Market-Based Mechanisms for Protection of Water Resources

Status: Ongoing
Type of Project: Research Report
Principal Investigator: Mr Laurence Smith, University of London (Email)

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Faced with climate change, many of our catchments are already under stress from high demands for water and from diffuse and some point source pollution. The risk and severity of flooding may also be increasing. We need improved ways to protect water resources at source and alleviate flood risk. This requires change in land use and farming practices and the cooperation of land users. Advice and capital grants backed up by regulation can take us so far, but this project investigates how we may go further by incentivising landowners to set aside targeted areas of land with most beneficial effect for water protection.

The project will investigate ‘Payments for Ecosystems Services’ (PES) schemes. These involve a voluntary transaction in which a land use providing an environmental service is paid for by one or more beneficiaries. The project will partner and evaluate the Westcountry Rivers Trust’s WATER project in South West England, which aims to develop a market-based catchment restoration scheme.  

Success will demonstrate a means to strengthen adaptive land management for water protection whilst maintaining viable farm businesses under conditions of environmental change. It is a key premise that a PES scheme for water protection requires networks, partnership working and creative knowledge exchange. Three key groups are: providers of environmental services (land managers); technical intermediaries (the agency managing the scheme); and beneficiaries of services (the people and organisations that pay).

Research outputs will include: a synthesis of global PES experience for water resources, assessment of farmer attitudes and costs, market analysis and stakeholder mapping, methods for targeting land use change and assessing resource protection benefits, assessment of risks of pollution swapping, and knowledge exchange and dissemination.