This Week In Water: Yorkshire Water Accounts for NatCap Impacts

Natural capital accounting receives another boost as a UK water utility becomes the first of its kind to develop an environmental profit & loss account. Payments for ecosystem services (PES) received a boost as well, with passage of Peru’s PES law establishing a framework for compensation regarding ecosystem services.

This article was originally published in the Water Log newsletter. Click here to read the original.


2 July 2014 | Greetings! Earlier this month, the same week that US President Barack Obama unveiled a national climate action plan that opens the door to cap-and-trade in the power sector, Peru’s National Congress passed the country’s ground-breaking Payments for Ecosystem Services Law (Ley de Mecanismos de Retribucií³n por Servicios Ecosistémicos). The law passed with 83 votes in favor and none against, with no abstentions, according to a press release issued by the Ministry of Environment (MINAM).

The law sets out a framework for compensation for ecosystem services (like clean water or carbon storage) between land stewards and beneficiaries, including civil society, businesses, and municipal governments. Contracts will still be voluntary agreements between these parties, which means the government’s role is limited, according to those familiar with the law. It boils down to ecosystem services management and providing regulatory certainty for contracts – though the government will also help to identify payers and administer the compensation process.

“It’s a voluntary agreement between private parties with a private contract, but the state often owns the natural resources at the center of the contract,” explains Jose Luis Capella, Director of the Forestry Program in the Peruvian Society of Environmental Law (SPDA).

Examples of ecosystem services contracts in Peru are plentiful, like a project to restore degraded lands in the Rumiyacu-Mishquiyacu micro-watersheds, located among the jungles of Peru’s San Martin region. Residents in the city of Moyobamba agreed to finance sustainable land management through a monthly payment on their water bill. The Watershed Services Incubator, a collaborative initiative between Forest Trends (publisher of Ecosystem Marketplace) and MINAM, among other institutions, is a larger-scale effort to provide a capacity-building platform for developing water projects based on a payments for ecosystem services (PES) model.

Ultimately, Peru’s law aims to coordinate all of these activities by providing a simplified framework for PES to increase the mechanism’s use. It’s based on a simple idea that isn’t particularly innovative: those who help maintain and improve ecosystem services establish an agreement with those who are voluntarily willing to compensate for those services.

Other big stories this month: Yorkshire Water becomes the first water company to develop an environmental profit & loss statement reflecting its impacts on natural capital. India’s Sanjay Ghandi National Park is now part of Mumbai’s “natural infrastructure” system with the announcement of watershed management plans for the park to protect city drinking water supplies. And the latest installment in our series on the water-energy-food nexus offers a background look at what the concept, and why it’s so important to put nature in the nexus.

Very best,

— The Ecosystem Marketplace Team

For questions or comments, please contact [email protected]

EM Headlines


Peruvian Congress passes historic ecosystem services law

Six years in the making, Peru’s new Ecosystem Services Law passed this month, providing a comprehensive legal framework for the sticky issue of payments for ecosystem services. It is one of the most advanced pieces of legislation of its type, but had been stuck in committee for five years. Peru’s National Congress passed the country’s ground-breaking Payments for Ecosystem Services Law (Ley de Mecanismos de Retribucií³n por Servicios Ecosistémicos) with 83 votes in favor and none against, with no abstentions, according to a press release issued by the Ministry of Environment.

The law provides a legal framework to support a diverse range of ecosystem services – including greenhouse gas emissions reductions, biodiversity conservation and the preservation of natural beauty. Investments in watershed services (IWS), an already popular water management method in the country, have also been incorporated into the proposal.

There are two parties involved in the compensation process that the law lays out. The first are land stewards – farmers, indigenous peoples, landowners and individuals involved in ecotourism, who act as the receivers of ecosystem services. The other group – mostly civil society, businesses and municipalities – are the payers. They compensate the land stewards to practice sustainable land-use. These sustainable practices ensure businesses and cities will have the ecosystem services, like clean water and air, that they need to survive and thrive.

The government will be responsible for identifying the payers and also for administering the compensation process.

Read more at Ecosystem Marketplace.


The water-energy-food nexus: Interlinked solutions for interlinked challenges

Ecosystem Marketplace is launching a series of stories leading up to the State of Watershed Payments 2014 report release date that looks at global challenges related to the nexus and the various approaches businesses, government and the world as a whole are taking to address this issue.

In the latest article in the series, we take a look at how our demands for energy, food and water all drive each other, and how we can prevent them from driving in the wrong direction. We examine cases from India to California to sketch out what, exactly, the “nexus challenge” is, and how we can meet it. (Hint: it involves putting nature in the nexus.)

