Recognizing and rewarding the provision of watershed services

Increasing demands for and widening fluctuation of water quantityand declining water quality are contributing to a serious decline inthe available water that many see as an unalienable right. Linked tosupply of water is the protection of the watersheds that provide thewater and with the scarcity of supply comes conflict and competitionto own, use and manage the sources of water. Conventional solutionshave been left in the hands of government who have not always beenthe most efficient or appropriate managers. Conversely being leftentirely to market forces has resulted in unfair distribution and oftenmisuse and degradation of environmental attributes associated withwater. Both approaches have suffered from market failure - the failurefor the full economic value of water - indirect and direct, use and non-use, to be fully accounted for. Using market mechanisms can provideprotection of watershed resources (securing supply) as well asmeeting demands. It will mean that development of marketmechanisms must account for the total economic valuation as well asensuring that there are fully aware, knowledgeable and capablestakeholders in the process, that property rights are clearly definedand that an enabling and supportive policy and institutionalenvironment is in place.

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