Interview by Katiana Murillo, Rainforest Alliance
“The key in negotiating with businesses lies with the preliminary studies that we already have done, which conclude that the watersheds that are being deforested are left without water while the watersheds where we maintain the forest still have water — Oscar Núñez.”
The Las Minas Biosphere Reserve Water Fund, managed by the Defenders of Nature (Defensores de la Naturaleza) organization with support from World Wildlife Fund (WWF) Central America, is an innovative mechanism that seeks to establish fair payments for a resource that traditionally, stakeholders use virtually free. Defensores y WWF are now working to establish a trust fund and develop a reliable system of water distribution that will charge user fees, which would then be invested in watershed conservation. The initiative also aims to provide “environmental services payments” to persons with in-holdings in the reserve, protect the watershed that provides drinking water, and encourage environmentally-friendly activities.
The reserve protects 70 percent of the total biodiversity found in Guatemala. More than 60 rivers originate in the reserve, which supply fresh water to 13 municipalities in five departments of Guatemala. Altogether, 500 communities (some 300,000 people) benefit from potable water, hydroelectric, and irrigation projects, while bottling companies like Coca Cola, Licorera Zacapaneca and Agua Gallo also use the water from these rivers.
We spoke with Oscar Núñez, Project Coordinator, and Oscar Brenes, Head of Water and Training for WWF-Central America, about how the project is trying to become a model for the payment of environmental services.
Question: What is Sierra de Las Minas’ Water Fund project?
Brenes: The Water Fund is a trust fund that will promote water conservation. The fund has been designed, and we are now seeking financing from some of the hydroelectric and bottling companies that work near Sierra de Las Minas and from the potable water users. The municipalities, industries, and society in general, are also part of the picture.
Núñez: The project was born out of a concern about valuing the environmental services of Sierra de Las Minas. For more than six years, much of the Defenders of Nature’s environmental education campaign focused on water. Basically, the idea is to see how, through this resource, we can transmit the message that it is important to value and conserve forests. The fund is conceived as a technical and financial mechanism that will allow all the local stakeholders and users to begin to value water and to pay for its use in the medium term.
WWF and The Nature Conservancy are helping us with the project. Our idea is 70 to 80 percent of the fees paid by each one of the users will be invested in the same watershed (conservation activities, forest fire control, etc.). The remaining 20 percent would be for related activities such as environmental education and the financial management of the trust.
Q: How are you negotiating with the companies?
Brenes: The Biosphere Reserve belongs to five departments, and work has been done with the municipalities, mainly in the department of Zacapa, trying to involve them. We’ve held workshops, meetings and other events to convince them of the importance of conserving these areas. We’ve also invited local companies to the workshops and visited them separately to try to obtain their support.
Núñez: We work watershed by watershed to strike agreements. The municipalities are also very open to this because traditionally they have gotten funding for water treatment, but no funding for the maintenance of water sources.
The key in negotiating with businesses lies with the preliminary studies that we already have done, which conclude that the watersheds that are being deforested are left without water while the watersheds where we maintain the forest still have water.
Q: What benefits do the companies see from their participation, taking into account that they used to obtain the water resource practically for free?
Brenes: The companies can contribute to a whole new culture of water and also guaranteeing themselves a resource that they use, in quantity as well as quality. They are guaranteeing themselves a supply of water in the future.
Núñez: From the beginning the companies have seen it as an investment in raw material and in fact, this is how we are selling the idea to them. Another aspect is that we think of the water fund as a private, transparent trust. There will be a Board of Directors with a representative from each one of the user groups — the hydroelectric companies’ association, the townships, the industries, the communities, the irrigation systems, the State — and the Defenders of Nature will serve as the secretariat.
Q: Have you established contracts?
Brenes: Yes, with the Irrigation Users Association, with the hydroelectric companies, and we are having conversations with the bottling industries in the zone. Right now, we are in a negotiation process with different users about increasing the trust fund.
Núñez: In the work plan, first we established agreements with the hydroelectric companies. These agreements stipulate that when the water fund is functioning, they will transfer the payment mechanism to the fund. Right now we are working with them exclusively through annual work plans that they finance in order to address aspects such as forest fires, reforestation, and soil conservation. The idea is that in the future they will provide a percentage of the energy valuation. We are also in direct contact with investors in these kinds of projects in Canada and the United States.
Besides the hydroelectric companies, we also have some agreements with industries. Coca Cola, Pepsi Cola and the industrial irrigation systems are already interested in working with us. The project has also been presented to the townships, mainly those that are in the southern part of Sierra de Las Minas. We are going to work with them to conduct analyses to see the status of their water sources, where they come from, how to take care of them, their distribution; and in the medium term, study the status of their regulations to see if we can improve them.
Q: How do you determine the amount that the companies should contribute?
Brenes: There are different methods of determining value. Some of the studies determine a specific value — for example, water use by the hydroelectric companies. These are estimates, so we need to negotiate in order to arrive at an agreed upon price. Guatemala does not have regulations regarding the payment of environmental services, so negotiations must be done with each company.
Núñez: We are now conducting studies to help determine values. We haven’t wanted to talk about specific fees but rather a volunteer system of payment. We are going to try to encourage regulations at the local level, and these could evolve into some kind of Water Law in Sierra de Las Minas.
This year we worked on joint work plans, such as an agreement with the Hondo River Hydroelectric company, where what we are doing is taking a sort of photo of the watershed and outlining indicators about how we are going to monitor it over the long term. This is the work plan: determine a baseline for indicators of all forest aspects, of vegetation, of fauna, and see what is important in the watershed in order to conserve it over the long term.
Q: How large is the water supply provided by Sierra de las Minas?
Brenes: There are two main watersheds: the Motagua River in the south, which is drier, has a more limited resource and less forest cover; and the Polochic River Basin in the north, a more humid zone with more forest. The latter is much better conserved. Efforts have been centered more on the Motagua River watershed. The area is very important both nationally and globally. In 1990, it was declared a Biosphere Reserve.
Q: What is the status of land tenure in the reserve?
Brenes: The biosphere reserve is almost 600,000 acres (240,000 hectares) in size. Part of this area is in the core zone and the rest is in the buffer zone. Efforts have focused on guarantying land protection in the core zone. Some lands were bought through the Defenders of Nature, and others through the National Council of Protected Areas.
Some of the communities in the reserve’s buffer zone have land titles, and we have launched a major environmental education campaign to ensure that their farming and other activities are environmentally friendly.
Q: What kind of sustainable livelihoods have you encouraged locally, in order to conserve water?
Brenes: Environmentally-friendly organic shade coffee is promoted, as well as ecotourism projects, sustainable agriculture with low input requirements, and soil conservation practices for the mountain slopes.
Q: What have been the project’s principal challenges?
Núñez: The main threat in the southern region of the reserve are forest fires, while in the north it is the continual advance of the agricultural frontier. Population growth is high, and there is pressure on the land. We must change the development model: convert a subsistence agriculture model to an agro-industry or industrial system in the Polochic Valley. We also need a direct relationship with the hydroelectric companies because we need this energy. All the communities in the northern part do not have power. This is a long-term goal.
Currently protection is focused on the reserve’s core zone, but to the extent that we are successful, we would focus on a second phase, dealing with efficient water distribution. We shall see if we can focus on health aspects, such as water chlorination.
Q: When do you think the fund will be sustainable?
Núñez: The goal is for the fund to begin to function in a year. We also hope to raise $5 million in five years for the seed fund.
Brenes: Also within a year we hope to have the participation of a group of service companies such as hotels, gas stations, tourism centers, banks and restaurants.