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Governance for cooperation and

successful watershed conservation strategies:

the Water Funds case

Vidal Garza, Carlos Hurtado, Priscilla Treviño and Ilsa Ruiz, FEMSA Foundation

atershed conservation is a priority that has been

exacerbated by climate change. The delicate balance

of nature, which offers vital ecosystem services to

society, has been compromised in several parts of the world.

The problem is a substantial one. An estimated 50 per cent

of the world’s wetlands have been lost since 1900

. Finding

a solution to this is not straightforward though; usually any

conservation initiative requires cooperation and coordina-

tion between multiple stakeholders for it to be successful

and sustainable. In Latin America, several approaches have

been taken to tackle watershed conservation, including Water

Funds – innovative governance and financial structures that

enable downstream beneficiaries to invest in upstream conser-

vation, which is needed to help secure water availability and

other environmental services.

FEMSA Foundation, together with The Nature Conservancy (TNC),

the Inter-American Development Bank (IDB), and the Global

Environment Fund, developed the Latin American Water Funds

Partnership in 2011. Their main goal is to create at least 32 success-

ful Water Funds in Latin America by 2016. These Water Funds

could support the conservation of over seven million acres of water-

sheds that supply water to cities with a population of approximately

50 million people. In order to achieve this, the partnership promotes

the collaboration between the private, public and social

sectors of society, and is committed to improving rela-

tions between local Water Funds.

The establishment of a regional governance structure

is a key objective for the partnership. It believes that

this will help to boost effective cooperation between

different stakeholders. This cooperation, together

with the Partnerships regional influence, can improve

the effectiveness of local Water Funds and the water

conservation as a whole by promoting:

• Efficiency through scientific tools, which promote

the allocation and execution of resources to maxi-

mize return on investment.

• Financing through seed capital, which can be

matched by public resources, invested on the finan-

cial market or used to develop local Water Funds;

fundraising capabilities with local and international

interested investors; and development of innovative

financial mechanisms.

• Collaborative learning, which encourages Water

Funds to share best practices, develop regional

scientific studies, and gain knowledge from interna-

tionally-renowned experts to provide guidance on

ongoing developments.

inancing

ooperation

What is a Water Fund?

As defined in the report

Water Funds: Conserving

green infrastructure

, published by The Nature

Conservancy in collaboration with other organizations

including FEMSA Foundation, “Water Funds are an

innovative way of paying and compensating for the

services that nature provides to humans. They attract

capital contributions from large water users such as

water supply companies, hydropower plants, irrigation

districts and agricultural associations, among others,

in an organized and transparent manner, adequately

investing these resources to maximize their return on

investment. The funds are invested in the financial

market through trust funds, and the financial returns

are invested to leverage public and private funds

to conserve the watershed, to create or strengthen

public protected areas, to pay for conservation

easements, to obtain financial and technical support

to promote more eco-friendly agriculture and livestock

systems that improve productivity, and to develop

community initiatives.”