Incentives for Ecosystem Services (IES) in the Himalayas: A ‘Cookbook’ for Emerging IES Practitioners in the Region

Main message: In rural Himalayan areas, where infrastructure is not adequate to facilitate direct payments to individual landowners, community groups can play a vital role in receiving and distributing financial and in-kind payments. As many communities are involved, care must be taken to ensure that promised payments are made to the service providers, and that they have the tools and conditions to prevent resource degradation. Otherwise, even a well-established IES system can run into various risks. Case 5: Drinking water supply – Dhulikhel, Nepal

Setting: Dhulikhel municipality is located in the Kavre district of Nepal and has a population of 16,263 (in 2011). The municipality has a high and growing demand for drinking water due to the expansion of tourism services, infrastructure development and rapid urbanization. Securing drinking water has been a key challenge for Dhulikhel because the municipality lacks high mountain ranges that could supply water. To address this problem, the Dhulikhel drinking water supply scheme was set up, which is the only urban water supply system that is managed by users in Nepal (Bhatta et al., 2014). The first step of this scheme was the laying of a 14km pipeline to provide safe drinking water to the residents and institutions of Dhulikhel city from the upstream water source. This upstream source is governed by the Bhumidanda Village Development Committee, which has 4,700 people living in its watershed. The pipeline extracts 20 litres/sec of water from Kharkhola and was completed in 1992. Services, payment and beneficiaries: In addition to the laying of the pipeline, a payment scheme was set up in 2010 between Dhulikhel municipality and Bhumidanda to formalize the extraction and supply of water. In this scheme, both parties agreed on providing cash contributions and in-kind incentives to upstream communities for their contribution to conserving the water source (Laxmi et al., 2014). The pipeline system is managed by the Dhulikhel Drinking Water and Sanitation Users Committee (DDWSUC), which supplies water to 1,978 private

connections and provides the direct and indirect payments to upstream communities. NPR 1 million (approximately US$10,000) are transferred per year to upstream communities, with an increase of 100,000 NPR every five years. Downstream water consumers in Dhulikhel pay a tariff based on water use volume. In-kind compensations to the upstream community include a Kathmandu University scholarship for one upstream student, trainings for upstream teachers at the Kathmandu University, salary for the forest guards and proposed health service discounts at the local hospital. Table 5 shows the types and amount of payments that Bhumidanda receives per year. Table 6 displays the rates of water tariffs for water supply by volume. Lessons learned: The system is predominantly community-managed and is supported by the local government, which acts as a mediator in making proper agreements. This enables the community to supply water at a reasonable price and more efficiently than government agencies. Furthermore, because the water demand in this scheme is high, buyers are willing to pay more to upstream service providers (Laxmi et al., 2014). This is particularly important when addressing some of the challenges unique to community management systems (for example, recovering the maintenance costs of the system via mutually agreed tariffs (Ojha, 2015)). As the value of water becomes more apparent, agreements may also need to be re-negotiated. Previously signed agreements between Bhumidanda


Incentives for Ecosystem Services (IES) in the Himalayas

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