Champagne for a pittance

News reports indicate that farmers in Parkejuli village in Assam pay Rs 21,000 to their counterparts across the border in Bhutan for using water from rivers flowing from the Himalayan Kingdom. The practice reportedly dates back to 1956 when the annual tax was just Rs 100. The rate of payment has since been revised several times. It seems there is an unwritten obligation on the part of the downstream users to pay their upstream counterparts for sustained supplies.

Unlike most city dwellers, Parkejuli inhabitants do not take the water that flows downstream for granted. In most cities across India water is ferried from distant watersheds to meet the growing demand. Quite often, neither is consent sought from local inhabitants for such transaction nor is payments made for the services they render. The crucial question is whether robbing Peter to pay Paul is justified in a market-driven economy?

Based on multi-location studies in eight countries the book has attempted to examine the issue of payment for watershed services from social, economic, legal and institutional perspectives. There are mixed evidences though. Payment for hitherto unrealized ecosystem services brings into the open the potential winners and the likely losers, setting the stage for a negotiated settlement to create a win-win situation. Without doubt, the payment schemes seem difficult to set up.

However, the Catskills-Delware watershed has sustained a large chunk of the 4.5 billion litres of daily supply of water to 9 billion people in the New York City on 'payment for ecosystem services' principle. Considered 'champagne' of drinking waters, the quality started deteriorating in the early 1980's due to intensification of farm activities in the watershed. It was estimated that to maintain water quality, the city would need to invest $ 6 billion in setting up a treatment plant.

The New York city instead struck a deal with the farmers, paying for pollution control investments on each farm. Between 1990 and 1993, 93 per cent of landholders in the Cat-Del watershed had signed up the program at a cost equivalent of about 11 per cent of the proposed treatment plant. New Yorkers have retained their champagne drinking water at a fraction of the cost of treatment. Curiously, exceptional cases like these have yet to inspire replication.

The case of New York city indicates that ensuring buyers alone may not be sufficient to set the system rolling. What the buyer pays for and what the seller gets may not be enough, the challenge is to ensure that watersheds get a fair deal....Link

Fair deals for watershed servicesby Ivan Bond & James Mayers 
IIED, London, 112 pages, $ 18