Payment for Ecosystem Services (PES) Schemes for Conserving Sardu Watershed Nepal: Existing Practices and Future Prospects

In order to understand the implementation approach of PES, a study was conducted in Sardu Watershed in Sunsari district of Nepal. The ecosystem services considered are drinking water supply, recreational services and support services at the watershed level. The study found that the economic value of water, fodder/forage, pebbles/ boulders, and fuel wood available in the watershed was estimated to be more than NRs. 60 million a year. However, the economic value of the recreational and regulating services needs to be estimated to give a significant boost to the concept and idea of implementing the PES scheme. Although PES generally is not pro-poor, the project considered that poor local communities are at the centre in management and benefit sharing. The result showed that about 47 % of the total population living in the downstream are willing to contribute their physical labour (Shramdan), while 42% have agreed to allocate monetary contribution to the conservation fund for the sustainable management of watershed. To initiate raising financial sources and advance the PES scheme, a conservation fund was established, in which IUCN contributed an amount of NRs 1,000,000 in the form of seed money. However, for the sustainability of PES scheme, either a mechanism should be established where fund is generated from the service users or endowment fund should be established. Currently, PES in Sardu Watershed only considers a drinking water service that gives very low return of the efforts made by the community to conserve watershed. Bundling other ecosystem services, such as recreation, biodiversity conservation, carbon sequestration with drinking water services, may give better return to the community. Based on the learningby-doing approach, the specific PES law can draw the attention of the government and the public to the institutionalisation of PES as a policy instrument to ensure future provision at local, provincial and national levels.