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Water-related ecosystem services and river
basin management: a case study of
Extrema, Brazil
Cláudia Maria Coleoni
Linacre College
School of Geography and the Environment
University of Oxford
Submitted in partial fulfilment of the requirements for the degree of
Master of Science in Water Science, Policy and Management
03 September 2018
Word count: 14,460
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Abstract
Payment for Ecosystem Services (PES) has been increasingly applied to deliver water-related
ecosystem services (ES), particularly in Latin America. The aim of this dissertation is to
advance the understanding of how water-related ES can be integrated into river basin
management. It adopts the Water Conservator PES programme in the city of Extrema,
Southeast Brazil, as a case study within the context of the Piracicaba-Capivari-Jundiaí (PCJ)
river basins. By conducting documentation analysis, semi-structured interviews and direct
observations, this dissertation analysed three dimensions of PES at the city- and river basin-
level: (i) sustainability; (ii) adaptability; and (iii) scalability. This research finds that successful
PES programmes develop strong municipal public policies that integrate water-related ES into
the local planning process, enabling river basin committees to coordinate regional ES
provision. These findings emphasise that local environmental governance is key prior to
implementing and scaling-up PES programmes from the city- to the river basin-level.
Keywords: payment for ecosystem services; water-related ecosystem services; river basin
management; sustainability; adaptability; scalability
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Resumo
Pagamentos por Serviços Ambientais (PSA) têm sido amplamente utilizados para prover
serviços ambientais hídricos, especialmente na América Latina. O objetivo dessa dissertação é
avançar o entendimento de como serviços ambientais hídricos podem ser integrados à gestão
de bacias hidrográficas. A pesquisa adota o Programa de PSA Conservador das Águas na
cidade de Extrema, Sudeste do Brasil, como um estudo de caso no contexto das bacias
hidrográficas de Piracicaba-Capivari-Jundiaí (PCJ). Ao conduzir análise documental,
entrevistas semiestruturadas e observações diretas, essa dissertação analisa três dimensões do
PSA a nível municipal e de bacia hidrográfica: (i) sustentabilidade; (ii) adaptabilidade; e (iii)
ganho de escala. Essa pesquisa conclui que programas de PSA bem-sucedidos desenvolvem
políticas públicas municipais robustas, que integram serviços ambientais hídricos no processo
de planejamento local, permitindo que comitês de bacias hidrográficas coordenem a provisão
de serviços ambientais a nível regional. Esses resultados enfatizam que a governança ambiental
local é essencial antes da implementação e do ganho de escala de programas de PSA desde o
nível municipal até o nível de bacia hidrográfica.
Palavras-chave: pagamentos por serviços ambientais; serviços ambientais hídricos; gestão de
bacia hidrográfica; sustentabilidade; adaptabilidade; escala
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Acknowledgments
This dissertation is the result of an enormous amount of peer support, library exchanges
throughout the University of Oxford, and the incredible team of friends, academics and
professionals based in Brazil and in the UK.
I am very thankful to my supervisor, Dr Dustin Garrick, who patiently guided me through the
dissertation process, incentivising me to think critically since the very early stages of planning
and defining research questions.
I would like to thank the School of Geography and the Environment, the Weidenfeld-Hoffmann
Trust (via the Max Weidenfeld Travel Grant) for funding my fieldwork and supporting my
academic endeavours at Oxford. I am also very thankful to Linacre College, my home and
place of inspiring conversations with lifelong friends from all over the world.
I am deeply thankful to the warm reception I had in the city of Extrema, the Piracicaba-
Capivari-Jundiaí river basins and Brasília, Distrito Federal. I had the opportunity to interact
closely with water managers working with Ecosystem Services and river basin planning. I
certainly miss the typical rural landscape of Extrema, and the fieldwork routine with the
professionals from the Environmental Department. It was also an incredible learning
experience to be back to the PCJ Agency and obtain the support of fellow Environmental
Managers from ESALQ/University of São Paulo. I am very thankful for their time.
My special gratitude goes to my beloved parents, who remained very near in my thoughts
despite the miles that set us apart. They will always be the first ones to encourage my dreams
and ideas, and it is an honour to have them as my supporters in this journey.
Finally, I thank God for the daily strength and motivation to pursue my dreams and aspirations.
Gratidão!
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Table of Contents
Abstract ......................................................................................................................................................... 1
Resumo ........................................................................................................................................................... 2
Acknowledgments ......................................................................................................................................... 3
1. Introduction .......................................................................................................................................... 6
1.1. Research Questions ........................................................................................................................ 7
1.2. Dissertation Structure ..................................................................................................................... 8
2. Literature Review ................................................................................................................................. 9
2.1. Ecosystem Services and Market-Based Instruments ...................................................................... 9
2.2. Environmental planning and water policy in Brazil ..................................................................... 11
2.3. The City of Extrema ..................................................................................................................... 14
2.4. PCJ River Basins Management .................................................................................................... 15
2.5. Research Gaps .............................................................................................................................. 17
3. Methodology ........................................................................................................................................ 18
3.1. Epistemological Orientation ......................................................................................................... 19
3.2. Exploratory Case Study ................................................................................................................ 19
3.3. Theoretical Framework ................................................................................................................ 21
3.4. Documentation ............................................................................................................................. 23
3.5. Semi-Structured Interviews .......................................................................................................... 25
3.6. Direct Observations ...................................................................................................................... 27
3.6.1. Technical visits .................................................................................................................... 27
3.6.2. PCJ Committees Meetings ................................................................................................... 27
3.7. Data Analysis ............................................................................................................................... 28
3.8. Ethics ............................................................................................................................................ 30
4. Results and Discussion ....................................................................................................................... 31
4.1. City-level: Water Conservator PES programme .......................................................................... 31
4.2. River basin-level: water-related PES and water springs protection ............................................. 48
4.3. Addressing Research Questions ................................................................................................... 57
4.4. Limitations of the Research ......................................................................................................... 61
4.5. Implications of the Research ........................................................................................................ 62
5. Conclusion ........................................................................................................................................... 63
References .................................................................................................................................................... 64
Appendices ................................................................................................................................................... 73
Appendix 1 – List of Figures .................................................................................................................... 73
Appendix 2 – List of Tables ..................................................................................................................... 74
Appendix 3 – Acronyms and Abbreviations ............................................................................................. 75
Appendix 4 – Revised Map of the PCJ River Basins (2018) ................................................................... 76
Appendix 5 – Technical Visits ................................................................................................................. 77
Appendix 6 – Participant Consent Form ................................................................................................... 78
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“Quem mantém a floresta viva não precisa do volume morto!”
“Who maintains the forest alive needs no dead volume!”
Environmental Department of Extrema, Brazil
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1. Introduction
The growing global interest in the ecosystem services (ES) concept has resulted in the
dissemination of environmental policies and market-based instruments that adopt Payment for
Ecosystem Services (PES) schemes as an approach to promote positive environmental
externalities (Gómez-Baggethun et al., 2010; Wunder, 2015). Defined as the “steward earns
principle”, the PES rationale is that ES beneficiaries should reward the stewards responsible
for the ES provision (Gómez-Baggethun and Ruiz-Peréz, 2011). This rationale has been
increasingly applied to deliver water-related ES, such as drinking water supply, water cycling,
climate regulation and water purification (Hackbart et al., 2017). A broad exemplification of
water-related PES consists on the adoption of best agriculture practices by landowners
upstream (e.g. farmers) and their derived ES benefits to users downstream (e.g. urban residents)
(Grima et al., 2016).
Despite the critiques PES schemes face, particularly concerning the commodification
of ES (Brockington and Duffy, 2010; Muradian and Gómez-Baggethun, 2013), they have
become an attractive policy instrument for the promotion of water-related ES in developing
countries, especially in Latin America (Martin-Ortega et al., 2013). Numerous schemes have
been implemented across different scales, ranging from local to regional, and including a mix
of national and local rules (ibid.). However, a recent survey with over one hundred
environmental professionals revealed conflicting opinions on the appropriate scale of PES
implementation (Waylen and Martin-Ortega, 2018). Some respondents argued that PES is more
feasible at the small-scale, whereas others argued it is more useful at large scales (ibid.). This
raises the question of the role of regional ES governance to determine the scalability of PES
schemes and their integration with sustainable water management (Sommerville et al., 2009;
Rival and Muradian, 2013; Knüppe and Kniepper, 2016).
In this context, a better understanding of how PES can be applied at different scales is
needed to identify the enabling conditions to achieve the expected PES performance and
outcomes (Huber-Stearns et al., 2017). To address the challenge of scaling-up PES schemes
and integrating them into regional governance, this research adopts the 13-year old
Conservador das Águas (hereafter, Water Conservator) water-related PES programme in the
city of Extrema, Southeast Brazil, as a case study. This research considers the boundaries of
the Piracicaba-Capivari-Jundiaí (PCJ) river basins, where the studied PES programme is
located, as the regional scale of analysis. The choice of the river basin as the unit of
management is aligned with the Brazilian water resources policy and management system
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(OECD, 2015). Furthermore, river basins play a key role in integrating ES into the design and
prioritisation of water management actions (Terrado et al., 2016).
The case study of Extrema illustrates what makes water-related PES sustainable,
adaptable and scalable given the decision-making processes at the city- and river basin-level.
The Water Conservator PES programme applies the rationale of integrated vegetation, soil and
water management (Pereira et al., 2016). This PES scheme is strategic to a region that is part
of two environmental conservation areas: the headwaters of the Cantareira Water Supply
System
1
and the Environmental Protection Area (APA) Fernão Dias (Taffarello, 2016).
Located in the Jaguari sub-river basin, which is responsible for the city’s and most of the
Cantareira System’s water supply (Prefeitura Municipal de Extrema, 2017), the Water
Conservator has established multi-layered environmental governance by actively participating
in the decision-making processes of the PCJ River Basins Committees (Agência das Bacias
PCJ, 2017).
1.1. Research Questions
The overall aim of this research is to advance the understanding of how water-related
ES can be integrated into river basin management, adopting the city of Extrema’s Water
Conservator PES programme within the Piracicaba-Capivari-Jundiaí (PCJ) river basins as a
case study. The overarching research question to tackle the overall aim is:
How sustainable, adaptable and scalable is the city of Extrema’s PES programme
within the PCJ river basin management?
The overarching research question evaluates three dimensions: (i) sustainability (i.e.
meeting PES goals and targets); (ii) adaptability (i.e. temporal, financial and monitoring
elements); and (iii) scalability (i.e. expanding PES from city-scale to river basin-scale).
More specifically, my research is structured in three empirical sub-questions:
Sustainability Dimension:
1. How is the PES programme developed and designed to meet its goals and targets
in the provisioning of water-related ES?
1
The Cantareira Water Supply System refers to an interconnected set of reservoirs providing water supply to over
10 million people in the Metropolitan Region of São Paulo (Richards et al., 2015).
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Adaptability Dimension:
2. How is the PES programme sustained financially and monitored over time?
Scalability Dimension:
3. How does scaling-up PES affect river basin planning?
a) What are the key conditions and changes needed to integrate city- and river
basin-level programmes?
The adoption of these multiple dimensions is recommended by PES studies performed
by Rival and Muradian (2013) and Huber-Stearns et al. (2017) to promote a better
understanding of ES governance. The definition of each dimension draws upon the patterns
identified in the PES performance of 40 case studies in Latin America, which considered the
original design and implementation process of successful PES schemes (Grima et al., 2016).
The set of empirical sub-questions was adapted from the enabling conditions for PES
programmes identified by Huber-Stearns et al. (2017). The research questions are aligned with
the research gaps identified in this dissertation, as further explained in the Literature Review.
1.2. Dissertation Structure
The Introduction section has presented this dissertation’s topic and justified the research
questions. The Literature Review section provides further explanation of the PES concepts and
its relation to the city- and river basin-level approach within the context of the Water
Conservator in the city of Extrema and the PCJ river basins. The Methodology section presents
the epistemological orientation, and justifies the theoretical framework and methods adopted
in the research. The Results and Discussion section presents and discusses the results
considering the sustainability, adaptability and scalability dimensions, identifying limitations
and implications of the research. Finally, the Conclusion section reflects upon the relevance of
this dissertation’s findings within the broader literature on PES.
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2. Literature Review
This chapter provides background information within the broader literature on ES and
river basin management. The first sub-section reviews the concept of ES and market-based
instruments to reach economic decision-making. The sub-second section positions Payments
for Ecosystem Services (PES)
2
within the river basin rationale in Brazil, contextualising the
country’s history in environmental planning and decentralised water management. The third
sub-section provides an overview of the city of Extrema. The fourth sub-section explains the
PCJ river basins management. The fifth sub-section details the research gaps.
2.1. Ecosystem Services and Market-Based Instruments
The concept of ES has been widely used to understand complex social-ecological
systems (SES) (Ostrom and Cox, 2010) and to provide a framework for the linkages between
the environment and human wellbeing (Groot et al., 2002; Binder et al., 2013). As a result of
decreased levels of ES in the Anthropocene, there has been an increasing concern with the
valuation of ecosystem functions, goods and services (Groot et al., 2002; Knüppe and
Kniepper, 2016). This can also be confirmed by the growing number of scientific publications
in the field of ES, and the mainstreaming of the topic both at national and international levels
(Goméz-Baggethun, 2010; Hackbart et al., 2017). The Millennium Ecosystem Assessment
(MA, 2005) has remarkably contributed towards these efforts by inserting ES into the political
agenda. Recent research has also highlighted that ES are clearly embedded in the United
Nations Sustainable Development Goals (UN SDGs), potentially contributing to achieving 41
targets across 12 SDGs (Wood et al, 2018). These findings confirm the importance of
thoroughly understanding the potential of applying the ES framework in a transdisciplinary
manner.
According to MA (2005), ES can be defined as “the benefits people obtain from
ecosystems”. MA (2005) classifies ES into the following categories: (i) provisioning (e.g. food,
water, timber, and fibre); (ii) regulating (e.g. climate, floods, disease, wastes, and water
2
Note that in Brazil and in other Latin American countries, PES is generally referred to as Pagamentos por
Serviços Ambientais (in Portuguese) and Pagos por Servicios Ambientales (in Spanish). In English, it would be
directly translated as Payments for Environmental Services. This research adopts the Payments for Ecosystem
Services terminology, as commonly found in the literature. Although there are some discussions about the meaning
and appropriateness of each terminology, in practical terms (i.e. management of a PES programme) the
implications are very little. For a detailed review on these related terminologies (i.e. ecosystem services, ecological
services, environmental services and PES), please refer to Pesche et al. (2013) and Wunder (2015).
