Local Markets for Payments for Environmental Services: Can Small Rural Communities Self-Finance Watershed Protection?

Michael Kaplowitz (), Frank Lupi and Oscar Arreola

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), 2012, vol. 26, issue 13, 3689-3704

Abstract: Payment for environmental service (PES) programs are innovative approaches for watershed and natural resources management that increasingly are being used around the world. Most well-studied PES examples rely predominately, if not entirely, on large governmental and outside non-governmental organizations for financial and management assistance. We examine the potential for using a locally-financed PES scheme in a small, agricultural community in a developing country as a means to preserve environmental services of watersheds, namely clean drinking water. A dichotomous choice, contingent valuation survey is used to examine the community’s demand for protection of the headwaters of the nearby river, the source of their drinking water. The survey results demonstrate local water users’ substantial willingness to pay for increased protection of the watershed environmental services. We find that a local-market PES scheme for watershed services, even in a relatively low-income context, may be sufficient to protect ecosystem services independent of external financial resources. Copyright Springer Science+Business Media B.V. 2012

Keywords: PES; Nonmarket valuation; Ecosystem services; Water user group; Gravity-fed drinking water system (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11269-012-0097-y

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