Watershed Services Agreements: An

2nd International WEPA Forum International Forum on Water Environmental Governance in Asia

3-4 December 2007 in Beppu City, Oita, Japan

Watershed Services Agreements: An Analysis of Benefits towards a Pro-poor

Reward Mechanism in Bakun, Philippines

GRACE B. VILLAMORg.villamor@cgiar.org

Outline

• Overview of the Project RUPES• Overview of the Project - RUPES• Framework Project• Case Study- Bakun, Philippines• Results

RUPES – Rewarding Upland Poor for Environmental Services

Seek information and clarification:-Who is generating the services?

Aim/Goal

-To whom the rewards should go?

-Who pays the reward?

-How and in what form the rewards are or will be collected?

-What amount or form is appreciated?

-Provide simple, practical examples of how innovative, institutional arrangement and reward mechanisms can foster local development (poverty alleviation), while at the same time preserving and restoring the environment

Framework:

Natural capital & properties that ‘come with the Dynamic Water quantity,

Biodiversity & landscape beauty

implications

Natural capital & properties that ‘come with the Dynamic Water quantity,

Biodiversity & landscape beauty

implications

Environ-

territory’

Absence of threats

Mitigation, increase in filtering

Dynamic landscapes

Efforts

functions

q y,evenness of flow & quality

Terrestrial carbonstorage

Environ-

Direct benefits

Environ-

territory’

Absence of threats

Mitigation, increase in filtering

Dynamic landscapes

Efforts

functions

q y,evenness of flow & quality

Terrestrial carbonstorage

Environ-

Direct benefits

Environmental Service

providersControl over territory

Efforts

Recognition & rewards

Environmental Service

beneficiaries

transaction costsOpportunity costs

Environmental Service

providersControl over territory

Efforts

Recognition & rewards

Environmental Service

beneficiaries

transaction costsOpportunity costs

KalahanManila

Bakun

Bakun

Singkarak-W.Sumatra

BakunKalahan

Kulekhani, Nepal

Sumberjaya

Bungo-Jambi

RUPES BakunBakun is a municipality of Benguet province in the Cordillera Administrative Region (CAR) of Northern Philippines with total area 30,678.74 hectares, comprising 7 barangays or villages

• First in the Philippines to be issued a Certificate of Ancestral Domain Title (CADT)

• Home of predominantly poor indigenous peoples(IP) called the Bago-Kankanaey tribe

• 87% of the population living below the poverty line• Average income of a family ranges from US $

1,036.36 to US $ 1,090.90 per annum

PWS – Payments for Watershed Services

Sellers Two hydropower companies

Broker

Policies Supporting the Hydropower Generation

Laws TitleExecutive Order 215 Allowing private sectors to generate

electricityRA 7156 Mini-Hydroelectric Power Incentives Act

of 1991RA 7160 Local Government Code of the

PhilippinesRA 7638 Department of Energy Act of 1992RA 7638 Department of Energy Act of 1992

RA 9136 Electric Power Industry Reform Act of 2001

Energy Regulations (ER 1-94)

Rules and regulations implementing Sec 5(i) of RA 7638

Policy Assessment Objectives:

• To assess the performance of the benefits as• To assess the performance of the benefits as stipulated in the MOA;

• To recommend ways how to improve reward mechanism from watershed services that benefits the upland communities; and

• To develop a model of intervention that• To develop a model of intervention that allows the IPs to exercise their rights in decision making affecting their livelihoods.

Results: A. Mandatory Benefits

B. Voluntary Benefits

• Benefits provided annually upon requestBenefits provided annually upon request of LGU and/or peoples’ organization

• e.g. infrastructure projects (roads and bridges) & social development and livelihood assistance (1M pesos/yr)

• Reforestation/ watershed development• Reforestation/ watershed development

Issues raised (local community):

• Disparity of data e g accounting• Disparity of data e.g. accounting • Communities are not represented in the

actual monitoring of energy produced and sold

• There is little support given to watershed protection and sustainabilityprotection and sustainability

• Lack of M & E on the benefits provided by HEC

….Issues raised (local community)

• Absence of integrated management planning• Absence of integrated management planning• No project proposal to access the ER-1-94

funds has been approved• Energization of affected barangays not yet

completed

Issues raised (local gov’t-side):

• Non-released of the privilege tax (2% & 1% of• Non-released of the privilege tax (2% & 1% of the net income of HEC for municipality & host barangays, respectively) – National Treasury

• Non-released of the national wealth tax

Issues raised (HEC):

• Huge expenditure in maintaining turbines due• Huge expenditure in maintaining turbines due to siltation/sedimentation

• Forced to shot-down for two months (40MPhP/mo is lost)

Are the rewards ‘pro-poor’?

• EffectivenessEffectiveness• Efficiency• Sustainability• Equity

Disconnect of ‘development’ and local perspectives

Pro-poor potentials:

• Implementation of agroforestry farming projects as a strategy for community livelihoodas a strategy for community livelihood development (e.g. nvs);

• Direct negotiation of the communities through BITO to HEC for voluntary benefits;

• Proper balance of negotiated projects specifically on infrastructure and resource yconservation

• Utilization of funds focusing on public services (e.g. farm-to-market road, electrification of barangays, and land tenure delineation)

Avenues/ Mode of intervention:

• Integrated Watershed Development and M t Pl (RUPES t di ti tManagement Plan (RUPES concept as distinct strategy)

• Adoption of a municipal-wide improved land management practices

• Annual provision of voluntary benefits

Lessons Learned/Challenges:

• PWS is already integrated in the Philippine W t li iWater policies.

• To plough back the benefits to the upland ES providers – is the issue!!!

• Policy and legal reforms are needed.

Many thanks

www.worldagroforestry.org