10
quality); (iii) supporting (soil formation, photosynthesis, and nutrient cycling) and (iv) cultural
services (e.g. recreational, aesthetic, and spiritual). Within the framework proposed by MA
(2005), river basins provide a series of ES, such as household water supply and water for
cropping/irrigation and livestock (provisioning); pollution control and flora/fauna habitats
(regulating); river landscapes for recreational purposes (cultural) (Knüppe and Kniepper,
2016). Within the UN SDGs, the intersection between water and ES can be clearly observed in
the UN SDG 6 “Clean Water and Sanitation”, specifically in the target 6.6, which states that
water-related ecosystems should be protected and restored.
Another conceptual approach to ES was developed by The Economics of Ecosystems
and Biodiversity (TEEB, 2010), which details the pathways from ecosystems and biodiversity
to human wellbeing. Differently from MA (2005), TEEB (2010) clearly defines ecological
phenomena (functions) and their direct/indirect contribution to human wellbeing (services),
identifying the gains provided for wellbeing (benefits) (Terrado et al., 2016). Figure 1 positions
water-related ES within the framework developed by TEEB (2010).
Figure 1. Pathways from biophysical structures and processes to human wellbeing for water-
related ecosystem services. WTP stands for willingness to pay.
Source: Terrado et al. (2016)
Although initially designed to raise public interest for biodiversity conservation, the
concept of ES has been criticised by its anthropocentric focus and utilitarian framing of
ecological concerns, which may lead to a solely economic-based mindset (Gómez-Baggethun
11
et al., 2010). Despite its criticisms, the promotion of ES has led to the adoption of market-based
instruments since the early 2000s, specifically Market for Ecosystem Services (MES) (Bayon,
2004) and Payment for Ecosystem Services (PES) (Wunder, 2005). MES focuses on trading
schemes, such as emission trading of greenhouse gases and sulphur dioxide (i.e. atmospheric
sink functions of CO2), and wetland mitigation (Gómez-Baggethun et al., 2010). PES is most
commonly defined as voluntary and conditional transactions over well-defined ES between at
least one buyer and one supplier who will secure the provision of ES (Wunder, 2005).
While MES tackles negative economic externalities
3
(i.e. polluter pays principle), PES
rewards positive externalities (i.e. steward earns principle) (Gómez-Baggethun and Ruiz-Peréz,
2011). When addressing externalities, one may choose to adopt a “Pigovian” and/or a
“Coasean” solution (ibid.). In the “Pigovian” approach, public intervention is responsible for
correcting “market failures” with state taxes and subsidies (Pigou (1920), 2006). The
“Coasean” approach private transactions correct “market failures”, whereby ES can be sold
and bought through voluntary bargaining (Coase, 1960). However, when analysing PES
initiatives on-the-ground, even when there is such “market-based approach”, most “markets”
have been “set up, subsidised and actively regulated by governments” (Gómez-Baggethun and
Ruiz-Peréz, 2011, p. 618). This is certainly the case of the Water Conservator PES programme
in Extrema, which will be further explored in Section 4. As a result, reducing PES complexity
to a market-based approach is rather simplistic, since it disregards the fact that PES is
embedded in SES (Van Hecken et al., 2013).
2.2. Environmental planning and water policy in Brazil
Water management in Brazil is decentralised and the river basin is considered the unit
of management (Brazil, 1997). At the federal level, the National Water Agency (ANA)
implements water policy and administers water use licenses and permits. The national
institutional framework was established in 1997, creating the river basin committees, where
decision-making takes place, especially by administering water use charges and applying them
to the development of projects within the river basin.
Water use charges (cobrança pelo uso da água) in Brazil are defined as the “price for
the use of a common-pool resource, set within the basin committees in a participative manner
3
Externality can be defined as “the cost or benefit that affects a party who did not choose to incur that cost or
benefit” (Buchanan and Stubblebine, 1962).
12
by water users, civil society, and public authorities” (OECD, 2017, p. 38). ANA (2014) clarifies
that the water use charges is neither a tax, a fine, nor a tariff. It is rather an “economic
compensation” for the use of the “water commons” (ibid.). Setting the water use charges is a
political-technical process conducted by the river basin committees and it is administered by
the delegated water agencies (or river basin agencies) (OECD, 2017). Figure 2 illustrates the
implementation cycle of the water use charges. Further to the water use charges, the national
water system counts on other four management instruments: water resources plan (or river
basin plan); water quality classification of water bodies; water permits; and water resources
information systems (Brazil, 1997).
Figure 2. The water use charge implementation cycle in Brazil.
Source: OECD (2017)
At the national level, the concept of PES was disseminated through ANA’s Programa
Produtor de Água (hereafter, Water Producer Programme), which aimed at valuing water-
related ES using the “user-pays/polluter-pays” principle of the Brazilian regulation (ANA,
2013). It has also been implemented as a means of complying with land-use regulations in
Brazil, such as the national Forest Code (which demands restoration of naturally vulnerable
areas, i.e., riparian zones) (Schmitt et al., 2013). This arrangement has contributed to the
dissemination of the PES concept nationally, resulting in the implementation of water-related
ES projects at the municipal level within a regional and/or river basin context (Taffarello,
13
2016). Figure 3 illustrates the dissemination of water-related PES in the Atlantic Forest biome,
where the city of Extrema’s PES programme is located.
Figure 3. Water-related PES projects per state within the Atlantic Forest biome, Brazil.
Minas Gerais (MG): (1) Extrema’s Water Conservator, (2) Water Producer Programme;
São Paulo (SP): (1) PCJ Water Producer, (2) Water Producer, Guaratinguetá, (3) Water
Producer, São Francisco Xavier, (4) Oásis Project, (5) Mina d’Água, (6) PES project Vinhedo,
(7) Corredores do Vale; Rio de Janeiro (RJ): (1) Water Producer, (2) Floresta Guandu; Paraná
(PR): (1) Oásis Project; Santa Catarina (SC): (1) Water Producer, Camboriú River and (2)
Water Producer, Vermelho River.
Source: adapted from Taffarello (2016).
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2.3. The City of Extrema
Extrema is a city of 34,344 inhabitants, occupying an area of 24,370 hectares situated
in the state of Minas Gerais, neighbouring the state of São Paulo, Southeast Brazil (IBGE,
2017). This strategic location has enabled industrial development, ranking the city in the first
place of a regional index for municipal development (Prefeitura Municipal de Extrema, 2017).
With the highest gross domestic product (GDP) of Minas Gerais (i.e. BRL 153,744 or USD
37,498) (IBGE, 2015), the city of Extrema’s main economic activity is beef and dairy
production (Richards et al., 2015). Although Extrema has very low agricultural potential
(Gavaldão, 2009), family farm’s activities have an impact on water quality at the city- (i.e.
upstream farming) and regional-level (i.e. downstream urban dwellers in the city of São Paulo).
Located in the headwaters of the PCJ river basins, the city of Extrema has numerous
water springs of regional interest for public water supply (Comitês PCJ, 2017). Furthermore,
Extrema’s main river (Jaguari) is responsible not only for the city’s water supply, but also for
most of the Cantareira System (Pereira et al., 2016) (Figure 4 situates Extrema within the
Cantareira System reservoirs). Combined with the fact that Extrema is located in the Atlantic
Forest, one of the most degraded biomes in Brazil, this region is of particular importance for
the provision of water-related ES (Taffarello, 2016).
Figure 4. Location of the city of Extrema and the Cantareira System, Southeast Brazil.
Source: Richards et al. (2015)
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2.4. PCJ River Basins Management
The PCJ river basins are composed of 76 municipalities (71 in São Paulo and 5 in Minas
Gerais), located totally/partially within the basins, distributed across an area of 15,377.81 km2,
totalising 225 drainage areas within 7 sub-river basins (Atibaia, Camanducaia, Capivari,
Corumbataí, Jaguari, Jundiaí, Piracicaba) (PROFILL and RHAMA, 2018a) (Appendix 4). The
total estimated population residing in the PCJ river basins is 5,727,981, with an urbanisation
rate of 95.1% (ibid.). The region has a very representative economic potential, with its GDP
estimated at 5% out of the total Brazilian GDP (Agência das Bacias PCJ, 2017). The PCJ river
basins are considered of double dominion (i.e. jurisdiction of two states), since 92.45% of its
territory is in São Paulo, and 7.55% in Minas Gerais (ibid.). Because of the interstate Piracicaba
river basin (i.e. some of its water springs are situated in Minas Gerais), the decision-making
processes are jointly conducted by the PCJ River Basins Committees (hereafter, PCJ
Committees) (Figure 5). The PCJ Committees are a tripartite entity formed by members from
Minas Gerais and São Paulo states, and the Federal level.
Within the PCJ Committees, members are distributed in 12 Technical Boards (Figure
6). They can be public, private or civil society, and all have the right to vote (Agência das
Bacias PCJ, 2018). Technical Boards have an agenda of their own, and they may create a
Working Group to tackle specific issues within their area of expertise (ibid.). Most notably, the
PCJ river basins represent a pioneering experience in the implementation of the water use
charges in Brazil (OECD, 2017). Although the PCJ river basins have successfully implemented
a regional governance, the amount charged does not correspond to the basins’ needs (ibid.).
For instance, the yearly water collection is approximately BRL 16 million (or USD 4 million),
against the projected investment need of BRL 4 billion (or USD 1 billion) (ibid.).
In the PCJ river basins, water use charges come from four sources: state funds (such as
FEHIDRO
4
), São Paulo state water charges, Minas Gerais state water charges and federal
domain charges (locally known as PCJ-federal) (Agência das Bacias PCJ, 2017). The
Foundation of the Piracicaba-Capivari-Jundiaí River Basins Agency (hereafter, PCJ Agency)
is characterised as the water agency for the basin’s portion of the state of São Paulo (ibid.).
Although the PCJ Agency is the delegated water agency for the federal government, it is not
allowed to apply the collected water charges in rivers of the Minas Gerais state’s domain, where
these functions are carried out by IGAM
5
(OECD, 2017).
4
FEHIDRO stands for the State of São Paulo Water Resources Fund
5
IGAM stands for Institute for Water Management of the State of Minas Gerais
16
Figure 5. Composition of the PCJ River Basins Committees.
Source: Agência das Bacias PCJ (2018).
Figure 6. Management structure of the PCJ River Basins Committees. The PCJ Committees are
composed of 12 Technical Boards from the PCJ Committees: 1) Groundwater; 2) Environmental
Education; 3) Integration and Diffusion of Research and Technology; 4) Hydrological Monitoring; 5)
Water Permits and Licenses; 6) Basins Plan; 7) Planning; 8) Conservation and Protection of Natural
Resources; 9) Use and Conservation of Water in Rural Areas; 10) Sanitation; 11) Environmental Health;
12) Use and Conservation of Water in the Industry.
Source: Agência das Bacias PCJ (2018).
17
2.5. Research Gaps
The governance of ES in river basins is not always integrated or considered broadly
(Knüppe and Knieper, 2016). As a result, governing ES provision depends on different layers,
scales and dimensions, which are conditioned to the generation and flow of ES (Rival and
Muradian, 2013). Hence, this dissertation adopted multiple dimensions (i.e. sustainability,
adaptability and scalability) when elaborating the research questions to analyse PES at the city-
and river-basin level (Grima et al., 2016). As emphasised by Huber-Stearns et al. (2017), the
enabling conditions for PES require an increased integration of biophysical and institutional
components.
The sustainability dimension addresses the gap of the design and development required
to sustaining programme longevity for PES (Jack et al., 2008), considering the biophysical
conditions for the provision of water-related ES (Huber-Stearns et al., 2017).
The adaptability dimension addresses the need for adaptative governance of complex
social-ecological systems (Folke et al., 2005). It tackles the financial and monitoring gap found
by prior research in the Extrema region, particularly in relation to the key role of institutional
framework for successful PES programmes (Richards et al., 2015; Taffarello, 2016).
The scalability dimension addresses the gap of understanding the effects of PES scales
(i.e. local or regional) in the delivery of ES and the conditions necessary to scale-up PES
schemes (Waylen and Martin-Ortega, 2018). This dissertation analyses the integration of local
(i.e. city-level Water Conservator programme) and regional (i.e. PCJ river basins) scales.
Further to the Literature Review, I consulted academics and professionals working with
ES in Brazil to identify research gaps and understand the difficulties in the field. These
discussions are not part of the material for analysis, but they contributed to refining the scope
of this research.
18
3. Methodology
This research employs an exploratory case study approach with mixed methods for data
collection and analysis (Hart, 2005) and adopts PES as the theoretical framework (Wunder,
2015; Wunder et al., 2018). Mixed methods refer to the combination and integration of
qualitative and quantitative data (both open- and close-ended questions) (Creswell and
Creswell, 2018). The justification of adopting mixed methods relies on three main reasons: (i)
consulting multiple data sources; (ii) understanding the intersection between water managers
and water-related ES; and (iii) observing the decision-making processes at multiple spatial
scales (city- and river basin-level) (Elwood, 2010). The sources of evidence applied in this
research are documentation, semi-structured interviews and direct observations (i.e. technical
visits to the sites of the PES programme and attending key meetings of the PCJ Committees).
The rationale for using multiple sources of evidence is considered a major strength in case
studies since it allows the convergence of the data collected (i.e. triangulation) (Yin, 2013), as
illustrated in Figure 7. The triangulation of evidence is used as a validity strategy to build
justification of this research’s findings (Creswell and Creswell, 2018).
Figure 7. Convergence of multiple sources of evidence.
Source: Adapted from Yin (2013).
19
3.1. Epistemological Orientation
This mixed-methods research employs a pragmatic epistemological orientation.
Epistemology is a “way of looking at the world and making sense of it” (Crotty, 1998, p. 8).