Get background on the nexus here.


DelAgua: Delivering Emissions Reductions, Clean Water, And Hot Beans

DelAgua Health is in the business of emissions avoidance as well as emissions reduction. It’s a tricky but vital distinction. In addition to cutting climate-warming emissions that are already occurring, the UK-based company is focused on preventing emissions that never have to occur in the first place – especially from the 3 billion people in the world who cook food using traditional cookstoves or open fires, and the 884 million who still do not have access to safe drinking water.

Carbon finance through the sale of offsets is central to DelAgua’s business model. Its programme of activities under the United Nation’s Clean Development Mechanism (CDM) combines the distribution of two household devices – clean cookstoves and water filters – to Rwandan families and has been piloted in 2,000 homes so far. In addition to reducing the need for fuelwood to boil water and cook food, therefore alleviating pressure on forests, the water filters almost instantaneously reduce water-borne illnesses while the lower-smoke cookstoves relieve respiratory ailments over time.

Matt Spannagle, DelAgua’s Climate Partnerships Manager, spoke with Ecosystem Marketplace (EM) ahead of the release of EM’s full State of the Voluntary Carbon Markets 2014 report about the motivation behind the double registration, some unexpected benefits of clean cookstoves, and why carbon offset sales makes more sense than other potential finance streams.

Read more at Ecosystem Marketplace.


Barack Obama And The Rationale For Ecosystem Service Markets

US President Barack Obama continued to roll out his Climate Action Plan last week by addressing the League of Conservation Voters. In the address, he mocked climate-science deniers, touted renewable energy, and warned environmentalists against ignoring the potential costs of reducing emissions. He also defended the Clean Water Act – an act that succeeds by addressing concerns about economics cost head-on.

A set of mechanisms in the Clean Water Act let land developers disrupt environmentally significant swamps (or “wetlands”) that filter water and regulate floods. That’s right. This great success works in part because it lets bad things happen. But there’s a catch: this degradation can only happen under very limited circumstances and only after a rigorous permitting process. More importantly, it can only happen if the developer compensates by either restoring, creating, or in some cases preserving an endangered wetland area of equal or greater environmental value than what is lost. This ingenious mechanism, which dates back to the 1970s, has led to the creation of wetland mitigation banks, private conservation efforts that proactively restore degraded wetlands – and on typically larger, more contiguous sites that deliver more ecosystem services than the isolated patches of degraded swamp that are destroyed.

This is one of the great unsung successes of the 1970s environmental boom, and it succeeds because it doesn’t let the perfect become the enemy of the good. Something similar is happening under the Endangered Species Act, which allows for development on habitat under very limited circumstances and only if habitat of equal or greater value is restored, created, or preserved. These things work, and they work so well that the European Union is incorporating similar mechanisms into its environmental strategy.

Read the opinion piece at Huffington Post.


In The News


Mumbai-area national park to be managed for watershed values

A watershed management plan is in the works for India’s Sanjay Gandhi National Park, with an eye to stabilizing flows and boosting water retention capacity in the park. The park, an important source of water for the city of Mumbai, will see new soil, water and habitat conservation work underway over the next eighteen months. It signals a more ‘soft-path’ approach to water security. “We used to construct artificial water holes inside the park whenever there was a scarcity. Now, we will manage the natural watersheds in an organised manner and give priority to natural water springs. This will help the wildlife, vegetation and help Mumbaikars’ water needs,” said Vikas Gupta, chief conservator of the park.

The Indian Express has the story.


China looks to avoid water scarce fate with new projects

China will be short 200 million cubic meters per year by the end of the next decade if the nation continues on the trajectory it’s currently on, according to the think tank 2030 World Resources Group. This alarming fact is likely a driving force behind the federal government’s approval of 170 new water projects that are meant to expand irrigation, reduce water usage in agriculture and speed up construction of its south-north water transfer infrastructure. The projects will be implemented over the next six years and, if successful, will reduce demand by 26 billion cubic meters of water (m3) and increase supply by 80 billion m3.

As of right now, China’s water challenges are staggering. Decades of rapid economic development with little regard for the environment has diminished China’s water resources. The government has said 70 percent of its groundwater is polluted. And recently, the Chinese Academy of Sciences said the country’s glaciers has shrunk fifteen percent in the last 30 years. This will impact river’s water flow and further cut water supplies. “Not executing this plan is really not an option,” says Debra Tan of the Hong-Kong based non-profit, China Water Risk.

