Country Name: Brazil
Author: José Alberto Gonçalves

This article was translated from the new Portuguese version of the Ecosystem Marketplace - www.mercadosambientais.com. Foundations, city councils, and water resource committees are ready to begin making payments to rural producers for environmental conservation services.



The small town of Extrema, in the southern part of the state of Minas Gerais, is transforming theory into practice with payments for environmental services in a water resource area. With funding already budgeted, the municipal government will begin making payments in October under the Water Conservation project.

In accordance with a municipal law approved in December of 2005, Extrema's city hall will initiate monthly payments totaling R$148.00 per hectare per year to one hundred small farmers with land in the Ribeirão das Posses River sub-basin. This basin feeds the Jaguari River, one of the principal headwaters of the Cantareira watershed, responsible for supplying half of the water to greater São Paulo.

To qualify for the payment, farmers will have to meet monthly goals for the conservation of soil, the recuperation and safeguarding of the fluvial vegetation that stabilizes the riverbanks, and the implementation of environmental sanitation, including the installation of septic tanks on their properties. The payment of benefits also requires that 20% of each property be left with forest cover intact.

The developments in Extrema reflect growing concern about soil degradation and the wanton removal of vegetation in watershed areas. Growing imbalances are threatening the quality of the water, resulting in increasing expense in water treatment.

In light of this situation, environmental organizations and private sector representatives are teaming up with municipal governments, watershed resource committees, and the National Water Agency to study the question of how to provide financial incentives for conservation in key watershed regions.

Collecting fees for the use of water, beginning in federally-managed basins such as the Rio Paraíba do Sul in 2003, and in the Piracicaba, Capivari e Jundiaí (PCJ) basin since last January, puts into practice both "user fees" and the notion of "polluter pays." However, these still do not adequately address the challenge of water and soil conservation. In the words of José Galizia Tundisi, professor at the Universidade Federal de São Carlos and a specialist in freshwater affairs, "Fines are still much more oriented to punishing polluters."

This, says Professor Mônica Porto of the University of São Paulo, is not as it should be. "Environmental protection occurs by compulsory mechanisms or financial incentives," says Porto. "It is the not the result of wishful thinking. Compulsory methods are more difficult and expensive to implement and generally not as effective."

Specific targets

Each incentive is incubated with a specific objective. In Joinville, Santa Catarina state, the purpose behind the recently created Financial Compensation System for the Environment is to rehabilitate the vegetation along the banks of the Cubatão River. This river forms the principal watershed for Joinville, the largest city in the state with 450,000 inhabitants and the third largest industrial center in the southern Brazil. The Municipal Environmental Foundation (Fundema in the Portuguese abbreviation) will make monthly payments of R$175 to R$550 to the 15 small farmers in a pilot project, with the amount proportional to the size of the property.

In order to qualify for the incentive, the farmers will have to plant and maintain riverbank vegetation under the guidance of Fundema, which will invest R$152,000 in the first three years. "It is an amount that is in line with what we spend on conservation services. The project will also involve the farmers and their families in the protection of the riverbank vegetation, with these environmental restrictions turning into a source of income," explains Norival Silva, president of Fundema.

In the case of the ANA "Water Producer" project, the real target is the erosion that leads to the silting up of rivers and lakes. If approved by the membership of the WRC for the Piracicaba, Capivari and Jundiaí basins, a total of R$1 million of the total collected for water use over the next five years will be applied towards the payment of environmental services, according to Professor Marcos Vinícius Folegatti at the University of São Paulo. The first step in this program carries an estimated price tag of R$4 million, with the remaining R$3 million to be met with funds from ANA, NGOs, and private enterprise.

Among the services that qualify for payment will be the application of techniques for soil conservation, such as terracing (to retain rainwater), at R$100/hectare. Folegatti illustrates how the incentives would work with an example; if the farmer were to implement terracing on 20 hectares, he would receive R$2,000 for his labor, with an additional R$20 per hectare per year for maintenance.

Folegatti is clear about the magnitude of the problem, "Erosion causes enormous environmental damage in the PCJ basin." Throughout Brazil, erosion rates vary between 15 and 20 tons per hectare, well above the tolerated limit of 9-12 tons specified by Devanir Garcia dos Santos, executive manager of the Multiple Use Department of Ana. The more erosion there is, the greater the amount of sediment that accumulates in rivers and lakebeds, rendering the water muddy and polluted. Turbidity alone makes water treatment four times more expensive, according to Santos.

The war against erosion is carried out by rehabilitating the vegetation cover, or by soil conservation techniques such as direct planting, reducing gradients, or terracing. All of these techniques help allow the soil to absorb water and prevent direct runoff into rivers. "Although you often hear about the construction of barriers to retain water in the soil, the retention of water in the basin through absorption into the soil is much simpler, with less [adverse] impacts," says Folegatti.

Paid not to plant

The payment for environmental services can work by simply discouraging the planting of crops in key conservation areas. This is the proposal being made by the International Institute of Ecology (IIE) for the municipality of São Carlos, in the state of São Paulo. The project entitled "Water Farms" will be sent to municipal chamber for consideration. If passed, the law will provide subsidies to farmers for not planting on lands close to the watershed. The eventual recovery of the forest habitat will allow rainwater to penetrate into the soil instead of discharging directly into the river with heavy load of sediments, thus affecting the recharge of the regional aquifer that is essential to the health of the headwater region.

With the support of the municipal government, the subsidy would be calculated in function of the lost agriculture production, according to Tundisis, honorary president of the IIE.

Even in urban areas, the concept of payment for environmental services can be applied for the protection of watershed regions. The Oasis Project of the Boticário Foundation intends to offer a type of cash reward for landowners in the watershed to the south of the São Paulo capital who preserve the remnants of the Atlantic rainforest on their lands.

The Foundation´s project analyst João Luiz Guimarães explains the goal: "We are basing this on scientific evidence that maintaining the forest in watershed regions increases the quality of the water." Guimarães further states, "Basins with a good percentage of vegetation cover act as natural filters, allowing the water to arrive in the reservoirs with a smaller load of pollutant."

The degradation of the Guarapiranga reservoir for the capital was so bad that the cost of water treatment more than doubled between 1998 and 2003, rising from R$23 to R$54 per million liters, according to the Foundation, which is presently seeking partnerships with companies to fund the Oasis Project.

Integrated Actions

One of the principal motives for the interest in the payment for environmental services with respect to water is the necessity of coordinating water policy with forestry policy. Reflecting this fact is the recent joining of forces of some of the principal environmental NGOs to create the Water and Forests Program in 1999. As told by Heloísa Dias, coordinator of the Atlantic Rainforest Biosphere Reserve (RBMA), "This is the path to rescuing the forest as a water producer." RBMA is joined in this initiative by the SOS Atlantic Rainforest Foundation, the World Wildlife Fund, and the Nature Conservancy.

Since 2003, the program has been running workshops in the WRC of the Paraíba do Sul state (Ceivap) in order to encourage integrated policy for these two themes. In March, a new stage of cooperation with Ceivap was reached with the selection of three top-priority areas for environmental restoration, integrating the concept of water resource managment, conservation forestry, and the payment for environmental services. "Our dream is that the WRCs create permanent mechanisms for the payment of environmental services," says Dias.

First published: September 29, 2006

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