The central questions of epistemology are what can be known and what it means to know
something, which is the process of generating knowledge through research (Tashakkori and
Teddlie, 2010) as well as a “basic set of beliefs that guide action” (Guba, 1990, p. 17).
Pragmatism is real-world practice oriented and problem-centred (i.e. seeking solutions
to problems) (Patton, 2015; Creswell and Creswell, 2018). Tashakkori and Teddlie (2010)
emphasise that pragmatism investigates the research problems by using pluralistic approaches
to extract knowledge out of the problem. Hence, truth is considered what works at the time of
this exploratory case study given a set of contextualised actions, situations, and consequences
(Morgan, 2007). Furthermore, a pragmatic epistemological orientation is justified based on its
assumption that collecting multiple sources of data provide a better understanding of research
gaps, rather than quantitative or qualitative data separately (Creswell and Creswell, 2018).
3.2. Exploratory Case Study
This research applies the exploratory case study approach to a better understanding of
how water-related ES can be integrated into river basin management. The purpose of an
exploratory case study is to “identify the research questions or procedures to be used in a
subsequent case study” (Yin, 2013, p. 238). Case studies provide an in-depth view of the
studied phenomena while considering real-world implications within a contemporary set of
events (Yin, 2013) and building upon the existing literature (Burawoy, 1998). This in-depth
view favours a holistic and context-based qualitative analysis (Creswell and Creswell, 2018).
The case study presented here, as explained in the Literature Review, is based on the
13-year Water Conservator PES programme. From May 21st to June 19th, 2018, I travelled to
three different regions in Brazil to obtain an overview of the PES programme:
(i) the city of Extrema, Minas Gerais state, where the PES programme is located;
(ii) the cities of Piracicaba and Campinas, São Paulo state, where the PCJ Agency
is located and where the PCJ Committees meetings were held, respectively;
(iii) the city of Brasília, capital of Brazil, Federal District, where ANA is located.
20
Figure 8. Timeline for dissertation fieldwork in Brazil, from May 21st to June 19th, 2018.
The overall agenda was previously agreed with the professionals I consulted in Brazil,
as detailed in the fieldwork timeline (Figure 8). Figure 9 illustrates the geographic location
of these cities in Brazil and Table 1 details the activities performed in each of these regions.
Figure 9. Location of the cities travelled in Brazil for the case study on Payment for Ecosystem
Services (PES). Dissertation activities were performed in three different regions: the city of
Extrema, South of Minas Gerais state; the cities of Piracicaba and Campinas, São Paulo state;
and the city of Brasília, capital of Brazil, Federal District.
Source: adapted from GADM (2018).
21
Table 1. Summary of activities performed in the dissertation fieldwork locations in Brazil,
from May 21st until June 19th, 2018.
Location
Description of activity
Extrema, Minas Gerais
Technical visits to the sites of the Water Conservator PES
programme with the local support of the Municipal
Environmental Department and The Nature Conservancy;
Interviews with four professionals from the Municipal
Environmental Department and one professional from The
Nature Conservancy;
Access to planning and technical reports from PES programmes
(Water Conservator and Mantiqueira Conservator).
Piracicaba, São Paulo
Interviews with four professionals from the PCJ Agency;
Access to documents on PES programmes, forest restoration
river basin planning;
Observation of the first selection process for incoming projects
on the PCJ Policy on Springs Protection.
Campinas, São Paulo
Participation in two meetings of the PCJ Committees conducted
by three Technical Boards (Conservation and Protection of
Natural Resources – CT-RN; Use and Conservation of Water in
Rural Areas – CT-Rural; Planning – CT-PL);
Interviews with two professionals from the PCJ Committees.
Brasília, Federal
District
Interview with one professional from the National Water
Agency (ANA) to understand the implementation of the Water
Producer Programme strategy in river basins across Brazil,
focusing on existing and future projects.
3.3. Theoretical Framework
This study adopts the ecological principle for water policy (Pegram et al., 2013). As
such, the river basin is the unit of management, as specified in the Federal Law no. 9433 on the
Brazilian water resources policy and management system (Brazil, 1997; OECD, 2015). This is
an appropriate standpoint to this research, since scaling-up of PES is analysed from the city
(i.e. Extrema) to the river basin-level (i.e. PCJ river basins).
Water-related ES are evaluated through the lens of the revised PES framework
proposed by Wunder (2015) and Wunder et al. (2018). Wunder’s (2005) initial definition of
PES, as explained in the Literature Review, was commonly framed as a “Coasean” approach
(Pagiola and Platais, 2007) or “user-financed” (Engel et al., 2008), and rather “narrow”
6
(Muradian et al., 2010). Given the rapid mainstreaming of PES (Rival and Muradian, 2013),
Wunder (2015, p. 235) posed the following question:
6
A “broad” definition of PES would be: “A transfer of resources between social actors, which aims to create
incentives to align individual and/or collective land use decisions with the social interest in the management of
natural resources” (Muradian et al., 2010, p. 1205).
22
“Does it matter most what PES were conceptualised to be [theory-based analytical
framework] or the way ideas are currently being practised?”
Since this research considers the Water Conservator PES programme’s design and
implementation, rather than its conceptualisation, a more practical PES framework was
employed, aligned with a pragmatic epistemological orientation and based on four
preconditions established by Wunder et al. (2018), as explained in Table 2.
Table 2. Framework based on preconditions for PES implementation.
Precondition
Implication for PES implementation
(1) ES users’ willingness to pay
likely exceeds ES providers’
willingness to accept
compensations
As a fundamental economic reality check for PES, it is vital to
determine if the user-perceived value of the ES exceeds the
value of landholders’ expected costs of ES delivery. Informed
guesses can be made, even if the value of the ES and/or the
precise cost of participation are unknown.
(2) ES users are capable of
internally organising payments
The ES user (or public) institutions are in place to champion
the introduction and administration of PES.
(3) ES providers have sufficiently
secure user rights over important
environmental resources to
effectively exclude third party
intrusions
More specifically, landowners and resource stewards need to
actually be in charge of the decision-making processes that will
come to determine the ES provision.
(4) Any pre-existing intrinsic
motivations for good stewardship
are not crowded out by extrinsic
PES incentives
Payment on balance needs to motivate ES providers to
sustainably deliver more ES.
Source: Adapted from Wunder et al. (2018).
These preconditions set conditionality “as the single most important PES feature”
(Wunder, 2015, p. 242), which is defined as the combination of compliance monitoring and
sanctions for non-compliance (Wunder et al., 2018). This is reflected into the PES design once
participants and payments have been defined. Hence, this research considers monitored and
enforced conditionality as necessary for effective incentives on water conservation through
PES schemes (ibid.).
23
3.4. Documentation
Documentation refers to the use of any relevant documents (e.g. administrative and
financial documents, progress reports, formal studies, minutes of meetings etc.) that
corroborate and increase the research’s evidence from other data sources (Yin, 2013).
Documentation covers longer time spans, including many events and settings (ibid.), which
contributes to fieldwork preparation and the contextualisation of semi-structured interviews
and direct observations. Other advantages include the unobtrusive source of information (i.e.
not dependent on the case study’s outcomes), identification of technical language and exact
references, and data that participants use for decision-making (Creswell and Creswell, 2018).
Although this research looks at water-related ES both at the city- and river basin-level,
it is vital to recognise that water management in Brazil considers the administrative boundaries
(municipal, state, federal) and hydrological boundaries (river basin committees). As a result, I
conducted a systematic search of documents at the city, state, river basin and federal levels,
since the PCJ river basins are considered federal and of double dominion. The systematic
search looked at four main components: (i) relevance to research questions; (ii) availability and
access to the material; (iii) reliability (quality of the document); (iv) updated information.
After evaluating the documentation’s content based on those components, I analysed
four main documents to address the research questions: (i) Water Conservator PES
programme’s 12-year report; (ii) First Revision of the PCJ River Basins Plan (2010 to 2020);
(iii) Updated Forest Restoration Master Plan for Water Conservation in the PCJ River Basins;
and (iv) PCJ Policy on Restoration, Conservation and Protection of Water Springs. The
documentation analysis focused on the triangulation of the city- and river basin-level
documents, particularly to understand how the lessons learned with the Water Conservator are
currently shaping the scaling-up of PES and water-related ES policies in the PCJ river basins.
Any additional information needed was complemented with the literature review, and/or data
made available by the city of Extrema, the PCJ Agency and ANA. Interviews were also a key
source of information and explanation of the documentation’s content. Table 3 summarises the
content of each documentation.
24
Table 3. Description of analysed city- and river-basin level documents.
Document
Description
Water Conservator PES
programme’s 12-year report
[city-level]
Released in 2017 by the city of Extrema, it details the programme’s technical, financial and management aspects, from its
conception to achieved results. The current expansion efforts with the Mantiqueira Conservator Plan are also explained.
The report brings the methodological criteria for eligible rural properties and catchments, detailing the institutional and
financial arrangements made to meet the Water Conservator’s targets (Prefeitura Municipal de Extrema, 2017).
First Revision of the PCJ
River Basins Plan
(2010 to 2020)
[river basin-level]
The main planning instrument of the PCJ River Basins, delineating the priority areas for investment of the water use charges
and the characterisation of the river basins. It encompasses the topics of use, protection, conservation and restoration of
water resources. Started in August 10th, 2016, the first revision brings proposals of updating the water quality classification
of water bodies and its effectuation programme by 2035. The final report of the First Phase was approved on April 27th,
2018, and it refers to the Revision and Updating of the Plan, composed of the Diagnosis, Prognosis and Action Plan,
distributed in four volumes. The PCJ Committees are currently working on the Thematic Guidelines for each priority area
within the PCJ river basins (Comitês PCJ, 2018a; PROFIL and RHAMA, 2018a, 2018b, 2018c, 2018d).
Updated Forest Restoration
Master Plan for Water
Conservation in the PCJ
River Basins
[river basin-level]
Approved in June 6th, 2018, the final report of the PCJ Forest Restoration Master Plan supports the technical guidelines on
conservation and water use in rural areas and forest restoration within the PCJ River Basins Plan. The Master Plan delineates
the territorial strategies to implement actions of environmental restoration in areas of interest and PES, both at local and
regional levels (Comitês PCJ, 2018b; IRRIGART, 2018).
PCJ Policy on Restoration,
Conservation and Protection
of Water Springs
[river basin-level]
Approved on December 15th, 2017, it is the instrument used to apply the guidelines set forth in the PCJ River Basins Plan
and the PCJ Forest Restoration Master Plan. Its success relies on the integrated coordination of the Technical and Working
Groups within the PCJ Committees. The Policy defines the criteria for the first public call to select projects on water
conservation projects in the municipalities located in the state of São Paulo’s portion of the PCJ river basins. It also relies
on the implementation of the Survey of Areas for Investment in Ecosystem Services (locally known as the LUISA Project)
(Comitês PCJ, 2017).
Source: own elaboration based on literature review.
25
3.5. Semi-Structured Interviews
From May 21st until June 19th, I conducted a total of 12 interviews looking at different
administrative levels for Extrema’s Water Conservator PES programme: municipal; river
basin; and federal. As a Brazilian national, I conducted all interviews in Brazilian Portuguese.
The interviews’ duration ranged from 30 to 60 minutes. Participants were from five
organisations and either had been or still are involved with water management in the PCJ river
basins. Participants were chosen based on their relevant professional working experience in the
topic of water-related ES and river basin management in the context of the Water Conservator
and the PCJ river basins. As a result, this research’s sampling is representative, adequate and
appropriate to answer the research questions (Richards and Morse, 2013), thus classified as
purposeful sampling (Patton, 2015). Snowball sampling was adopted to select potential new
interviewees in two cases: (i) to identify current decision-makers within the PCJ Committees’
Technical Boards and (ii) to verify that previously selected participants would provide relevant
information for the research.
The procedure adopted for conducting interviews was the following:
(i) Formal invitation via e-mail to the selected interviewee;
(ii) Scheduling an in-person interview whenever possible;
(iii) If no in-person interview was possible, I conducted either a Skype call or requested
written responses via e-mail, whichever option the interviewee preferred;
(iv) Obtaining confirmation of interviews through April – May, 2018;
(v) Before starting the interview, I explained the participant information sheet and the
consent form obtained from the University Oxford’s School of Geography and the
Environment. I would only start the interview after having the participant’s written consent.
Ten out of twelve interviews were audio recorded and I would also take notes of the main
arguments throughout the interviews, particularly when they were not audio recorded.
The interview guide was designed following the literature on qualitative methods
(Creswell and Creswell, 2018; Yin, 2013). The topics covered in the interviews were structured
under the three dimensions of the Research Question: (i) sustainability; (ii) adaptability and
(iii) scalability. Focus of the interview questions varied according to the interviewee’s
expertise, and sample questions were adapted to a more conversational dynamics, since I knew
most of the interviewees based on my prior work experience in the PCJ river basins. Table 4
details participants information classified under administrative level and focus of the interview
questions based on their area of expertise.
26
Table 4. Participants per administrative level and focus of the interview’s questions.