Read more from Reuters.


What the US West can learn from Australia’s water troubles

When farmers don’t get the water they need, everybody suffers. This statement was made painfully clear for Australians as they struggled through a horrific drought that lasted over ten years and wreaked havoc on the nation’s economy and environment. River flows throughout Australia’s food basket, the Murray-Darling Basin, were only 40 to 60 percent of average. And over-allocation of the basin’s water rights meant that during these dry times, many farmers weren’t distributed any water.

The situation, which might sound familiar to people who’ve been living in the US West lately, led Australia to develop a water extraction cap policy called the Basin Plan, which recognizes the need to reduce water use by one third and leave 60 percent of water in the river. As most of water consumed goes toward irrigated agriculture, the government has provided funding for installing efficient farming techniques like drip irrigation. To date, nearly 70 percent of the targeted reductions in water use have been achieved, leading some to believe Australia’s strategy could be a model in the US and other water scarce regions.

Learn more from National Geographic NewsWatch.


Can nexus thinking deliver an energy, food and water secure future?

The interconnections between the water, energy and food sectors make up what’s known as the ‘nexus.’ Nexus approaches, which seek innovative and holistic methods to solve global interlinked challenges impacting each sector, are on the rise among NGOs and business leaders. But can the nexus become more than just a buzzword and actually help deliver solutions? Two academics from the environmental space ask this question and have found substantial momentum for nexus thinking. The severity of the resource scarcity situation is a key driver: it has never been more dire and is forcing society to accept interlinked resource challenges and reject business as usual as unsustainable. And evidence of this new thinking is seen among some large corporations. Big oil and gas companies are discussing the “resource trilemma” while brewing giant SABMiller is attempting to make decisions using a resource nexus lens.

Read more at The Guardian.



UK water company takes first steps toward natcap accounting

Contrary to the way they’re often treated in traditional economic thinking, natural resources are not infinite, and businesses take a big risk in not using or accounting for them accordingly. Companies report that resource-related supply chain disruption and price volatility are already happening. A new reportfrom CIMA, EY, the International Federation of Accountants (IFAC) and the Natural Capital Coalition highlights how these risks are largely ignored in corporate boardrooms.

However, one UK water utility, Yorkshire Water, is making efforts to integrate sustainability into its business strategy and is billing itself as the first water company to do so. Working with the environmental consulting firm, Trucost, Yorkshire Water has implemented an environmental profit and loss (EP&L) account. While the EP&L isn’t perfect and plenty of challenges still remain, it’s a start to integrating natural capital into Yorkshire Water’s balance sheets and has the potential to encourage other companies to follow. Simon Barnes, Yorkshire Water’s program director, says, “There are all sorts of reasons why you don’t do it – it’s not quite the right time, we don’t have the right data – but if you keep waiting you will never make a change.”

Keep reading at The Guardian.


PES in Vietnam daunted by inefficient and illegal activities

Like China and Costa Rica before it, Vietnam is attempting to implement a national policy of payments for ecosystem services (PES) to protect the nation’s watersheds and forests from illegal deforestation. The Payments for Forest Environmental Services program requires hydropower companies and other organizations reliant on ecosystem services, like tourism operators and water companies, to pay rural and mainly poor communities to practice conservation.

The program is meant to support economic development in poor areas while protecting Vietnam’s forests but its success is uncertain. For one, little environmental monitoring takes place to measure if the conservation practices are having an effect on water quality or forest health. And because of Vietnam’s power distribution monopoly, collecting money from several hydropower operations is proving difficult. Then there are the lucrative illegal activities, like logging and planting coffee trees in state forests, that lure farmers out of participating in the program. But the program is very much in its early days (having launched nationally in 2011) and the challenges Vietnam is facing are much like those faced in other countries testing national PES strategies.

The New York Times has coverage.


In the midst of ‘replenishment’ success, Coca-Cola closure order in India calls back bad memories

A Coca-Cola bottling plant in northern India was ordered closed earlier this month after local farmers complained to Uttar Pradesh authorities that the plant was depleting groundwater levels. But shortly thereafter, India’s National Green Tribunal overturned the local ruling, allowing the plant to reopen. The closure action echoed a similar incident ten years earlier, when the Kerala government withdrew consent for a Coca-Cola plant over similar allegations.

