Recognizing and rewarding the provision of watershed services

Abstract

Increasing demands for and widening fluctuation of water quantity and declining water quality are contributing to a serious decline in the available water that many see as an unalienable right. Linked to supply of water is the protection of the watersheds that provide the water and with the scarcity of supply comes conflict and competition to own, use and manage the sources of water. Conventional solutions have been left in the hands of government who have not always been the most efficient or appropriate managers. Conversely being left entirely to market forces has resulted in unfair distribution and often misuse and degradation of environmental attributes associated with water. Both approaches have suffered from market failure - the failure for the full economic value of water - indirect and direct, use and non- use, to be fully accounted for. Using market mechanisms can provide protection of watershed resources (securing supply) as well as meeting demands. It will mean that development of market mechanisms must account for the total economic valuation as well as ensuring that there are fully aware, knowledgeable and capable stakeholders in the process, that property rights are clearly defined and that an enabling and supportive policy and institutional environment is in place