Administrative
Level
Interview
Code
Participant’s
Organisation
Participant’s Position
Interview Focus
Municipal
EXT1
Environmental
Department of Extrema
Environmental Secretary
(Decision-maker)
Outcomes of the Water Conservator PES programme;
Institutional arrangements and partnerships within the PCJ river basins;
Financial sustainability (municipal/external sources);
Water quality/quantity monitoring;
Scalability (Water Conservator/Mantiqueira Conservator PES initiative)
EXT2
Environmental Manager
(Extension)
Operational aspects of the Water Conservator PES programme;
Building long-term relationship (farmers/Environmental Department)
EXT3
Environmental Manager
(Education/Outreach)
Communicating the Water Conservator PES programme;
Scalability (Water Conservator/Mantiqueira Conservator)
EXT4
Supervisor
(Finance/Technical)
Technical aspects of the Water Conservator PES programme;
Financial sustainability;
Data availability and usage
River Basin
AGPCJ1
PCJ River Basins
Agency
Director-President
River basin instruments for PES implementation (i.e. plans; policies);
Institutional view on scaling-up PES/forest restoration;
The role of Extrema in scaling-up PES in the PCJ river basins;
Financial sustainability (water use charges/external sources)
AGPCJ2
Coordinator
(Information System)
Integrating River Basins Plan, Forest Restoration and Springs Protection;
Financial sustainability (water use charges/external sources);
Water quality/quantity monitoring
AGPCJ3
Coordinator
(Projects)
Technical and financial analysis of the Water Conservator PES programme;
River basin instruments for PES implementation (i.e. plans; policies)
AGPCJ4
Environmental Analyst
(Water/Forest
Conservation)
Integrating River Basins Plan, Forest Restoration and Springs Protection;
The role of Extrema in scaling-up PES in the PCJ river basins;
Financial sustainability (water use charges/external sources);
Water quality/quantity monitoring
COPCJ1
PCJ River Basins
Committees
Coordinator
(Natural Resources Group)
Integrating River Basins Plan, Forest Restoration and Springs Protection;
PCJ Committees arrangement for PES implementation
COPCJ2
Secretary
(Rural Technical Board)
Integrating River Basins Plan, Forest Restoration and Springs Protection;
PCJ Committees arrangement for PES implementation
TNC1
The Nature Conservancy
Water Manager
NGO’s technical support to expanding PES (Extrema/PCJ river basins);
NGO’s policy on water-related ecosystem services
Federal
ANA1
National Water Agency
Coordinator of the
Water Producer
Programme
Implementation of the Water Producer Programme;
Integrating PES to river basin management;
Financial sustainability;
Water quality/quantity monitoring
27
3.6. Direct Observations
Given the case study and the real-world pragmatic approaches, direct observations are
a source of evidence in this research (Yin, 2013). Direct observations are a qualitative
approach, in which the “researcher takes field notes on the behaviour and activities of
individuals at the research site” (Creswell and Creswell, 2018, p. 186). The observational
protocol consisted on taking field notes of relevant information to contextualise my research.
The observations were open-ended (i.e. professionals working in the field sites were free to
provide their views) and my role as a researcher was known (i.e. observer as participant). In
this research, direct observations refer to the technical visits in the PES sites and the meetings
of the PCJ Committees.
3.6.1. Technical visits
I made two technical visits to the sites of the Water Conservator PES programme, in
Extrema, Minas Gerais (Appendix 5). The main purpose of the technical visits was to identify
the current PES sites and the potential expansion areas in the Jaguari sub-river basin. Visited
sites were located in the Posses catchment, where the PES programme was first implemented
in 2007 (Prefeitura Municipal de Extrema, 2017). Figure 10 shows the location of the Posses
catchment within the city of Extrema (the current site of the Water Conservator headquarters).
Inaugurated in 2016, the headquarters serve as an International Centre for Forest Landscape
Restoration and Environmental Services (i.e. water, biodiversity, climate, forest, and soils).
The city of Extrema concentrated all administrative PES programme activities in that site,
serving as a point of reference for welcoming visitors, delegations and professional trainings.
3.6.2. PCJ Committees Meetings
The objective of attending two PCJ Committees meetings was three-fold: (i) to observe
how the decision-making process was conducted at the river basin level; (ii) get familiarised
with the current topics of discussion; (iii) obtain professional’s perspectives on the current
policy for water springs conservation and the ongoing review of the PCJ river basins plan.
More specifically, I joined the 71st Ordinary Meeting of the Planning Technical Board (CT-
PL) on June 8th, 2018; and the 1st Joint Meeting between the Natural Resources Technical
Board (CT-RN) and Rural Technical Board (CT-Rural) on June 14th, 2018. Both meetings took
28
place at the Centre for Water Knowledge at the Society for Water Supply and Sanitation
(SANASA) in the city of Campinas, São Paulo. All meetings from the PCJ Committees are
open for public participation and they are organised by the PCJ Agency in partnership with the
Technical Boards.
Figure 10. Location of the Posses catchment in the city of Extrema, South of the Minas Gerais
state, Brazil. The green areas indicate the fragments from the Atlantic Forest biome across
Brazil; the red area indicates the Posses catchment; the blue line indicates the drainage systems.
Note that the Posses catchment is located in the Jaguari sub-river basin.
Source: Adapted from Lima (2010).
3.7. Data Analysis
Data analysis was conducted through simultaneous procedures (i.e. hand-in-hand with
data collection and write-up of findings), commonly applied in qualitative research (Creswell
and Creswell, 2018). The analysis process followed sequential steps, ranging from specific to
general with several levels of analysis to tackle the research questions, as recommended by
Creswell and Creswell (2018) (Figure 11).
The first step consisted on organising and preparing the collected data for analysis.
Recorded interviews were transcribed using the free web-based application oTranscribe, which
allows the adjustment of speech’s speed and facilitates the text formatting, without switching
Brazil
29
from one application to another (oTranscribe, 2018). Interviews were translated directly from
Brazilian Portuguese into English from the audio recording or written responses (i.e.
interviewee replied over e-mail), and they were saved as Microsoft Word documents. As a
native speaker, I attempted to represent as accurately as possible the ideas expressed by the
interviewees, adapting technical and internal terminologies to facilitate the reader’s
comprehension. English was chosen as the language of analysis given that this research’s
findings are presented in English. All fieldnotes from direct observations and documentation
were typed up to facilitate analysis.
The second step consisted on reading through all data to obtain a general understanding
and to extract the overall meaning of the findings. While interpreting data, I evaluated the
credibility and use of information to tackle research questions, taking notes as needed.
The third step consisted on coding the collected data. Guest, MacQueen and Namey
(2012) define coding as “the process by which a qualitative analyst links specific codes to
specific data segments” (pp. 49-78). Manual interpretation was preferred over using computer-
assisted software for qualitative data analysis (e.g. QSR NVivo, MAXqda, QDA Miner) for
three main reasons: (i) detailed interpretation of texts by approximating the researcher to the
data; (ii) avoiding oversimplifying and/or fragmentating collected data (Welsh, 2002;
Sinkovics and Alfoldi, 2012); (iii) relatively small number of interviews, which allows a
manual systematic analysis.
The fourth step consisted on generating and interrelating themes. The coding process
generated themes that reflected the interviewee’s perspectives and addressed the research
questions, supported by representative quotations. The coding was based on expected codes
(i.e. literature review and prior professional experience in the PCJ region) and emerging codes
(i.e. themes that were not anticipated prior to fieldwork) (Tesch, 1990).
The fifth step consisted on representing and interpreting the meaning of themes, which
combined this research’s sources of evidence.
30
Figure 11. Overview of the data analysis process.
Source: Adapted from Creswell and Creswell (2018).
3.8. Ethics
Prior to travelling to the fieldwork sites in Brazil, I received the approval from the
University Oxford’s School of Geography and the Environment for ethics (reference number:
SOGE 18A-49) and risk assessment (reference number: AC-2018-CW-095). Before starting
the interview, I explained the participant information sheet and the consent related to my
research (Appendix 6). Interviews were conducted only after the written consent from the
participant. If the interview was not conducted in-person, the participant would submit a signed
written consent over e-mail. All interviewees were aware that their participation was voluntary,
and they were able to withdraw their information if they wished to do so. Although participants
were indifferent to anonymisation, I decided to anonymise responses to direct the focus to the
participants’ arguments rather than their identity.
I have previously worked for the PCJ Agency (2014-2017), but I am not affiliated with
the organisation. I was introduced as an MSc student from the University of Oxford to the
organisation and its partners. Therefore, I hold no conflict of interest in this research.
31
4. Results and Discussion
The aim of this research is to advance the understanding of how water-related ES can
be integrated into river basin management, adopting the city of Extrema’s Water Conservator
PES programme within the PCJ river basins as a case study. This section analyses and combines
the collected data (documentation, semi-structured interviews, direct observations) at the city-
and river basin-level within the research question’s dimensions (sustainability, adaptability,
scalability) and emerging themes.
4.1. City-level: Water Conservator PES programme
Sustainability Dimension (meeting PES goals and targets)
The city of Extrema established local governance of the Water Conservator by
promulgating the Municipal Law no. 2010/2005, which allowed the municipality to allocate its
own budget into the PES programme. During that time, ANA was also launching the Water
Producer Programme in the region (neighbouring municipalities of Nazaré Paulista and
Joanópolis, in the state of São Paulo) (EXT1, ANA1, AGPCJ3); however, the city of Extrema
adopted its own set of preconditions to implement PES based on four criteria:
(i) voluntary participation based on meeting the targets;
(ii) flexibility in the proposed agriculture practices;
(iii) payments based on meeting the targets;
(iv) payments made during and after the programme’s implementation.
Those preconditions set the city of Extrema to become the first city in Brazil to be
responsible for PES transfers (Richards et al., 2015), establishing four main goals to increase
the supply of water-related ES, as detailed in Table 5.
32
Table 5. Water Conservator PES programme’s goals and their expected outcomes in the supply
of water-related ES.
Goals
Expected outcomes
(1) Increase the forest cover in the catchments
and implement micro ecological corridors
Expand the area of recovery and conservation
around the rivers
(2) Reduce the levels of non-point pollution in
rural areas, resultant from sedimentation and
eutrophication processes, and the lack of rural
sanitation
Improve water and habitat quality
Increase natural water purification
(3) Disseminate the concept of integrated
vegetation, soil and water management in the
Jaguari sub-river basin
Reduce erosion
Increase water flow
Promote forest restoration
(4) Ensure the socioeconomic and environmental
sustainability of the implemented practices
through financial incentives to landowners
Ensure the continuity of best management
practices
Source: own elaboration based on Prefeitura Municipal de Extrema (2017) and Hackbart et al. (2017).
In 2006, the city of Extrema regulated the Municipal Law no. 2010/2015 through the
Municipal Decrees no. 1703 and 1801, later unified as the Municipal Decree no. 2409 in 2010,
as illustrated in Figure 12. The unified Decree brings two main conditionality aspects to the
enrolment of landowners, which are key for PES implementation, as signalised in this
research’s theoretical framework (Wunder et al., 2018).
The first conditionality aspect is the compliance with four targets:
(i) soil conservation practices to reduce erosion and siltation;
(ii) installing rural sanitation system;
(iii) planting and maintenance of Area of Permanent Protection (APP);
(iv) registration of the Legal Reserve.
It is important to notice that targets (iii) and (iv) are directly related to compliance with
the national Forest Code regulation (EXT2). Initially, implementing PES was a “very
interesting rationale to obtain enrolment of farmers for the environmental compliance of their
rural properties” (EXT1).
The second conditionality aspect is the three criteria for landowner’s eligibility to enrol:
(i) location of the rural property within a catchment covered by the programme;
(ii) having a minimum property size equal or bigger than 2 hectares;
(iii) regularised water use within the rural property (i.e. other than recreational
purposes).
33
Figure 12. PES framework for financial sustainability and technical capacity in the Water
Conservator programme in the city of Extrema, Minas Gerais, Brazil.
Source: Adapted from Richards et al. (2015) and Prefeitura Municipal de Extrema (2017).
Landowners not complying with the conditionality criteria would be withdrawn from
the programme. As of now, there has been no occurrence of non-compliance, given the close
dialogue between the Environmental Department of Extrema and landowners (EXT2).
The city of Extrema’s methodology for choosing the rural areas to implement the PES
programme included four main criteria:
(i) catchment-based implementation within the Jaguari sub-river basin;
(ii) catchments with the least vegetation cover were prioritised;
(iii) water springs for public water supply were prioritised;
(iv) elaboration of the Individual Property Project (PIP, in the Portuguese acronym)
for each participating rural property (i.e. survey based on land use/land cover).
Following those criteria, the Posses catchment was chosen as the first location to
implement the PES programme, starting from downstream-based properties to upstream-based
properties. Initially, 120 rural properties were mapped, in a total area of 1,200 hectares. Most
of those properties had very low agricultural potential, with dairy production as the main
economic activity. The city of Extrema extended its PES efforts to other two priority
catchments (Salto in 2009 and Forjos in 2012). Figure 13 illustrates the catchments within the
Jaguari sub-river basin participating in the Water Conservator programme, and Figure 14
provides an overview of the restored areas.
34
Figure 13. Implementation of the Water Conservator PES programme in the catchments within
the Jaguari sub-river basin. The Jaguari sub-river basin is responsible for water supply in the
city of Extrema and it is a major contributor to the Cantareira Water Supply System. The dashed
red line indicates Fernão Dias, the main highway connecting São Paulo to Minas Gerais.
Source: Adapted from Prefeitura Municipal de Extrema (2017).
Figure 14. Overview of the Water Conservator programme’s restored areas within the
priority catchments of the Jaguari sub-river basin.
Source: author’s own private collection (2018).
35
Focusing on the concept of integrated vegetation, soil and water management, the city
of Extrema planted a total of 1,484,407 native tree saplings from the Atlantic Forest biome and
built 278,488 metres of fences to maintain the cattle away from water springs and reforested
sites, restoring an area of 6,378 hectares (Prefeitura Municipal de Extrema, 2017). Figure 15
shows the evolution of the number of native trees planted annually for a ten-year period (2007
to 2017). The relative low numbers in the first four years, ranging from 34,589 to 50,740 tree
saplings, are related to the initial efforts led by the city of Extrema, with limited budget and
partnerships (Prefeitura Municipal de Extrema, 2017). In 2011, the city of Extrema started to
receive funds from the PCJ-federal water use charges, specifically to finance PES to
participating landowners (AGPCJ1, AGPCJ4). In addition, partnerships with NGOs, such as
TNC and SOS Mata Atlântica, were key to secure planting and maintenance of native trees
(TNC1). All combined, these factors allowed an 85.5% increase in the number of trees planted
from 2010 to 2011. It is important to notice that the city of Extrema continued to invest on tree
planting even during the water crisis that hit the Southeast region from 2013 to 2015, showing
78% increase from 2013 to 2014. This was the city’s clear message about the importance of
investing in green infrastructure, rather than grey infrastructure alone (EXT3). The peak for
tree planting was in 2016, with 284,326 saplings. The 30% decrease from 2016 to 2017
signalises that the city is directing its efforts towards tree maintenance, since priority
catchments already have developed more mature forests in this 10-year period.
Figure 15. Number of planted native tree saplings from the Atlantic Forest biome per year
from 2007 to 2017 in the Water Conservator programme.
Source: own elaboration based on data from Prefeitura Municipal de Extrema (2017).
