The Cañete River basin in Peru is a crucial source of water for the farmers, rural families, people living in the town of Cañete, and hydropower industries. The water supply is unevenly distributed among these groups, with the ecosystems upstream supplying the majority of the water used further down the river.
In addition to the uneven distribution of the watershed, the ecosystem surrounding the river has shifted. Over the last 40 years, the number of the glaciers has fallen from 17 to 11, and the ice cover of the existing glaciers has been reduced by over 40 percent. Pollution from mining and wastewater from rural households is adversely affecting water quality. These factors have put the river and its surroundings at risk. Local farmers in the basin are already reporting that they cannot export their products due to polluted water. In the upper parts of the basin, depriving soils of needed nutrients. Ecosystem degradation is seriously jeopardizing the future availability of water in the basin.
CIAT and its project partners have developed methods to anticipate, monitor, and measure the effects of introducing a benefit-sharing mechanism in the Cañete River basin. Through this, the Ministry of Environment and the International Fund for Agriculture Development (IFAD) have been able to establish a “reward for ecosystem services” scheme by providing guidance to design the trust fund, identifying priority investment areas for ecosystem conservation, and assessing the value of different ecosystem services. The result is that a fund for a sound financial retribution scheme has been established.
What has changed?
As a direct result of this initiative, the Ministry of Environment in Peru ratified a law in the Peruvian Parliament, which established a new scheme for rewarding ecosystem services in the Cañete River basin. The Ministry has also designated the basin as an official pilot for a national benefit-sharing program, which, if successful, could be scaled up and implemented in an additional 53 river basins, furthering more equitable sharing of water across the country. The Ministry also developed an ecosystem services law, aimed to foster more benefit-sharing mechanisms, which is scheduled to be ratified soon.
July 21, 2016, the Peruvian government approved regulations of Law No. 30215 – Law on Compensation Mechanisms for Ecosystem Services (MRSE). The regulations were one of the key missing components to enforce the implementation of the Law: they provide specific guidelines for the design and implementation of the mechanisms, and clearly define the roles of different actors involved. They define how public entities can participate in the mechanisms and establishes the registry system for reward initiatives, which facilitates monitoring and learning from their implementation.