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Reciprocal agreements for watershed conservation in South America

Nigel Asquith

Research report, 7 pages

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.

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Asquith, N (2018)Reciprocal agreements for watershed conservation in South America. International Institute for Environment and Development, London.
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Project information

This project will explore the potential for combining payments for ecosystem services (PES) and conditional social transfers (CST) at national and sub-national level to simultaneously alleviate poverty and address environmental problems.

More at www.iied.org:
Conditional transfers for poverty reduction and ecosystem management