34,589
47,535
35,40850,740
94,102
106,137
135,642
241,456
255,302
284,326
199,170
0
50,000
100,000
150,000
200,000
250,000
300,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Number of native tree saplings
Year
36
The same rationale applies to the implementation of fences, which had its peak in the
early stages of the Water Conservator, with 48,844 metres built in 2008 (Figure 16). The city
of Extrema counted on the partnership of the Minas Gerais State Institute of Forests (IEF-MG)
and TNC (TNC1). The occasional increases refer to the expansion of the PES programme to
other catchments, and the decreasing trend is associated to maintenance efforts. Figure 17
illustrates the fences constructed, the pasture and some of the reforested sites.
Figure 16. Implementation of fences (in metres) per year from 2007 to 2017 in the Water
Conservator programme.
Source: own elaboration based on data from Prefeitura Municipal de Extrema (2017).
Figure 17. Integrated vegetation, soil and water management with the construction of fences
to prevent the cattle from reaching water springs and reforested sites.
Source: author’s own private collection (2018).
24,358
44,844
38,331
19,701
23,667
19,846
16,78215,326
32,505
28,975
14,153
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fences built (metres)
Year
37
Adaptability Dimension (financing and monitoring over time)
The key long-term financial strategy was the establishment of the Municipal Fund for
PES (Law no. 2482/2009), accepting both private and public funds, which guarantees the
continuity of PES after a 4-year agreement with landowners. The conditionality of providing
water-related ES remains the same due to the city’s commitment of expanding PES.
The Water Conservator’s methodology for payments is based on the total area of the
participating rural property. Landowners receive payments monthly. The reference value is
known as the “Fiscal Units of Extrema” (UFEX), annually determined by a municipal decree
according to the National Index for Consumer Prices (INPC) (EXT1, AGPCJ3). The city
calculates PES on a 100 UFEX-value per hectare per year, as demonstrated in Equation (1):
𝑃𝐸𝑆 𝑉𝑎𝑙𝑢𝑒 = 100 𝑈𝐹𝐸𝑋 × 𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 𝐴𝑟𝑒𝑎 (1)
where PES Value is given in Brazilian Real (BRL) and area in hectares
The rationale of the “per hectare PES value” was set up as the opportunity cost of raising
one head of cattle per year, given that the main land use in Extrema is extensive pasture (about
40%) (Kfouri and Favero, 2011; EXT1). Figure 18 shows the 13-year evolution of the UFEX
value (in Brazilian Real and United States Dollar, for reference).
Figure 18. UFEX* value (in BRL and USD) per year from 2005 to 2018.
*Conversion rate: 1 USD is equivalent to 4.10 BRL (Oanda, August 2018)
Source: own elaboration based on Prefeitura Municipal de Extrema (2010, 2014, 2017) and semi-
structured interviews (AGPCJ3; EXT4).
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
USD 0.34 0.36 0.37 0.39 0.41 0.43 0.46 0.48 0.51 0.54 0.57 0.64 0.68 0.70
BRL 1.41 1.48 1.52 1.59 1.69 1.76 1.87 1.98 2.1 2.21 2.35 2.62 2.79 2.85
0.00
0.50
1.00
1.50
2.00
2.50
3.00
UFEX Value
38
Figure 19 shows the evolution of the PES value in USD per year. The increasing trend
verified in the figure reflects the importance of adjusting the UFEX to the INPC. Considering
the land’s low agricultural potential, PES can also be considered a stable source of income to
landowners, especially because PES is annually adjusted to the inflation. Currently, the city of
Extrema invests 25% of its budget in PES (EXT1).
Figure 19. PES* monthly value (in USD) per year based on the 100 UFEX value per hectare.
*Conversion rate: 1 USD is equivalent to 4.10 BRL (Oanda, August 2018)
Source: own elaboration based on Prefeitura Municipal de Extrema (2010, 2014, 2017) and
semi-structured interviews (AGPCJ3; EXT4).
In the past ten years (from 2007 to 2017), there have been 239 contracts with
landowners. The contracts represent each participating rural property (e.g. one farmer owning
three rural properties would have signed three contracts with the city of Extrema), totalising
6,798 hectares and an investment of USD 1,264,727.29 in PES (Table 6). Initially, farmers
would enrol in the Water Conservator programme concerned about possible non-compliance
with the Forest Code; however, as the number of farmers increased, other farmers felt secure
to do so, signalising the influence of behavioural change and social norms (Gonçalves, 2013).
From June 29th, 2011 to December 21st, 2015, the city of Extrema signed a Transfer
Contract with the PCJ Agency to receive financial resources from the PCJ-federal water use
charges under the Continuing Duration Programme (PDC) 4 “Conservation and Protection of
Water” (EXT4, AGPCJ3). The Transfer Contract was operationalised by the CAIXA Bank as
the Financial Agent and the PCJ Agency as the Technical Agent (i.e. responsible of emitting
the Technical Note to approve the financial reporting of the Water Conservator). Under this
contract, the PCJ Committees approved the transfer of BRL 1,195,000.00 (or USD 291,463.41)
specifically for PES to 31 landowners located in the priority catchments of the Jaguari sub-
34 36 37 39 41 43 46 48 51 54 57
64 68 70
0
10
20
30
40
50
60
70
80
PES monthly value (USD)
Year
39
river basin (AGPCJ3). This investment was justified given the water and soil conservation
practices required in the Water Conservator programme (AGPCJ1). As a condition, the city
of Extrema agreed to invest BRL 996,061.41 (or USD 242,941.81) in other items of the
programme (i.e. payment of professionals; expenditures with transportation and office
materials), equivalent to 45.46% of the total value of the Transfer Contract. The first transfer
from the PCJ Agency to the city of Extrema referred to the PES of the May-July 2012-period.
The last transfer referred to the PES of the February-April 2015-period. The PCJ-federal water
use charges funded 44.83% of the total amount of PES in the Water Conservator programme
(2012-2015 period). Figure 20 illustrates the breakdown of PES funded by the PCJ-federal
water use charges and the remaining amount by the city of Extrema’s funds.
Table 6. Relation of total PES* value (in BRL and USD) and the number of new PES contracts
per year in a 10-year period (2007 to 2017).
Year
Number of
new contracts
(per year)
Total area
(hectares)
Total PES value
(BRL)
Total PES value
(USD)
2007
21
451
16,165.00
3,942.68
2008
14
306
106,858.00
26,062.93
2009
26
674
226,101.00
55,146.59
2010
15
894
340,529.00
83,055.85
2011
24
523
419,462.00
102,307.80
2012
44
2356
557,106.00
135,879.51
2013
17
415
631,881.00
154,117.32
2014
12
177
707,512.18
172,563.95
2015
13
262
769,154.26
187,598.60
2016
38
243
690,184.36
168,337.65
2017
15
497
720,429.10
175,714.41
Total
239
6,798
5,185,381.90
1,264,727.29
*Conversion rate: 1 USD is equivalent to 4.10 BRL (Oanda, August 2018)
Source: own elaboration based on Prefeitura Municipal de Extrema (2010, 2014, 2017) and
semi-structured interviews (AGPCJ3; EXT4).
40
Figure 20. Investments on Water Conservator PES by the city of Extrema’s funds and the
PCJ-Federal Water Use Charges for the 2012-2015 period.
*Conversion rate: 1 USD is equivalent to 4.10 BRL (Oanda, August 2018)
Source: own elaboration based on Prefeitura Municipal de Extrema (2014, 2017), Agência
PCJ (2012, 2013, 2014, 2015) and semi-structured interviews (AGPCJ3; EXT4).
It is important to emphasise that the Municipal Fund for PES gave financial flexibility
and stability to the city of Extrema. Further to the PCJ Committees investments with the PCJ-
federal water use charges, the water conservation and forest restoration initiatives attracted
private capital to the Water Conservator (EXT1). Given Extrema’s strategic geographic
position (i.e. bordering the state of São Paulo, and 111 km-away from the city of São Paulo),
industries from varied sectors would rather choose to establish their units in the municipality.
The city of Extrema would incentivise this establishment if the industries committed to the
municipal environmental initiatives, especially the Water Conservator (EXT3, EXT4). For
instance, an industry from the food sector decided to compensate its water footprint in the city.
Under this arrangement, the city of Extrema calculated that an area of 50 hectares would be
needed to compensate the water consumption in the industry’s productive process (Prefeitura
Municipal de Extrema, 2017). As a result, the food industry donated tree saplings for forest
restoration. A similar rationale was applied to obtaining infrastructure for rural sanitation – a
manufacturing local industry donated biodigesters for domestic sewage treatment (EXT2).
These partnerships also enabled an emerging financial source named “Water Funds” under the
“Cities Coalition for Water”, coordinated by TNC (TNC1). Triggered by the 2013-2015 water
crisis in Southeast Brazil, TNC also managed to attract private investors and banks to the region
(the cities of Extrema, and Nazaré Paulista and Joanópolis in São Paulo) (TNC1). “These
2012 2013 2014 2015
% funded by PCJ 44.46 61.25 57.67 19.81
Extrema-PES 75,473.01 59,727.07 73,051.75 150,444.13
PCJ-PES 60,406.50 94,390.24 99,512.20 37,154.47
0.00
20,000.00
40,000.00
60,000.00
80,000.00
100,000.00
120,000.00
140,000.00
160,000.00
180,000.00
200,000.00
PES Value (USD)
PCJ-PES Extrema-PES
41
partnerships were essential to achieve what everyone was looking forward to: get from theory
to practice by developing this financial architecture and environmental governance” (TNC1).
Despite the water crisis and the underperformance of the Cantareira System Reservoirs,
SABESP did not choose to invest in environmental conservation of the System’s headwaters
through the Water Conservator (EXT1, AGPCJ1). “We would like to have an interaction with
them [SABESP], but forest restoration has never been an action or a priority for sanitation
companies in general. Water has always been detached from the environmental issue” (EXT1).
Referring to SABESP’s reliance on the use of the Cantareira System’s dead volume during the
water crisis, EXT1 repeated the main slogan of the Environmental Department of Extrema:
“who maintains the forest alive needs no dead volume!”. This claim was also informally
confirmed by farmers, who observed that the protected water springs did not dry out during the
water crisis (EXT2). In a region where lack of water had never been a problem, Water
Conservator’s actions during the water crisis seemed to be a motivating factor for farmer’s
behavioural change and enrolment in the PES programme (EXT3).
The second key aspect to the Adaptability Dimension refers to the monitoring of the
Water Conservator Programme. The city of Extrema did not have monitoring of water quality
and quantity in the Jaguari sub-river basin prior to the start of the PES programme in 2005
(Pereira et al., 2016). In order to obtain additional information on the impact of the Water
Conservator actions, the city of Extrema partnered with several institutions to monitor the
project over time (see Table 7). The main partner is ANA, responsible for installing seven
monitoring stations (two fluvial and five pluvial) for water quantity in the Posses catchment,
which began operating in November 2008 (ANA1). ANA allocated financial resources to the
PCJ Agency for additional monitoring, which has been done in partnership with the
Department of Water and Electricity of the State of São Paulo (DAEE-SP), Agronomic Institute
of Campinas (IAC) and Foundation for the Support of Agriculture Research (FUNDAG)
(AGPCJ2). These institutions created a protocol to measure the water flow from the water
springs in the Posses catchment in addition to ANA’s monitoring, which is under the
coordination of the Geological Survey of Brazil (CPRM). Other partnering institutions include
the Brazilian Centre for Monitoring and Early Warnings of Natural Disasters (CEMADEN),
Minas Gerais Sanitation Company (COPASA-MG) and Minas Gerais Institute for Water
Management (IGAM-MG). The data is available for consultation in ANA’s web-based
hydrometeorological portal (ANA1) (see Figure 21); however, the city of Extrema has not
created a database of its own with the available monitoring series (EXT1).
42
Table 7. Monitoring water stations in the Jaguari sub-river basin.
*Three out of the four fluvial stations are dedicated to water quality monitoring.
Source: own elaboration based on ANA (2018).
Figure 21. Hydrometeorological monitoring stations map from ANA in the Jaguari sub-river
basin.
Source: ANA (2018).
Station Code Name Catchment Responsibility Operator Type
Beginning of
Series
2246176 Pires Jaguari DAEE-SP DAEE-SP Pluvial Apr-14
62590000 Pires Jaguari DAEE-SP DAEE-SP Fluvial Apr-14
2246150 Extrema Jaguari COPASA COPASA Pluvial Aug-02
2246204 Extrema_Forjos Jaguari/Forjos CEMADEN CEMADEN Pluvial Jan-14
2246203 Extrema_PSF Matão Jaguari/Matão CEMADEN CEMADEN Pluvial Jan-14
2246167 Nascente Principal Jaguari/Posses ANA CPRM Pluvial Nov-08
2246168 Sítio São José Jaguari/Posses ANA CPRM Pluvial Nov-08
2246205 Extrema_Estrada das Posses Jaguari/Posses CEMADEN CEMADEN Pluvial Jan-14
62584500 Portal das Estrelas Jaguari/Posses ANA CPRM Fluvial* Nov-08
2246169 Sítio Canto da Siriema Jaguari/Posses ANA CPRM Pluvial Nov-08
2246170 Sítio Bela Vista Jaguari ANA CPRM Pluvial Nov-08
2246171 Recanto do Ratinho Jaguari ANA CPRM Pluvial Nov-08
2246175 Foz Ribeirão das Posses Jaguari/Posses ANA CPRM Pluvial Jun-13
62584600 Foz Ribeirão das Posses Jaguari/Posses ANA CPRM Fluvial* Nov-08
2246200 Extrema_Extrema01 Jaguari CEMADEN CEMADEN Pluvial Jan-14
2246206 Extrema_Extrema07 Jaguari/Tenente CEMADEN CEMADEN Pluvial Jan-14
2246202 Extrema_PSF Furnas Jaguari/Furnas CEMADEN CEMADEN Pluvial Jan-14
2246201 Extrema_Extrema02 Jaguari/Juncal CEMADEN CEMADEN Pluvial Jan-14
62584200 Extrema Jaguari IGAM-MG IGAM-MG Fluvial* Jul-11
43
Further to ANA’s monitoring stations, higher education and research institutes have
been developing studies in the Jaguari sub-river basin as a result of the Water Conservator
actions (ANA1, EXT3). Monitoring results have been published as scientific papers and/or
theses, which have been made available in the Water Conservator webpage, but not
incorporated in the programme’s reports. Table 8 details some of the ongoing monitoring
projects related to the PES programme.
