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Creating incentives for communities to help secure water supply is a win-win situation but without a national law in support the challenges might be too great.
‘We keep on extracting water then what do we do as a water utility to give back for our resources?’ asked Euljun Salarda of the Cagayan de Oro Water District in Bukidnon Province, the Philippines about their support for reforestation of the headwaters of the Cagayan de Oro River.
The Water District’s reforestation activities include payments for ecosystem services (PES). PES is a voluntary transaction where a clearly defined ecosystem service — such as water, carbon sequestration, flood reduction or landscape beauty — is bought by a willing buyer from a willing seller.
The conditions of payment differ based on the degree to which the ecosystem service — the product — can be monitored. For instance, it is difficult to measure how much additional water is contributed by each tree that’s planted or how much extra carbon is sequestered by a hectare of forest being protected.
Because of these kinds of difficulties, activity-based payments are the main condition of PES schemes in the Philippines. Buyers pay for activity that potentially results in delivery of the desired ecosystem service.
The Water District had adopted a payment for ecosystem services’ scheme in Mt Kalatungan to protect the headwaters from deterioration. Aside from environmental protection, the scheme included several other targets, including reduction of the amount of non-billable water (from leakage and cleaning pipes, for example), building the capacity of their staff to carry out various tasks, and compliance with the Philippine National Standards for Drinking Water. All these targets support their main goal of providing a potable water supply.
The Water District’s commitment was demonstrated in their first reforestation activity in July 2018: in collaboration with the Miarayon Lapok Lirongan Tinaytayan Talaandig Tribal Association and the Xavier Science Foundation they set out to reforest 10 hectares within five years. As well as achieving their company’s targets, they expected that the reforestation activities would support improved livelihoods, better health services and greater infrastructure; promote organizational and youth development; and maintain the culture and tradition of the communities.
The Xavier Science Foundation acts as the intermediary between the Association and the Water District. The Foundation assisted the Association to develop a package of activities to be sold to the Water District. Based on the memorandum signed by the three groups, the Water District pays the Association PHP 1,000,000 (just under USD 20,000) to implement the reforestation activity.
Opportunities and challenges
Salarda cited Presidential Decree 198 as the legal framework for preserving and rehabilitating forests. Section 32 of the Decree states that a water district can implement actions ‘to prevent interference with or deterioration of water quality or the natural flow of any surface, stream, or ground water supply…’.
Under the Decree, the Water District is pursuing development of a city ordinance mandating them to collect a monthly fee of PHP 5 per household. The fee would then be transferred to the local government.
Many processes and guidelines, though, are substantial challenges for the Water District. For instance, they must undergo public hearings and seek approval from the local water utilities administration; a circular from the Philippine Commission of Audit forced them to revise their work and financial plans as well as their memorandum of agreement.
They are currently unsure if they are allowed to perform this activity only within their service area or if they can include upland water sources. To overcome these challenges, a national law would ease the process of establishing PES-based activity in the Philippines.
This PES case was part of a scoping study conducted by World Agroforestry Philippines, 27–31 May 2019 in partnership with the National and Regional Project Coordinating Offices of the Integrated Natural Resources and Environmental Management Project, which is funded by the Asian Development Bank. The study was part of the project’s Component 2, which aims to establish sustainable financing mechanisms in four selected river basins.
World Agroforestry (ICRAF) is a centre of scientific and development excellence that harnesses the benefits of trees for people and the environment. Knowledge produced by ICRAF enables governments, development agencies and farmers to utilize the power of trees to make farming and livelihoods more environmentally, socially and economically sustainable at multiple scales. ICRAF is one of the 15 members of the CGIAR, a global research partnership for a food-secure future. We thank all donors who support research in development through their contributions to the CGIAR Fund.