The Coca-Cola Company, which called claims about its Uttar Pradesh water usage “misleading and false,” in recent years has invested heavily in efforts to reduce water use and replenish an amount equivalent to its use through funding efficiency, watershed development, and ecological restoration projects. On June 5th, the day before the Uttar Pradesh Pollution Control Board ordered the plant closure, Coca-Cola announced that it had replenished 68 percent of water used in finished beverages globally in 2013 and is on track to reach its goal of 100 percent replenishment by 2020. In India, Coca-Cola estimates that it has already surpassed that target, having reached 130% replenishment relative to its operations in the country.

Read about the initial closure in the Financial Times.
Get coverage of the National Green Tribunal decision from BeverageDaily.


Setting the bounds for public-private partnerships on water

At the CEO Water Mandate’s thirteenth working conference in Lima in May, the group along with WWF released a very interesting discussion paper exploring the potential of business-government cooperation for water governance, Shared Water Challenges and Interests: The Case for Private Sector Engagement in Water Policy and Management. Lest readers be wary of business involvement in management of a public good, the brief offers case examples of successful public-private collaboration for sustainable management – whether through improving efficiencies, financing infrastructure, or moving sustainable practice forward. It also recognizes the limits of the approach, acknowledging critics’ worries about policy capture and greenwashing. Still, the authors say, “Current conditions actually offer a much greater incentive for companies to align their water-related policies and practices with the public interest than in the past,” and it would be a mistake for the public to pass on that opportunity.

Get background from IISD.
Download the discussion paper (pdf).
Read a summary of the meeting (pdf).


CISL report offers four collaborative financing scenarios for UK catchment management

A report launched by the Cambridge Institute for Sustainability Leadership in June takes on a similar question – what exactly should public-private collaboration on sustainable water management look like? – from a different angle. Researchers developed four models, each representing a different spread of cross-sectoral financing, governance and ownership. The models were used to examine how co-investment in catchment management might deliver resilience to water scarcity in the UK, and develop business cases for each sector participating.

No clear winners emerged – each model has its own benefits and implementation challenges – but the report’s authors say they hope it will help decision-makers consider future paths. “I believe that the Sink or Swim work places business in an excellent position to navigate the collective action that is required to address water resource management across sectors and alongside government,” CISL programme manager Dr Gemma Cranston said in a press release. “This innovative thinking has laid the groundwork for multi-sector plans and approaches to be implemented.”

Read a press release.
Read the report (pdf direct download).


June PENNVEST nutrient auction posts lower prices, slightly higher forward volumes from last year

In Pennsylvania, a June 11 auction saw certified nutrient credits for the 2014-2015 compliance years drop a bit in price though with a slight uptick in forward sales compared to last year. PENNVEST – the Pennsylvania Infrastructure Investment Authority – holds regular auctions for nitrogen and phosphorus credits for water quality trading markets in the Susquehanna and Potomac River basins. This month, a total of 23,000 credits for the 2014 compliance year went for $2.01-$2.27 (with prices falling in a second round of bidding), and 10,000 credits for 2015 within the same range. At a forward auction in June 2013, 9,000 credits for the 2014 year were sold for $2.78-$2.96, and a total of 37,000 2013 ‘spot’ credits for $2.15-$2.67. All trades in the recent auction were for the Susquehanna Basin. Depending on whom you ask, lower credit prices aren’t necessarily a bad thing: it suggests that dischargers in the state are meeting their pollution control requirements at a lower cost. Trades and a credit registry are hosted on the Markit platform. The next forward auction is scheduled for September 10th.

Read a press release.
View the PA Credit Trading page on Markit.


“Rare” marketing campaigns help move investments in watershed services forward

Successful reciprocal water agreements in Latin America continue to gain traction as Rare, the international conservation organization, initiates a slew of projects in Peru, Colombia, Ecuador, Bolivia and Mexico. Water users incentivize farmers to practice conservation with actions, supplying them with barbed wire to keep cattle out of streams or providing them with the training to grow more sustainable crops and conserve critical habitat. Those activities keep upstream areas healthy and help regulate freshwater flows to downstream areas. Rare is using its “Pride” marketing campaign model to encourage local populations to be proud of their natural resources and protect them by practicing good stewardship.

National Geographic NewsWatch has coverage.



