Environment as a Basis for Development Case Studies Overview of the Case Study/Project and Context (include objectives

of the project, partnerships) Max 300 words Water Funds In Colombia and Ecuador, The Nature Conservancy has established “water funds”- an innovative approach to ensure that the natural environment upstream is managed to provide a clean, regular supply of water for downstream users. Applying a payment for ecosystem services (PES) framework, water funds are long-term trust funds that involve a public-private partnership of water users who determine how to invest financial interest in conservation activities in priority areas. Each water fund has its own set of objectives and goals, but, in general, water funds invest in conservation of watersheds in order to accomplish the following: Improve or maintain water quality and quantity for downstream users; Maintain regular flows of water throughout the year; Maintain or enhance natural ecosystem biodiversity, both freshwater and terrestrial; and Improve or maintain human well-being and quality of life for upstream human communities. In Quito, Ecuador, The Nature Conservancy worked with local utility companies, upstream watershed communities, and the Quito Municipality to launch the first Water Fund, FONAG (Fondo para la Conservación del Agua) in 2000. Since 2000, FONAG has reached a capitalization of nearly $8 million USD and implemented, directed, or participated in many conservation and development activities in the Quito watershed. Building on our experience with FONAG, TNC provides technical assistance and support to 4 water funds in Ecuador (FONAPA, Pro-Cuencas, Tungurahua and Espindola) to improve watershed management and establish long-term financing for the sustainable management of watersheds in Ecuador. In the East Cauca Valley of Colombia, Asocaña, an association of sugar cane producers who provided much of the funding, led to the creation of a water fund, called Fondo de Agua por la Vida y la Sostenibilidad (FAVS) or “Water Fund for Life and Sustainability”. The Nature Conservancy worked with Asocaña and numerous other partners, including USAID, to secure funding for establishment of a trust fund and supported local stakeholders in developing an inclusive and appropriate governance system for the funds. The goals of this water fund are to secure biodiversity and water-related service benefits, particularly reduction in sedimentation and maintenance of regular water flows. Activities carried out through investments by the fund include conserving at least 125,000 hectares of the natural ecosystems and improving management of the landscape. In the coming decades, the East Cauca Valley watershed is expected to see changes in temperature and precipitation patterns due to climate change. Applying an adaptive management framework, the Conservancy is working with local communities, academics, and government agencies to design new water management strategies that incorporate ecosystem-based adaptation into water funds and ensure that these investments are „climate-resilient‟. These activities will help secure sustainable water supply for sugar cane production, an important industry for the Colombian economy, and people living downstream (an area that has a population of 920,000 people). Lessons learned from these studies can be built into current and future water fund programs.
Who are the program participants?

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The Nature Conservancy works in partnership with local communities, governments, and private sector partners. For example, in Ecuador, The Nature Conservancy worked with USAID, Quito municipality, a private beer company, and utility companies in water and electricity. In Colombia, The Nature Conservancy worked with Asocaña (sugar cane production association- Colombia), community-based grassroots organizations, the regional environmental authority, and a peace and social justice organization.
How is the project being measured?

Impact measures are being developed to assess effectiveness of water funds at two scales: At a broad- (large) scale: assessing what would happen in these watersheds if we did not use water funds to encourage best management practices on agricultural/ranching landscapes and to conserve natural ecosystems At a smaller-scale: using experiments to determine how to measure the effects of our conservation strategies (best management practices and conservation of natural ecosystems) on selected indicators. Experiments and indicators have been defined for water quality, water quantity, water flow, terrestrial biodiversity, freshwater biodiversity, socioeconomic impacts, and the effectiveness of governance and financial structures. The major link between the broader- and smaller-scales of measures is how the sum of the parts (small-scale measures) adds up to demonstrating the basin-scale (large-scale) effectiveness of the water funds as a multi-institutional, sustainably financed decision-making strategy. Additionally, the financial capitalization of trust funds in each water fund site is monitored and complemented with a participatory process to identify activities and areas for conservation activities using interest from trust fund.
What barriers/challenges did the project encounter? How were they addressed?

Water Funds need to be tailored to each local context- addressing social, economic, political, and environmental factors that are unique to each watershed. Ensuring adequate investment in time and human resources to conduct comprehensive feasibility studies that engage stakeholders; assess biophysical and social conditions; and evaluate national and regional laws is critical to development of water funds. Multi-sectoral commitment and leadership is also essential to foster to ensure the sustainability of water funds. Outreach and capacity building with these stakeholders is essential to develop the collaborative partnership required for the water fund model to work. Learning from experiences in Ecuador and Colombia, the Conservancy is exploring replication of the model across Latin America, Africa, and Asia.
To what do you attribute the success of the project?

