The Loktak RUPES II initiative in Manipur, India was launched to promote sustainable water management for ecological restoration and poverty alleviation. Total annual benefits from the lake in 2006-2007 were assessed at Rs 600 million, indicating a significant underestimation of the contribution of Loktak Lake to the regional economy. Actual cost of hydropower generation is 400% more than presently charged (Rs 5.16/unit against Rs 0.96/unit actually charged). The hydropower-producing company and the lake management authority are potential buyers and sellers of sustainably supply of water for hydropower, thus providing a suitable PES instrument to complement ongoing conservation efforts and rationalise water use for various developmental purposes.
The lesson learnt is the importance of identifying underestimation of the overall contribution of environmental services. This is likely to be applicable in similar PES-like environments