Reciprocal Agreements for Water School

Fundacií³n Natura Bolivia with the support of various donors has established a School for Reciprocal Agreements for Water (Acuerdos Recí­procos por Agua, or ARA). The school seeks to inspire leaders in the region through training and education, working with mayors, municipal government, leaders of indigenous organizations, farmers and producer associations, NGOs, and other stakeholders. The School teaches how to implement ARA schemes in various contexts, with the goal of scaling up the ARA model in Bolivia and Latin America and through ARAs ensure the conservation of water and biodiversity-rich ecosystems. This intensive six-day course reviews in detail the establishment of ARAs. Each course has twenty places open will run in August and again in October of this year. All trainings are held in Spanish. The first course will be held in the cities of Santa Cruz de la Sierra and Vallegrande, Bolivia 11 to August 16, 2014.

Learn more here (in Spanish).


World Water Week 2014: Energy and Water

World Water Week is hosted and organised by the Stockholm International Water Institute (SIWI) and takes place in Stockholm. The World Water Week has been the annual focal point for the globe’s water issues since 1991. Every year, SIWI provides a platform for over 200 collaborating organisations to convene events at the World Water Week. In addition, individuals from around the globe present their findings at the scientific workshops. Early Bird discount rate is available till 30 June. 31 August – 5 September 2014. Stockholm, Sweden.

Learn more here.


Ecosystem Services Partnership Conference 2014

The emphasis of this Seventh international ESP conference will be on the use of the ecosystem services concept at the local level, focusing on Latin America with a special emphasis on Costa Rica. Scientists representing several EU-funded projects will present their results on Community Based Ecosystem Management. Don’t miss your chance to interact and exchange ideas with the rapidly growing network of ESP members, practitioners, educators, policy-makers, researchers, and many others from all continents. Be part of special sessions and working-groups producing outcomes ranging from journal articles, white papers, book chapters, grant proposals, database structures, websites, and much more. The deadline for the submission of abstracts for posters is June 15th and July 6th. 8-12 September 2014. San Jose, Costa Rica.

Learn more here.


One Water Leadership (OWL) Summit

Early Bird Registration for this year’s One Water Leadership (OWL) Summit is open with reduced rates! Join the 5th annual event September 15 – 17, in Kansas City. Invited keynotes include: President of the U.S. Conference of Mayors and Mayor of Sacramento Kevin Johnson and U.S. EPA Administrator Gina McCarthy. Spotlight Communities will drive the national conversation on water as the centerpiece for urban sustainability, developing green infrastructure and resource recovery. 15-17 September 2014. Kansas City MO, USA.

Learn more here.


16th Annual BIOECON Conference

The BIOECON Partners are pleased to announce the Sixteenth Annual International BIOECON conference on the theme of “Biodiversity, Ecosystem Services and Sustainability”. The conference will be of interest to both researchers and policy makers working on issues broadly in the area of biodiversity, ecosystem services, sustainable development and natural capital, in both developed and developing countries. The conference takes a broad interest in the area of resource management, development and conservation, including but not limited to: the role of biodiversity and ecosystem services in economic development, plant genetic resources and food security issues, deforestation and development, fisheries and institutional adaptation, development and conservation, wildlife conservation, and international trade and regulation. The conference will have sessions on economic development, growth and biodiversity conservation, as well as on institutions and institutional change pertaining to the management of living resources. 21-23 September 2014. Cambridge, UK.

Learn more here.


World Green Infrastructure Congress

The Congress will present the latest technological developments, green industry awards, iconic best practice projects, research data, professional training workshops, Living Art competition and new areas of applications in the field of green infrastructure. It will serve as a surface + space where international urban greenery thought leaders from various disciplines may come together with architects, landscape architects, landscaper contractors, environmentalists, horticulturists, nursery growers and policymakers and stakeholders to examine the present and future trends of this growing sector. 7-10 October 2014. Sydney, Australia.

Learn more here.


ACES 2014 Conference: Linking Science, Practice, and Decision Making

ACES: A Community on Ecosystem Services represents a dynamic and growing assembly of professionals, researchers, and policy makers involved with ecosystem services. The ACES 2014 Conference brings together this community in partnership with Ecosystem Markets and the Ecosystem Services Partnership (ESP), providing an open forum to share experiences, methods, and tools, for assessing and incorporating ecosystem services into public and private decisions. The focus of the conference is to link science, practice, and sustainable decision making by bringing together the ecosystem services community from around the United States and the globe. ACES 2014 will bring together leaders in government, NGOs, academia, Native American communities, and the private sector to advance the use of ecosystem services science and practice in conservation, restoration, resource management, and development decisions. We hope you will make plans to join more than 500 ecosystem service stakeholders in this collaborative discussion to advance use of an ecosystem services framework for natural resource management and policy. Abstract submission deadline is July 11th. 8-11 December 2014. Washington DC, USA.

Learn more here.


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