Targeting water fund investments based on biophysical efficiency, social preferences and climate vulnerability

Background/Question/Methods

Declining clean, consistent water flows is currently one of the gravest issues for freshwater biodiversity conservation, the private sector and households worldwide. The Nature Conservancy and its partners have been creating water funds, a growing conservation mechanism aimed at addressing this challenge. This mechanism uses public and private funds to invest in watershed management practices that increase water-related ecosystem service flows and safeguard terrestrial and freshwater biodiversity. However, water fund investments are generally made in an ad hoc way, focusing on land owners who are willing to participate. Without scientific guidance, these funds risk failure by investing in places and activities that will not provide measurable ecosystem service returns, promoting actions that are not socially acceptable or targeting areas where climate change will lower ecosystem service returns, biodiversity importance or social acceptability.

Results/Conclusions

We demonstrate how a simple modeling approach, captured in the InVEST tool, can be used to direct water fund payments with greater biophysical efficiency and recognition of social constraints and interests. In a case example for the Cauca Valley in Colombia, we used restoration and protection costs, stakeholder input, biophysical rankings and ecosystem service models to conduct a return on investment analysis. We showed that investments at the USD 10 million level will likely lead to watershed-scale improvements in water quality (sediment concentration) in seven of nine watersheds in the water fund region and show where these investments will lead to the highest ecosystem service returns and social acceptance. Approximately USD 700,000 in investments have already been directed to the priority areas identified in this analysis. We also demonstrate how climate change analyses of shifts in agricultural productivity, annual average water yield, erosion rates and species ranges can be incorporated into investment design so that water funds can be used as a climate adaptation strategy.