Compensation for Hydrological Services in Bolivia: the Comarapa Municipal Water Fund

Bolivia's Comarapa watershed faces constant pressure from soil erosion, increased sedimentation, contamination, and loss of fertility and biodiversity. In February 2008 local authorities approved the creation of a Water Fund, with the objective of sustaining and reviving the environmental services of the watershed through conservation of native forest and restoration of degraded ecosystems. The Caballero Public Services Cooperative Ltd., a pre-existing entity with legitimacy and administrative capacity, administers the Fund. Resources are derived from the annual contribution of the Municipal Government, a local NGO and from contributions of members of the water cooperative. In its first two years, the fund collected US $22,400 from domestic water users, which compensated 10 families for putting 628 hectares of cloud forest under permanent conservation. The size and type of each compensation package was negotiated with each farmer.