europe and the Americas is conducted. In reviewing those case studies, emphasis is placed on understanding the threats to specific watersheds, the market-based incentives used, the countrywide policy environment, the outcomes from the interventions, the factors for success and failure, and the pertinent policy issues in support of upscaling and the uptake of appropriate market-based approaches. The study identifies seven key policies that Governments should consider to upscale and facilitate the uptake of market-based incentives to promote participation by local communities and the private sector in watershed management.