Water Funds focus on objectives that meet water users‟ needs and biodiversity targets. This integrated set of objectives ensures that water funds are developed in manner that allows local economic development to occur in a sustainable manner meeting environmental and development needs. In addition, the process used to develop water funds has helped create enabling conditions that support results such as: Creation of a multi-institutional governing body bringing together local public and private partners and supporting local ownership and leadership of the Fund and associated conservation benefits Opportunities to avoid costs of water treatment by investing in nature instead of infrastructure; and Securing sustainable financing for long-term conservation efforts that offer human development benefits.

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In addition to the Water Funds case study information provided above, the following are also relevant cases that contribute to the themes addressed in the paper: Coral Triangle Initiative: The Coral Triangle Initiative (CTI), launched in Indonesia in May 2009, is an intergovernmental agreement aimed at developing a regional plan of action with goals and commitments for marine protected areas, fisheries protection and climate change adaptation. Signed by the heads of government from the six countries in the Coral Triangle — Indonesia, Papua New Guinea, Solomon Islands, the Philippines, Timor Leste and Malaysia-- the CTI has the potential to transform natural resource use, conservation and climate adaptation efforts across the region. The U.S. government, through USAID, is providing $32 million in new and existing funding to a consortium of conservation organizations. The consortium will work with government and private-sector partners in the CTI to strengthen local governance, protect livelihoods, promote ecotourism and protect reefs and mangroves to shield coastal communities from storms. These efforts will support the conservation of resources that sustain more than 120 million people. http://www.uscti.org/uscti/default.aspx Building the Resilience of Communities and their Ecosystems to the Impacts of Climate Change in the Pacific: In May 2010, The Nature Conservancy received funding from the Australian government for a program to strengthen the capacity of five target communities in Papua New Guinea and Solomon Islands (and one in Marshall Islands) to adapt to climate change impacts. The project will support local planning, finance and administrative arrangements aimed at developing climate change adaptation actions that can be taken at the provincial and local levels. These local and provincial actions will then be integrated into national development plans and national adaptation plans and programs as agreed to as part of the Coral Triangle Initiative. Kimbe Bay, Papua New Guinea: For more than a decade, The Nature Conservancy has worked with partners and local communities to protect Kimbe Bay's rich lands and waters. The Conservancy has helped design a network of marine protected areas (MPA) in Kimbe Bay that is one of the first in the world to incorporate both human needs and principles of coral reef resilience to withstand impacts from climate change. Like many coastal areas throughout the world, Kimbe Bay‟s rich marine biodiversity is at risk from overfishing, sedimentation and the effects of climate change. These effects include coral bleaching caused by higher sea temperatures and rising sea levels, which threaten to destroy coastal habitats that animals and people depend on. By protecting resilient coral reefs and linking MPAs through ocean currents, the network will ensure that coral reefs can survive the effects of rising sea temperatures and allow coral larvae from healthy reefs to replenish those affected by bleaching. The MPA network design team also included human factors in the equation, conducting socioeconomic studies to address the marine resource needs of local communities. In the Adelbert Mountains in Papua New Guinea, strategies have focused on developing land management agreements and appropriate legal frameworks that allow local communities to secure land that they are sustainably managing. This approach also enables local communities to work government agencies to develop land use management plans collaboratively. As part of the program, local forest communities are able to grow cash crops and have formed Cooperatives to ensure product level is marketable. In addition, The Nature Conservancy has helped Cooperatives to attain Fair Trade certification for cocoa production. In addition to the conservation benefits from sustainable forestry practices, the funds generated by the significantly increased premiums as a result of the certification will go directly into implementation of the communities‟ respective social development plans, improving education, health and access to transportation routes.
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In Berau, Indonesia, a partnership between national, provincial and district governments, civil society, and the private sector — aims to enable the 2.2 million acre Berau district to meet its development goals while sustainably managing its forests by developing a carbon finance mechanism that delivers effective incentives to reduce emissions from forest loss. Collaborating with indigenous groups, government agencies, global businesses and international NGOs, Berau is developing plans to combine on-theground conservation, financial incentives, scientific monitoring and sustainable economic activities to protect and improve management of biodiversity-rich forest areas, reduce carbon emissions, and stimulate local and national economies. The Nature Conservancy is working with local partners throughout the Berau district and regionally in East Kalimantan to develop a roadmap for creating direct economic incentives to maintain the forests. Experiences from this process could provide lessons learned for other nations to develop carbon conservation programs that reward them for keeping their forests intact while strengthening local economies and inform global policy efforts around REDD+. The Nature Conservancy is working to integrate approach and partnerships across population, health, and environment in the Mahale region in western Tanzania, a region that supports an incredible diversity of life and homeland of the Watongwe and Waholoholo tribes. Because of the area‟s remoteness, provision of social services and other resources is challenging. Without access to modern contraception, health services and education, village populations continue to grow and are forced to expand their settlements and farms up the nearby rivers and into the wild lands. Learning from previous programs, this recently launched program will be working with partners from the very beginning to design a project that will meet the healthcare needs of local communities, improve the well-being of women and their families, and reduce pressures on the area‟s natural resources.

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