• a mechanism for self-financing.
An example of how market arrangements have been used within a framework of cooperation is provided in Sukhomajri.
Sukhomajri village, located in Haryana state in the foothills of the Himalayas, was amongst the first in India to test participatory watershed management. The scheme was launched in 1979 in response to growing water scarcity,
compounded by reductions in local dams’ storage capacity due to high levels of siltation. Residents living downstream of Sukhomajri in Chandigarh were particu- larly badly affected by siltation of Lake Sukhna, their main source of water. Research by the Water Conservation Research and Training Institute found that 80 to 90% of sediment delivery to Lake Sukhna was coming from only 20% of the catchment. Sukhomajri was blamed for a large share of the sediment load. To tackle the heavy siltation and low dry season flows, farmers in Sukhomajri were supported by the Research and Training Institute and the Ford Foundation to undertake a programme of check dam construction and watershed manage- ment. A Water Users’ Association was set up in 1982, charged with
implementing watershed management, dam management and the collection of fees from water users. However, the main beneficiaries of watershed protection were residents in Chandigarh. To secure Sukhomajri’s participation, resources were provided to the village to construct a reservoir for irrigation.
While the reservoir helped to align farmers’ incentives with those downstream, benefits were not evenly spread within Sukhomajri. Whereas landholders below the reservoir benefited from increased water for irrigation, landless individuals who depended on common lands above the reservoir found their access for grazing and the collection of NTFPs restricted. To gain the support of landless households, the Water Users Association introduced a benefit-sharing system. Rather than paying landless households not to use common lands, a tradable water rights scheme was introduced. This scheme awarded every household the same rights to water and permitted those that had no use for water (i.e. land- less) to sell their rights to others, thereby gaining a financial compensation for complying with watershed protection. The Water Users’ Association was respon- sible for allocating and keeping records of water rights trades.
More recently the tradable water rights scheme has been abandoned in favour or simpler system of water user fees. Fluctuations in water availability made it difficult to maintain a system of water rights. The new system ensures water users pay a watershed protection charge which is channelled through the Water Users Association to be spent on dam maintenance and watershed protection activities. Hill Resources Management Societies have been established to ensure forest protection. In implementing watershed protection, the Water Users Association makes a point of employing landless people, providing another incentive to gain their support.
Source: Shah (1999), DFID (1999b), Rhoades (1998), Farrington and Lobo (1997), Hinchcliffe et al
(1999), Fernandez (1999), Patel-Weynand (1997), Kerr (1992); Misra (pers. comm. 1997); Chopra
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In addition to strengthening existing cooperative and hierarchical institutions, markets have frequently spurred the creation of new institutions (e.g. Romania’s Water Fund, the Tar-Pamlico Basin Association in North Carolina, Idaho’s Clean Water Cooperative, and Ecuador’s Water Conservation Fund).
Cooperative institutions are often essential for ensuring local support. Brazil’s watershed payment scheme in Piracicava builds in cooperative elements through its multi-stakeholder Municipal Environment Council. San Jose’s (Costa Rica) watershed fund similarly depends on a multi-stakeholder Board of Directors while Minnesota’s (USA) Rahr Malting organises its watershed protection activities with approval from a multi-stakeholder trust fund. New York’s Watershed Agreement provides a useful example of how the emergence of a payment scheme may be couched in a complex array of supporting bodies, including a number of multi-stakeholder institutions (see Box 30).
Box 30: From partnerships to payments: New York City’s Watershed Forestry Program
Water utilities across the USA are incorporating watershed management and protection as an integral part of their business strategies. Based on a review of 17 water utilities that have adopted watershed approaches to managing their raw water supplies, the Environmental Protection Agency (1999) draws attention to innovative partnerships and transfer mechanisms being adopted by water util- ities. These include partnerships between water utilities and landowner
representatives, land exchange agreements, conservation easements and land management contracts. The basis for these approaches is a recognition that if water utilities wish to control non-point pollution, they need to consult with landowners. Moreover, where watershed management requires landholders to alter their daily activities, in the absence of regulatory tools the water companies will need to provide incentives for compliance. Within this context a number of water utilities have begun negotiations with households and associations. Perhaps the most well documented case is that of the New York City water authority’s partnership with farmers in the Catskill and Croton watersheds to undertake best management practices, including forestry activities. This case is described below, with emphasis placed on the forestry components of the plan. The New York City watershed covers 1,900 square miles and is split between the Catskill/Delaware catchment, which supplies 90% of the City’s drinking water, and the Croton catchment that supplies the remaining 10%. A total of about 1.4 billion gallons are consumed a year by 9 million inhabitants in and around New York City. In 1993 the Environmental Protection Agency threatened to require that the City invest in a $4 to 6 billion filtration system to ensure it met federal water quality standards. Instead the City negotiated to be permitted to pursue a more cost-effective pollution reduction scheme targeting point and non-point source polluters. Following several years of negotiations, the following 3 programmes have been initiated to encourage watershed management: • A Watershed Agriculture Programme launched in 1994 involves paying farmers to
tackle non-point source pollution and the promotion of conservation easements through the federal Conservation Reserve Enhancement Programme. With the latter farmers can choose to enter 10-15 year contracts with the US Department of Agriculture to retire environmentally sensitive lands from production.