Reciprocal agreements for watershed conservation in South America

Reciprocal Watershed Agreements — known as ‘Watershared’ in South America — are simple grassroots versions of conditional transfers that help land managers located in upper watershed areas to sustainably manage their forest and water resources in ways that benefit both themselves and downstream water users. ‘Watershared’ agreements focus on changing behaviour through economic and non-economic incentives and building institutional capacity: in other words, on showing local authorities and water users that watershed protection is in their own interests, and then on helping to create the institutional framework needed to plan and implement it (Asquith, 2011).~Watershared agreements do not rely on extensive hydrological and economic studies to define `correct’ payment levels. Nor do they focus on the opportunity cost of conservation as the primary driver of levels and types of compensation. Rather, they attempt to strengthen and formalise pro-conservation social norms, by publicly recognising individuals who contribute to the common good by conserving their ‘water factories’. They respond to one of the key findings of behavioural economic experiments, that “money . . . is the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well” (Ariely, 2008, Mackenzie and Dwight, 2017). Watershared `compensations’ are thus tokens of appreciation rather than economic transactions and can comprise much lower amounts than neoclassical economic theory would predict.

This case study is one of several relating to the Toolkit: Ecosystems, poverty alleviation and conditional transfers. To access the full toolkit and other related case studies, please visit the ‘Publications’ section of the IIED project linked at the bottom of this page.