Table 8. Ongoing monitoring research projects in the Water Conservator programme.
Institution
Monitoring focus
University of São Paulo – “Luiz de Queiroz”
College of Agriculture, Forest Hydrology Lab
Vegetation development:
- Eight parcels remeasured every six
months.
Identification of tree species:
- Diameter at breast height (DBH), height,
solar radiation.
University of São Paulo – Institute of
Astronomy, Geophysics and Atmospheric
Sciences
Water flow from water springs:
- Forty water springs monitored in the
Posses catchment; monthly measurements.
- Comparison of monitoring results with
climate data
Water budget in three micro-catchments within the
Posses catchment:
- Water flow measurements through water
level sensors
Ecological restoration strategies for water and soil
conservation:
- Sediment export estimation and modelling
Federal University of Lavras
Soil erosion rates based on different land use and
land cover:
- Measuring parcels of soil and water losses
Source: own elaboration based on semi-structured interviews (EXT1, EXT2, EXT3, EXT4).
44
Scalability Dimension: scaling-up PES and forest restoration
The city of Extrema is currently expanding its integrated vegetation, soil and water
management approach, going beyond its municipal boundaries and the PES concept itself. In
fact, EXT1 emphasised that “there is no project of Payments for Ecosystem Services. Rather,
there are projects with Payments for Ecosystem Services. We always think of PES as an
economic instrument and not as an end-goal”. The view of PES as an “economic instrument”
is also supported by ANA1: “What we can’t forget is that PES is an economic instrument. If
you don’t have an economic good involved, then you misled your motivation.”. From ANA1’s
standpoint, soil conservation is the main strategy adopted in its flagship Water Producer
Programme. For EXT1, scaling-up PES is embedded in the municipality’s aim of increasing
forest cover, which is contrasting to ANA1’s main strategy. The city of Extrema has set an
ambitious goal of achieving 40% of native forest cover in the municipality by 2030 (EXT1).
This has been motivated by Extrema’s goal of mitigating and neutralising greenhouse gas
emissions (GEE), as specified in the city’ recently published GEE inventory (Prefeitura
Municipal de Extrema, 2017).
To advance with the environmental compliance of the rural properties, Extrema will
implement the Municipal System of Conservation Units (SMUC) under the Municipal Decree
no. 2887/2015 (Pereira et al., 2016). The priority areas for conservation correspond to 8,125
hectares (i.e. 33% of the municipal area), where hilltop areas (i.e. above 1,200 metres) and APP
sites are located (EXT4). EXT2 and EXT3 informed that a mosaic of conservation areas will
be formed, merging with the already conserved areas of the Water Conservator programme.
The strategy is to create two main modalities of Conservation Units
7
, which will be
implemented by the Municipal Council for Environmental Development (CODEMA):
(i) Private Reserve of Natural Heritage (RPPN)
(ii) Municipal Natural Park
Under this strategy, PES would continue to function as an economic instrument, but it
would not be the driving factor for change: “We understood that we would not be able to
advance with this project only with PES or financial support for the farmers” (EXT1). This
represents a major shift in the main strategy adopted with the Water Conservator, as illustrated
in Figure 22.
7
RPPN and Municipal Natural Park are both categories of Conservation Units from the National System of
Conservation Units (SNUC), established by the Law no. 9985/2000. The legislation’s main goals are creating,
managing and consolidating protected environmental areas.
45
Figure 22. City of Extrema’s strategy for scaling-up integrated vegetation, soil and water
management.
Source: own elaboration based on Pereira et al. (2016) and semi-structured interviews (EXT1,
EXT2, EXT3, EXT4).
The new strategy for scaling-up PES to other catchments within the Jaguari sub-river
basin will follow the nine-step plan outlined in Figure 22. EXT1 explained that Extrema has
been purchasing private rural properties since 2011, so that those areas become of municipal
domain (i.e. expropriation). This process has been done in properties of low agricultural
potential, particularly hilltop areas (i.e. priority areas for conservation). Farmers have agreed
to sell those lands, especially given their low economic value (EXT2). These hilltop areas are
strategic to create connectivity between reforested sites, thus resulting in a vegetation mosaic
and/or ecological corridors. These purchased areas will be turned into Municipal Natural Parks
through SMUC regulation, which are still in the creation process (EXT4).
Landowners who already have signed PES contracts would have their conserved areas
turned into RPPN. Payments would be received normally. This process has already begun with
the Municipal Decree no. 1415 of July 4th, 2017, which created the city’s first RPPN, named
Jacuaçu
8
, with a total area of 43.3 hectares (EXT4). Extrema plans to meet these goals by
2025, when the Water Conservator will have completed 20 years. The financial plan includes
municipal and external funds, totalising BRL 121,487,500 (or USD 29,631,097). Table 9
details the budget for scaling-up.
8
The dusky-legged guan (Penelope obscura) is an endemic bird species to the Atlantic Forest biome.
1) Establish
priority areas
per groups
2) Identify the
rural
properties
3) Elaborate
maps and
projects
6) Identify
areas for
expropriation
5) Migrate PES
contracts to
RPPN
4) Dialogue with
landowners
with PES
contracts
7) Create
Conservation
Units
8) Create a
vegetation
mosaic plan
9) Start forest
restoration
46
Table 9. City of Extrema’s investments on scaling-up forest restoration in the Jaguari sub-
river basin.
Activity
Area
(ha)
Unit Value
(BRL/ha)
Total Value
(BRL)*
RPPN creation with PES for 10
years
5,725
5,500.00
31,487,500.00
Municipal Natural Parks creation
2,400
12,500.00
30,000,000.00
Forest restoration
4,000
15,000.00
60,000,000.00
*Conversion rate: 1 USD is equivalent to 4.10 BRL (Oanda, August 2018)
Source: own elaboration based on Pereira et al. (2016).
The second scaling-up strategy is the Mantiqueira Conservator Plan in the Atlantic
Forest biome, encompassing 284 cities across the states of São Paulo, Minas Gerais and Rio de
Janeiro, Southeast Brazil (Prefeitura Municipal de Extrema, 2015). The potential area for forest
restoration totalises 1.2 million hectares, an area roughly the size of Portugal, which is
equivalent to 10% of Brazil’s goal from the Intended Nationally Determined Contributions
(INDC) for the Paris Agreement (COP 21) (EXT1, TNC1). Relying on the Water
Conservator’s expertise, the Mantiqueira Conservator Plan aims to “transform the model of
Extrema into public policies in other municipalities, so that they can also adopt the conservation
philosophy as a local public policy” (EXT1). Although the Mantiqueira Conservator takes
place in three states and five river basins (i.e. Grande, Mogi-Pardo, Paraíba do Sul, PCJ, and
Tietê), the strategy is centred at municipalities, which will be the executors of the Plan. EXT1
and TNC1 define that the successful replicability of the Water Conservator relies on three
determining factors:
(i) Attitudes and experiences;
(ii) Political ability;
(iii) Management and knowledge.
These determining factors seek to develop institutional and technical capacity at the
local level, which will culminate in the creation of twenty nuclei composed of local and
regional leaderships (e.g. state institutions, river basin committees, research institutes, NGOs).
Table 10 details the Mantiqueira Conservator’s goals and implementation strategy.
47
Table 10. Implementation strategy of the Mantiqueira Conservator Plan.
Goal
Strategy
1) Improve ES production, such as
water, soil conservation,
biodiversity, carbon sequestration,
landscape maintenance
a) Identify the main leaderships with
technical capacity to replicate the
knowledge and methodology
2) Promote a regional plan with the
participation of several stakeholders
b) Gather with representatives from the
municipal, state and national levels,
river basin committees, universities
and NGOs
3) Improve environmental governance
and municipal resilience to climate
change
c) Divide the Mantiqueira territory in
nuclei composed of capacity-
building institutions, such as river
basin committees, Conservation
Units, administrative centres,
universities
4) Economic valuation of ES produced
in rural properties and in
Conservation Units of Integral
Protection
d) Promote lectures, capacity-building
opportunities, trainings and
information exchange with nuclei’s
leaderships to build replicability of
forest restoration and PES
Source: own elaboration based on Prefeitura Municipal de Extrema (2015) and semi-structured
interviews (EXT1, TNC1).
Both scaling-up strategies (i.e. municipal Conservation Units and the Mantiqueira
Conservator Plan) imply that river basins may not be the ideal territorial unit to implement PES
programmes, since there are many competing interests in the decision-making process (EXT1).
Furthermore, river basin committees have very limited budget and water use charges alone are
not enough to scale-up PES and forest restoration efforts (ANA1). According to EXT1, a more
efficient rationale would be “the river basin committees supporting local project executors, and
not becoming the executors themselves. If the committees decide to become the executors, the
cost will be too high, and the efficiency will be very low”. In Section 4.2, I will detail the PCJ
Committees’ strategy and role in incorporating water-related PES and forest restoration in the
river basin management.
48
4.2. River basin-level: water-related PES and water springs protection
Sustainability Dimension: meeting water springs protection’s goals in the PCJ river basins
The triangulation of the First Revision of the PCJ River Basins Plan (2010 to 2020)
(hereafter, PCJ River Basins Plan), the Updated Forest Restoration Master Plan for Water
Conservation in the PCJ River Basins (hereafter, PCJ Forest Restoration Master Plan) and the
PCJ Policy on Restoration, Conservation and Protection of Water Springs (hereafter, PCJ
Policy on Water Springs) is key to addressing water-related PES and water springs protection.
This strategy was unanimously supported by all interviewees from the PCJ Agency and
Committees and confirmed amongst attendees of the PCJ Committees meetings.
Although the river basin is the unit of management, the PCJ Committees have adopted
micro-catchments and drainage areas as the conceptual framework to define priority areas for
forest restoration (IRRIGART, 2018). The choice of the drainage area is crucial to establish a
“technical dialogue between the river basins’ cartographical-base and the resulting datasets of
the River Basins Plan and the Forest Restoration Plan” (AGPCJ4). Similar to the criteria
established by Extrema, the PCJ Committees have also prioritised water springs for public
water supply (COPCJ1, COPCJ2). The resulting products will be integrated into the
Decision-Support System (SSD) of the PCJ River Basins Plan, which will orient future project
selection, investments and monitoring of results (AGPCJ2).
The PCJ Forest Restoration Master Plan brings both regional and local scales (1:50,000
and 1:10,000, respectively). At the regional scale, the hierarchisation of priority areas is
determined from most to least degraded, ranging from 1 to 225 (i.e. number of drainage areas)
(AGPCJ4) (Table 11). Figure 23 spatialises results for the Jaguari sub-river basin, generally
classified as high priority, particularly where the city of Extrema is located (i.e. drainage areas
6, 7, 9 and 17). Thus, regional criteria have the potential to orient actions at the municipal level.
For instance, the Water Conservator actions could be legitimated under the hierarchisation
criteria, and future projects would follow the same rationale. To facilitate this process at the
municipal scale, the PCJ Agency and partners conducted workshops with city officials, so that
the methodology could be understood and applied (AGPCJ1). However, AGPCJ4 signalises
that “there was a bit of frustration amongst members of the PCJ Committees in the beginning.
They would argue that the generated results were not what they were expecting”. AGPCJ4
added: “hadn’t we applied technical criteria for prioritisation, we wouldn’t be able to align our
planning instruments. It was a conceptual misunderstanding that we had to tackle and explain”.
49
Table 11. Hierarchisation criteria to classify priority areas for forest restoration.
Criteria
Description
Classification
Excess Overland
Flow
Calculation considering annual mean precipitation and potential evapotranspiration
Areas with greater excess overland flow
are considered priority
Critical water
availability
Critical areas for water quantity
Critical areas are considered priority
Public water supply
Areas of (i) municipal water springs; (ii) municipal water springs of regional interest; (iii) regional
water springs; (iv) water withdrawal points within the catchment
Areas of public water supply are
considered priority
Source: adapted from IRRIGART (2018)
Figure 23. Hierarchisation of priority areas for forest restoration in the Jaguari sub-river basin. Drainage areas range from high priority (red colour) to low priority (green
colour). Note that the city of Extrema is located in the drainage areas 6, 7, 9 and 17. Source: IRRIGART (2018).
50
The ongoing alignment between different planning instruments and competing water
demands (e.g. sanitation, agriculture and water conservation) in the PCJ river basins can be
credited to three main factors:
(i) The establishment of the Pluriannual Application Plan (PAP-PCJ);
(ii) The approximation of two historically competing Technical Boards (i.e. Natural
Resources and Rural – CT-RN and CT-Rural);
(iii) Development of Thematic Guidelines in the PCJ River Basins Plan.
This rationale, however, was not the same one applied in the 2011-Transfer Contract
with the Water Conservator (AGPCJ3). In that occasion, the PCJ Agency selected
conservation projects under the technical criteria of the “Spontaneous Demand” category rather
than the current “Inductive Demand” approach under PAP-PCJ (Table 12).
Table 12. Project selection categories in the PCJ river basins.
Category
Description
Spontaneous
Demand
The PCJ Committees select registered proposals by scoring projects according to
the criteria established by the PCJ Technical Boards and Working Groups. It is
labelled as “spontaneous” because it relies on the registration of potential recipients
of the funds. The technical and financial analysis is coordinated by the PCJ Agency.
Once a project is selected, it will receive one of the possible water use charges
categories: (i) FEHIDRO (São Paulo State Water Resources Fund); (ii) São Paulo
State Water Use Charges; (iii) PCJ Federal Water Use Charges. After assignment of
the financial source, the municipality/water user signs a Transfer Contract.
Inductive
Demand
The PCJ Committees establish priority areas for strategic investment and allocation
of financial resources into pre-defined programmes/regions within the PAP-PCJ
financial resources (i.e. solely from the PCJ Federal Water Use Charges). PAP-PCJ
refers to the multi-year budgeting for disbursement, currently in its second cycle
(the first referred to the 2013-2016 period; the second refers to the 2017-2020
period). In this arrangement, the PCJ Agency is the recipient of the financial
resources, rather than the municipality/water user. This allows the PCJ Agency to
contract and foresee specialised services on behalf of the beneficiary.
