Brazilian Water Protection a $100 Million Market?

Theresa Bradley National Geographic News 4 Jun 10;

This story is part of a special series that explores the global water crisis. For more visit National Geographic's Freshwater website.

Helga Hissa used to get soaked to promote better water management. In presentations to groups of Brazilian small farmers, she’d stand tall as her boss dumped a cup of water on her head, pointing as her wild, curly hair soaked it up. He’d then pour some on a bald volunteer, watching it roll off the man’s scalp and down his back.

The same happens when rain hits deforested land, Hissa’s team at the state agriculture ministry argues. Without vegetation to absorb it, more rain rolls off soil, speeding erosion, polluting water with sediments, and preventing the speedy recharge of reservoirs that supply Brazil’s biggest cities. Hissa and her colleagues want farmers to plant trees to prevent that.

Across Brazil, efforts are under way to recruit and reward rural residents to safeguard water sources and forests that normally retain water. Basically, they are paid to protect and plant trees.

Freshwater is one of Brazil’s most plentiful resources, with the country holding about 15 percent of Earth’s supply. But pollution and potential shortages are jeopardizing the farms and factories that drive the nation’s booming economy. Paying for protection may be the cheapest way to both preserve and naturally purify water, without extra—and expensive—treatment.

Cash incentives also give farmers a reason to cooperate with conservationists and have the potential to jump-start a broader “environmental services” market that could generate more than $100 million (U.S.) a year to fund conservation projects in Brazilian water basins.

The country’s biggest states and the national legislature are considering legislation to regulate such payments, while a dozen pilot programs are already spending tax revenues, environmental fines and water-use fees to encourage conservation.

”There are a lot of environmental problems that people aren’t aware of, but they can see water pollution, they can see erosion; they’re conscious that they have to do something,” said Hissa, now technical coordinator at Rio de Janeiro state’s program for sustainable rural development.

Valuing the Land’s Environmental Contributions

Interest in “payments for environmental services,” or PES, is growing worldwide, pushing landowners to protect forests not only by penalizing illegal cuts, but also by paying for their properties’ positive environmental contributions, including carbon sequestration, biodiversity preservation, and water filtration. Trees planted as buffers along streams, rivers, and lakes can significantly enhance water quality.

Carbon credits, one of the best-known PES vehicles, allow landowners to cash in on the carbon dioxide emissions that their trees absorb from the air, relieving the atmosphere of a portion of global warming gasses. Charging for erosion control or natural water filtration offers a comparatively concrete transaction, as local groups charge water utilities or municipal governments to preserve nearby basins, tapping what the UN calls a $2-billion-a-year (U.S.) market for global watershed services.

“You need to combine the carrot and the stick,” said Marcelo Morgado, environmental adviser to the head of Brazil’s biggest water utility, Sabesp. “A farmer won’t just lie in his hammock and say, ‘Oh, my trees are so beautiful, let me keep them.’ You need to support people to do the right thing.”

New York City pioneered watershed payments in the 1990s, when it avoided building a $4 billion (U.S.) water treatment plant by instead spending less than $2 billion (U.S.) to expand, and help upstate farmers protect, 2,000 square miles (5180 square kilometers) of land, lakes, and reservoirs that naturally filter water for 8 million city dwellers.

Brazilian officials are studying New York’s model and soliciting advice from current and former Empire State officials. The architect of the New York plan, former New York City Department of Environmental Protection commissioner Albert Appleton, insists that paying for conservation rather than cleanup can save any city money—and create revenue for surrounding rural areas.

“Brazilians are beginning to realize that the environment can actually be good for the economy,” Appleton said, recalling talks he had in 2009 with water officials in São Paulo.

Rise of Brazil’s Water Committees

Brazil holds more water than any nation and 2.5 times the U.S. supply, according to the California-based Pacific Institute research center. But those resources are unevenly distributed, with three-quarters in the Amazon—home to just 4 percent of Brazilians—and one twelfth along the southeastern coast, where 47 percent of the population lives, Brazil’s National Water Agency says.

In São Paulo state, an industrial hub of 40 million people, pollution and sediment have caused water treatment costs to quadruple since 1996, utility Sabesp reports, while 30 percent of water is lost each year to leaks and theft in sprawling favela slums, where residents puncture passing pipes to siphon supply, according to state data.

Federal water policy initially ignored such problems, focusing instead on hydropower, which provides 85 percent of Brazil’s electricity. But a 1997 law finally gave water economic value, creating a network of more than 80 local watershed committees empowered to charge and spend “water-use” fees levied on consumers.

Brazilians now pay less than 80 cents (U.S.) per cubic meter (35 cubic feet) of water, according to Ronaldo Seroa, an environmental specialist at Brazil’s Institute for Applied Economic Research—slightly less than New Yorkers. Still, studies suggest that São Paulo’s 22 watershed committees will together collect at least 140 million reals ($75 million U.S.) a year by 2011, which they could spend on preservation, said Renato Armelin, a technical manager at the state’s Environment Ministry.

A bill now before Brazil’s congress would promote that sort of spending, creating a PES registry and funneling part of the nation’s swelling oil income to farmers who conserve forests. A vote is expected after general elections in October 2010. São Paulo and Rio de Janeiro are drafting similar laws, while Espirito Santo, a top oil-producing state, already sends 3 percent of oil royalties to a water fund that rewards conservation. National Water Agency programs also provide about $28 (U.S.) per year per acre of land preserved.

Environmental economists suggest using water fees to protect public property, too. Researchers found it would cost affected consumers an extra 41 cents (U.S.) per year—about 0.0001 percent of Brazil’s minimum annual wage—to preserve Tres Picos, Rio’s largest state park.

Such costs are too small to hurt individual water users, but in sum offer water stewards a real incentive. That combination of affordability and impact could make watershed services a key building block for the larger environmental services market, drawing unlikely partners to preservation, said Fernando Veiga, environmental services manager at The Nature Conservancy in Curitiba.

“Now there’s common ground for agricultural and environmental guys to move beyond their old disputes about the environment versus development,” Veiga said. “This kind of watershed approach can actually bring us together.”

Theresa Bradley reported from Brazil as a fellow for the International Reporting Project.