Source: own elaboration based on semi-structured interviews and literature review.
Priority areas for investment are defined according to eight Continuing Duration
Programme (PDC) categories established by the State of São Paulo Water Resources Council
(CRH-SP), which are fully incorporated in the PCJ River Basins Plan (AGPCJ2).
51
As mentioned in Section 4.1, the Water Conservator was classified as “Conservation
and Protection of Water” (PDC 4). Currently, the PCJ Committees prioritise the following PDC
categories for Spontaneous Demand: (i) database, records, studies and surveys (PDC 1, which
includes the development of basic sanitation plans); (ii) recovery of the water quality (PDC 3,
which includes wastewater treatment plants and water treatment plants); (iii) promotion of the
rational use of water resources (PDC 5, which focuses on water losses control) (PROFIL and
RHAMA, 2018d). “Managing the water-related PES under the criteria of the ‘Spontaneous
Demand’ was not efficient. We were dealing with technical requirements mostly applied to
grey infrastructure, which were not transferrable to the pace of a forest restoration project.
Water Conservator was a successful case because the municipality adopted its own
methodology” (AGPCJ3). This was confirmed with the implementation of the Water Producer
Programme in the neighbouring municipalities of Joanópolis and Nazaré Paulista, also
receiving PCJ funds under the PDC 4 category. ANA1 emphasised that “although it was exactly
in the same geographic region, those municipalities hadn’t developed a leadership of their own,
and the results took much longer to appear”. In that model, TNC was the responsible for
implementing the actions, so there was not a direct contact between farmers and the
municipality, contrary to what happened in the Water Conservator (EXT1, TNC1). Later in
2012, ANA requested that the PCJ Committees implemented PAP, which would allow the
investments in water conservation and other priority areas of the PCJ River Basins Plan.
Adaptability Dimension: financing and monitoring over time
The PCJ River Basins Plan orients the allocation of the water use charges budget
towards the implementation of the priority actions. “But in reality, this is very hard to
implement for two main reasons: technical constraints and political will” (AGPCJ2). Despite
the context-based city- and river basin-level policies, this reflection also mirrors the “lessons
learned” for the scaling-up of the Water Conservator to the Mantiqueira Conservator (i.e.
attitudes and experiences; political ability; management and knowledge). Hence, the
approximation of CT-RN and CT-Rural was crucial for mobilising the PCJ Committees to
invest in water springs protection (COPCJ1, COPCJ2) and push forward the agenda for
specific guidelines on water conservation in the revision of the River Basins Plan (AGPCJ1).
Initially, CT-RN and CT-Rural adopted PES as the main approach, since the approval
of the payments to farmers had to go through the PES Working Group. “That would be the
only occasion when CT-RN and CT-Rural had a joint agenda. We had to modify this approach
52
to scale-up” (COPCJ1). In practical terms, the governance shifted from PES to the Water
Springs Working Group, especially because the PES methodology could be limited in terms of
financial sustainability. COPCJ1 explained that “it was hard for municipalities to structure the
continuity of PES and water conservation projects”. Furthermore, the past experiences with
PES as projects of “Spontaneous Demand” did not seem successful to the sanitation-oriented
PCJ Committees. AGPCJ4 added that “somehow it was justifiable not to invest much in forest
restoration, because only a small percentage of water conservation projects would be
concluded, thus reducing its importance for the river basin. We have discussed this a lot with
the Water Springs Working Group, and their perspectives have matured over time. Now we
can show more results, efficiency, and articulation to seek financial resources”. The main
financial resource to implement those actions is the PAP-PCJ, allowing the PCJ Committees
to apply the federal water use charges to water-related PES and water springs protection.
AGPCJ2 emphasised that “PAP-PCJ, perhaps more than the PCJ River Basin Plan or the PCJ
Forest Restoration Master Plan, triggered the PCJ Committees to invest in segments other than
sanitation. When the sewage issue was relatively more controlled, there was this recognition
that we should invest the PCJ-federal water use charges in water springs protection. We
couldn’t be a sanitation-only Committee”.
The first PAP-PCJ (2013-2016) dedicated 6.14% of its budget to PES and forest
restoration (i.e. BRL 5,000,000.00 out of BRL 81,400,000.00) (Agência das Bacias PCJ, 2017).
The current PAP-PCJ (2017-2020) dedicates 12.75% of its budget to the actions of the PCJ
Policy on Water Springs (i.e. BRL 13,150,000.00 out of BRL 103,106,000.00) (Comitês PCJ,
2017). In addition, 3.32% of the budget (i.e. BRL 3,425,000.00) is dedicated to the Piracicaba-
Jaguari (PJ) sub-river basin, which includes financial resources exclusively to PES in the Minas
Gerais portion of the PCJ river basins (Comitês PCJ, 2017). AGPCJ4 explained that “since
there is this dedicated segment, the municipalities from Minas Gerais are not contemplated in
the current Policy’s public call for water springs protection”. In addition, the PCJ Committees
are only allowed to invest in five municipalities from Minas Gerais, located in the PJ sub-river
basin (i.e. Camanducaia, Extrema, Itapeva, rural portion of Sapucaí-Mirim, Toledo). In a
nutshell, “the role of the PCJ water use charges for water-related PES and water springs
conservation might be this one: to kick-off the project, and then step back” (AGPCJ2).
Despite the relatively more favourable financial situation, the monitoring of water-
related ES remains a challenge for the PCJ river basins. “When defining water-related PES and
policies on water springs protection, the initial difficulty is to establish the metric of benefits
from the planning standpoint. For instance, benefits related to water quality are not as much
53
perceived as increased water quantity. As a result, you would end up with great expectations,
not really knowing the evidence” (AGPCJ2). A historical difficulty is to combine water
quantity to water quality monitoring data, since the responsible entities differ (e.g. in São Paulo,
DAEE for water quantity and CETESB for water quality). In Minas Gerais, the water
regulations differ to those in São Paulo, which result in different classifications for water
quality. In addition, the difficulty is to establish the baseline for future comparison in PES
(ANA1). Although ANA has established its hydrometeorological station, the series that ANA
has generated until now is impacted annually due to landscape changes: “Every year you
reforest a new area, you perform soil conservation. This means that you have neither a before
nor an after series” (ANA1).
Scalability Dimension: scaling-up PES at the river basin-level
The scalability strategy adopted by the PCJ Committees refers to the PCJ Policy on
Water Springs, which follows the technical criteria established in the PCJ Forest Restoration
Master Plan and the PCJ River Basins Plan (2010-2020). The Policy is “the operational
instrument” that applies the financial resources from PAP-PCJ (2010-2020) (i.e. PCJ-federal
water use charges) (AGPCJ1, AGPCJ4). It was structured with a continuous dialogue
amongst the members of the PCJ Committees, particularly the Water Springs Working Group
(jointly composed by CT-RN and CT-Rural). In 2018, the PCJ Committees started its first
selection process for water springs conservation projects under the Policy orientation. The
selection focuses on two main characteristics prior to the implementation of PES:
(i) Construction of technical and legislative capacity at the municipal level;
(ii) Building long-term financial sustainability.
These two requirements reflect the lessons learned with the Water Conservator.
“Although the city of Extrema has very peculiar political and economic settings, we were
convinced that we needed the local governance first prior to implementing PES. Therefore, we
have structured the Policy in four different Programmes” (AGPCJ1). The city of Extrema and
TNC also contributed to the design of the PCJ Policy on Water Springs, bringing the local
perspective in the regional planning (EXT1, TNC1). ANA contributed with the regional
perspective from its Water Producer Programme (ANA1). It is also important to notice that
PES is one out of the four strategic Programmes, as detailed in Table 13. Figure 24 details the
rationale for the project selection process.
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Table 13. Programmes of the PCJ Policy on Water Springs.
Programme
Description
(1) Restoration, Conservation,
Environmental Protection of Areas
of Interest
It contemplates the environmental compliance of
Individual Property Project (PIP) and restoration and
conservation services (i.e. increasing water quantity
and quality). The Programme 1 creates the Bank of
Areas (i.e. areas of interest that are “available” for
restoration in the PCJ river basins) and the Bank of
Projects (i.e. municipalities/water users with projects
that can be performed in an area of interest). The
combination of both Banks guarantees that projects will
tackle the prioritisation established by the PCJ
Committees.
(2) Payment for Ecosystem
Services
It contemplates the actions that aim at producing
ecosystem services at the micro-catchment level,
prioritising the water springs of interest for public water
supply in the PCJ river basins. The economic incentive
is applied to: (i) the proposed restoration actions in the
PIP, monitored by the Coordinating Unit for
Implementation (UCE) or Project Management Unit
(UGP); and/or (ii) payment to landowners who are
stewards-receivers, who generate ecosystem services
related to the increase of water quantity and quality.
(3) Incentive to “Areas of
Protection and Restoration of
Water Springs” (APRM-PCJ) of
regional interest
It contemplates the creation of APRMs within the PCJ
river basins in São Paulo and Minas Gerais, prioritising
the water springs of interest for public water. Each
APRM will have its own legislation and Plan of
Environmental Development and Protection (PDPA).
(4) Protection of the Atlantic
Forest and Cerrado biomes
It contemplates actions to protect the native vegetation
of the Atlantic Forest and Cerrado biomes based on
their respective conservation regulation.
Source: own elaboration based on Comitês PCJ (2017).
55
Figure 24. PCJ Policy Water Springs rationale for project selection.
Source: adapted from Comitês PCJ (2017).
The key strategy for the project selection is the prioritisation of Programme 1 prior to
Programme 2 (PES). It requires the creation of a monitoring group (UCE), ideally composed
by the technical division of the municipality (i.e. model developed in Extrema) (AGPCJ4,
EXT1) (Figure 25 details the PCJ-PES framework). The PCJ Committees are committed to
financing the creation of the UCE for a maximum period of two years, and the municipality
must make a financial commitment (e.g. creating their local PES budget) to finance UCE for
at least two more years on their own. The implementation of this Policy received criticisms in
the early stages: “We have been questioned a lot about it. Are you going to finance this
indefinitely? How can you expect institutional maturity and development? Our answer is: no,
we are not doing an indefinite assistantship. On the contrary: we are incentivising the
municipalities to continue PES on their own, particularly the small municipalities” (AGPCJ4).
56
By incentivising in the early stages, the PCJ Committees will allow municipalities to
structure themselves and leverage additional financial resources, ranging from the public to the
private sector, potentially compensating the yet insufficient funds coming from water use
charges. This view is also aligned with ANA1’s perspective: “What river basin committees
need to realise is that executing PES programmes leverage financial resources, similar to what
happened in Extrema. Water use charges should be more central to PES, but water use charges
alone will remain insufficient to tackle water conservation. Therefore, attracting investors is
key to the financial sustainability”. However, ANA1 warns that not all river basin committees
in Brazil have implemented water use charges, and not all of them are as structured as the PCJ
river basins. Finally, “[river basin committees] need to be aware of their core competency as
to not shifting its focus completely towards forest conservation and restoration” (ANA1).
Figure 25. Water-related PES framework in the PCJ Policy on Water Springs. UCE refers to
the Coordinating Unit for Implementation; CODEMA refers to Municipal Council for
Environmental Defense; CMDR refers to Municipal Council for Rural Development.
Source: own elaboration based on semi-structured interviews and literature review.
57
4.3. Addressing Research Questions
This section explains the relevance of the key findings at the city- and river basin-level
to this research’s aims, comparing and discussing the findings to the literature on PES. I will
review the main aspects of the literature and the PES theoretical framework (Wunder, 2015;
Wunder et al. 2018) to address the overarching research question: “How sustainable, adaptable
and scalable is the city of Extrema’s PES programme within the PCJ river basin
management?”.
Wunder et al. (2018) sets conditionality as the main defining factor for successful PES
(i.e. compliance with the established objectives). In this case study, both city- and river basin-
level PES frameworks have very well-defined preconditions (revisit Figure 12 and Figure 25).
In Extrema, landowners participating in the PES scheme are located in the programme’s
priority catchments. In the PCJ river basins, water-related PES schemes are coupled with water
springs protection at the micro-catchment level, prioritising the water springs of regional
interest for public water supply. In both cases, the economic incentive alone (e.g. funding
through the water use charges or private sources) is not enough to secure forest restoration and
water conservation goals, especially in the long-run. These findings indicate that PES is not
uniquely a market-based instrument of environmental governance, as previously considered in
the ES literature (see Engel et al., 2008; Wunder, 2005). PES should rather be framed
considering the complexity of socio-ecological systems (Ostrom and Cox, 2010). As Van
Hecken et al. (2013, p. 372) stated: “reducing [PES] complexity in order to make it fit into a
market-based model can only be done at the risk of overlooking the broader institutional
framework from which [PES] cannot be separated”. In fact, the Extrema case study showed
that the regulatory framework enabled the city to leverage additional financial resources (both
public and private) and to build internal technical capacity to ensure the project’s sustainability
(EXT1). Both at the local and river basin-level, the national Forest Code triggered water
conservation actions in the first place, and not the voluntary bargaining through market to
address the “efficient allocation of externalities”, as Coase (1960) proposed. The scaling-up of
PES initiatives came forth because of a gradual change of perceptions, as emphasised by the
PCJ Committees and PCJ Agency (COPCJ1, AGPCJ4). The collective action towards
building city- and river basin-level PES frameworks that dialogue with one another
corroborates the crucial role of institutions in the individual’s choices (Muradian et al., 2010).
Essentially, this case study demonstrates that the sustainability, adaptability and
scalability of water-related PES depends on a set of shared and collectively constructed
58
principles and rule systems (e.g. PCJ Policy on Water Springs, PCJ Forest Restoration Master
Plan and PCJ River Basins Plan). This will lead to the individual and institutional motivation
and capacity to abide by those principles and rules, and “if necessary, to monitor and enforce
them” (Van Hecken et al., 2013, p. 372). In practical terms, the establishment of strong local
public policies led to the monitoring and enforcement of the PES conditionalities proposed by
Wunder et al. (2018). Those policies enabled the PCJ Committees to coordinate regional
strategies for water-related ES provision, prioritising the most vulnerable areas. As exposed in
previous works on water-related ES, “PES intervention necessarily requires a new form of
regionalisation” (Joslin and Jepson, 2018, p. 10).
In the following sub-sections, I will detail the relevance of the key findings to each
dimension of the empirical sub-research questions.
Sustainability Dimension: How is the PES programme developed and designed to meet its
goals and targets in the provisioning of water-related ecosystem services?
The city of Extrema integrates the water-related ES generated in the Jaguari sub-river
basin into its municipal planning process by establishing a local PES regulation (technical
capacity), and a decree to regulate PES (financial sustainability) (EXT1). It adopts the concept
of integrated vegetation, soil and water management in defining water conservation actions.
The expected outcomes include increased water quantity and quality, besides promoting forest
restoration (Prefeitura Municipal de Extrema, 2017). These outcomes were similar to other
studies on water-related ES for environmental planning (Hackbart et al., 2017).
The Water Conservator influenced the design of PES programmes in the PCJ river
basins, indicating the importance of considering the different layers, scales and dimensions of
ES governance (Rival and Muradian, 2013). Most notably, the approximation of different
Technical Boards (CT-RN and CT-Rural) allowed the revision of the PCJ Policy on Water
Springs, and the establishment of priority areas for restoration based on technical
hierarchisation criteria (i.e. micro-catchments and drainage areas). As Knüppe and Knieper
(2016) proposed, participatory management and collaborative decision-making is required to
the provision of ES. This case study illustrates that PES is inevitably a social construction,
requiring distribution of power and local-regional legitimacy to advance PES development and
design (Corbera et al., 2007; Pascual et al., 2010; Le Coq et al., 2013). In practical terms, the
PCJ river basins dedicated a percentage of the Pluriannual Application Plan (PAP-PCJ) to
allocate the PCJ-federal water use charges to the delivery of water-related ES, balancing them
59
out with other competing water demands (e.g. sanitation and water loss control). The local-
river basin interaction confirms the need to “facilitate the self-organising capacity of local
groups and communities, who would be free to craft their own rules” (Rival and Muradian,
2013, p. 11), as advised by Ostrom (2001).
Adaptability Dimension: How is the PES programme sustained financially and monitored
over time?
At the city-level, PES programmes are maintained through the Municipal Fund for PES,
which allows the flexibility of receiving both public (e.g. water use charges) and private funds
(e.g. partnering institutions that compensate their water footprint in the Water Conservator
areas). This financial stability has allowed the continued provisioning of water-related ES,
fulfilling the goal of contributing both to forest restoration and local livelihoods (Grima et al.,
2016). The city annually updates its reference PES value (i.e. “Fiscal Units of Extrema” or
UFEX) according to the National Index for Consumer Prices (Kfouri and Favero, 2011;
Gonçalves, 2013). This rationale remained true even during the water crisis that hit Southeast
Brazil in the 2013-2015 period (Pereira et al., 2016). The city of Extrema’s decision-making
processes adopted a preventive rather than a reactive rationale, which means that the Water
Conservator initiatives were not triggered by increasing water shortages, as commonly
portrayed in the Latin American case studies (Southgate and Wunder, 2009). The participation
in the PES programme remains voluntary, fulfilling the precondition of internal capability to
organise payments to landowners (Wunder et al., 2018).
At the river basin level, the PCJ River Basins Plan is the main instrument to allocate
water use charges in priority actions. More specifically, water-related ES actions are
implemented exclusively with the application of the PCJ-federal water use charges. Although
water use charges and priority areas are strongly linked, their implementation is difficult due
to technical constraints and political will (AGPCJ2). In fact, river basin plans in Brazil were
once classified as “paper tigers” or “promises for others to fulfil” given their unrealistic set of
actions with the limited amount of water use charges (OECD, 2015; 2017). In the city-level
perspective, the nature of competing interests in the PCJ river basins makes it unpractical to
rely on water use charges alone for PES implementation (EXT1). Despite the water use
charge’s limited capacity, the PCJ Committees have decided to initially invest in the technical
capacity-building and the financial sustainability of the PCJ river basins municipalities. This
60
will allow municipalities to take ownership of the PES programme in later stages, which is
aligned with the perspectives from Extrema and ANA (EXT1, ANA1). This case study
corroborates the view that mid- and long-term financing sustainability is key to successful PES
programmes (Grima et al., 2016).
Monitoring over time remains a challenge in the city of Extrema and in the PCJ river
basins, as pointed out in previous studies in the region (Richards et al., 2015; Taffarello, 2016).
Following the trend of the early implementation of PES programmes (Pattanayak et al., 2010),
the Water Conservator programme started without having the baseline environmental
monitoring for future comparison of results (Prefeitura Municipal de Extrema, 2017). Although
monitoring results from the Jaguari sub-river basin have been publicly available through the
publication of academic work, the research-related monitoring information is not systematised
in the technical reports of the Water Conservator. In the Environmental Department of
Extrema’s standpoint, “our goal is not to generate scientific data. We have always supported
monitoring research, but our main goal is to take action, execute, get the project going. This is
what we have been doing” (EXT1). However, monitoring information could be used not only
to support municipal decision-making, but also to encourage PES continuity and expansion
(Saad et al., 2018). The ongoing triangulation of the PCJ Forest Restoration Master Plan, the
PCJ River Basins Plan and the PCJ Policy on Water Springs could create a momentum to
address the monitoring gap, taking advantage of the existing monitoring partnership with ANA
and the local Coordinating Unit for Implementation (UCE). This joint effort would potentially
reduce the uncertainties of water-related ES benefits derived from PES and water springs
conservation, which is currently an issue of concern in the PCJ River Basins Plan (AGPCJ2).
As concluded by studies on water-related ES indicators, “if this monitoring does not happen,
the [water-related ES] values could not be adjusted correctly in the near future” (Hackbart et
al., 2017, p. 225). Effective monitoring at the city- and river basin-scale would allow
standardisation, comparison and hierarchisation of PES programmes (Taffarello, 2016).
Scalability Dimension: How does scaling-up PES affect river basin planning? What are
the key conditions and changes needed to integrate city- and river basin-level
programmes?
Although river basins might not be the ideal management unit for executing PES given
their extension and competing water uses (EXT1, AGPCJ2), multilevel governance systems
(i.e. local and regional) are essential to scaling-up PES programmes. This requires a shift from
61
single-based instruments (e.g. market-based, command-and-control) to combining governance
structures, scales and tools (Rival and Muradian, 2013). In the PCJ river basins, the PCJ Policy
on Water Springs operationalises the selection of projects on water springs conservation. Long-
term technical and financial sustainability is ensured by investing in the creation of local
legislative framework (Comitês PCJ, 2017). This strategy is aligned with findings from Börner
and Vosti (2013), emphasising that economic incentives must be followed by a set of political
strategies that enable local development. Under this arrangement, the PCJ Committees will
only fund PES programmes after municipalities have secured their own technical capacity to
leverage additional financial resources and meet the goals set forth in the PCJ Policy on Water
Springs. May and Vinha (2013) also stress the role of governing institutions in creating the
conditions for partnerships to be successful. Therefore, the role of the river basin committees
would be supporting local project executors to integrate city- and river basin-level PES
programmes. Furthermore, as Rival and Muradian (2013, p. 15) recall, “without appropriate
incentives and local engagement in rule making, there is abundant evidence that [regional]
policies might be ineffective”.
4.4. Limitations of the Research
Whilst conducting direct observations and semi-structured interviews, the main
limitation was the 10-day nationwide truck driver’s strike (from May 21st until June 1st), which
affected transportation virtually everywhere, with some of the main roads blocked (Phillips,
2018). I was able to get to the PES programme’s sites accompanied by the Environmental
Department of Extrema’s staff, although some of the city’s activities were cancelled due to the
lack of fuel and I was not able to follow other PES activities more closely.
In relation to the documentation analysis, it is important to note that some government-
related websites might not be updated from August onwards because of the electoral period,
which does not allow public entities to update content until the end of the Brazilian elections
in October 2018. For this reason, all the data needed for this research was obtained up until
July to guarantee full access.
The use of statistical correlation in this research would have increased the
understanding of the influence of each dimension in the contributing success of PES schemes
in the city of Extrema and in the PCJ river basins. In addition, this research could have included
the view of other stakeholders at the river basin-level, such as water utilities and sanitation
companies. This limitation was partially addressed by attending two key meetings from the
62
PCJ Committees, where I could better understand the interactions between different water users
and the rationale behind the decision-making processes.
4.5. Implications of the Research
Despite the critiques PES schemes face, they have become an attractive policy
instrument for the promotion of water-related ES. A better understanding of what makes PES
sustainable, adaptable and scalable is needed for evidence-based decision-making processes at
the city- and river basin-level. This dissertation is a contribution to this effort, emphasising that
strong local public policies are strategic to scaling-up PES at the river basin level. It is crucial
that river basin institutions (e.g. committees, entities, agencies) establish direct dialogues with
stakeholders, particularly municipalities, understanding the local set of socioenvironmental,
political and economic conditions prior to the implementation and scaling-up of PES. In
addition, water use charges may play a defining role in increasing institutional capacity at the
municipal level, leveraging additional financial resources for water conservation actions
coming from both public and private funds.
This dissertation’s findings indicate the need of further research in understanding the
role of water utilities and sanitation companies in investing in water-related PES projects, and
forest restoration at the city- and river basin-level. In the PCJ river basins, for instance, this
could refer to the lack of involvement of the sanitation company SABESP in investing in water-
related ES in the headwaters of the Cantareira Water Supply System. Future studies could also
evaluate PES effectiveness in the context of regional climate change, since this could be used
as a rationale to increase the provision of water-related ES.
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5. Conclusion
This dissertation evaluated the sustainability, adaptability and scalability of water-
related PES given the decision-making processes at the city- and river basin-level. Within the
PCJ river basins context, successful PES programmes develop strong public policies that
integrate water-related ES into the municipal planning process. Once those policies are in place,
river basin committees can coordinate regional ES provision, prioritising the most vulnerable
areas. This is essential to scale-up PES based on the 13-year experience of the city of Extrema’s
Water Conservator programme.
The sustainability dimension provided evidence that the design of water-related PES
programmes is inevitably a social construction, requiring participatory management amidst
competing water use priorities within the city- and river basin-scales. The adaptability
dimension demonstrated that mid- and long-term financing arrangements allow the continued
provision of water-related ES, which should be oriented by effective monitoring of derived ES
benefits. The scalability dimension emphasised the need to apply appropriate incentives to
generate local-regional engagement to scale-up PES, coupled with a set of river basin-level
policies that enable municipal development.
Finally, the research findings indicate that understanding local socioenvironmental,
political and economic conditions is key prior to implementing and scaling-up PES.
Establishing strong and collectively constructed local public policies allows the sustainability,
adaptability and scalability of water-related PES both at the city- and river basin-level.
64
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Appendices
Appendix 1 – List of Figures
Figure 1. Pathways from biophysical structures and processes to human wellbeing for water-related
ecosystem services. ..........................................................................................................................................................10
Figure 2. The water use charge implementation cycle in Brazil. .....................................................................12
Figure 3. Water-related PES projects per state within the Atlantic Forest biome, Brazil. .......................13
Figure 4. Location of the city of Extrema and the Cantareira System, Southeast Brazil. ........................14
Figure 5. Composition of the PCJ River Basins Committees. ..........................................................................16
Figure 6. Management structure of the PCJ River Basins Committees .........................................................16
Figure 7. Convergence of multiple sources of evidence. ....................................................................................18
Figure 8. Timeline for dissertation fieldwork in Brazil, from May 21st to June 19th, 2018. ....................20
Figure 9. Location of the cities travelled in Brazil for the case study on Payment for Ecosystem
Services (PES). ..................................................................................................................................................................20
Figure 10. Location of the Posses catchment in the city of Extrema, South of the Minas Gerais state,
Brazil. ...................................................................................................................................................................................28
Figure 11. Overview of the data analysis process. ................................................................................................30
Figure 12. PES framework for financial sustainability and technical capacity in the Water
Conservator programme in the city of Extrema, Minas Gerais, Brazil. ..........................................................33
Figure 13. Implementation of the Water Conservator PES programme in the catchments within the
Jaguari sub-river basin ....................................................................................................................................................34
Figure 14. Overview of the Water Conservator programme’s restored areas within the priority
catchments of the Jaguari sub-river basin.................................................................................................................34
Figure 15. Number of planted native tree saplings from the Atlantic Forest biome per year from 2007
to 2017 in the Water Conservator programme. .......................................................................................................35
Figure 16. Implementation of fences (in metres) per year from 2007 to 2017 in the Water Conservator
programme..........................................................................................................................................................................36
Figure 17. Integrated vegetation, soil and water management with the construction of fences to
prevent the cattle from reaching water springs and reforested sites. ................................................................36
Figure 18. UFEX* value (in BRL and USD) per year from 2005 to 2018. ..................................................37
Figure 19. PES* monthly value (in USD) per year based on the 100 UFEX value per hectare. ...........38
Figure 20. Investments on Water Conservator PES by the city of Extrema’s funds and the PCJ-
Federal Water Use Charges for the 2012-2015 period. ........................................................................................40
Figure 21. Hydrometeorological monitoring stations map from ANA in the Jaguari sub-river basin. 42
Figure 22. City of Extrema’s strategy for scaling-up integrated vegetation, soil and water
management. ......................................................................................................................................................................45
Figure 23. Hierarchisation of priority areas for forest restoration in the Jaguari sub-river basin. .........49
Figure 24. PCJ Policy Water Springs rationale for project selection. ............................................................55
Figure 25. Water-related PES framework in the PCJ Policy on Water Springs. .........................................56
74
Appendix 2 – List of Tables
Table 1. Summary of activities performed in the dissertation fieldwork locations in Brazil, from May
21st until June 19th, 2018. ...............................................................................................................................................21
Table 2. Framework based on preconditions for PES implementation. .........................................................22
Table 3. Description of analysed city- and river-basin level documents. ......................................................24
Table 4. Participants per administrative level and focus of the interview’s questions. .............................26
Table 5. Water Conservator PES programme’s goals and their expected outcomes in the supply of
water-related ES. ..............................................................................................................................................................32
Table 6. Relation of total PES* value (in BRL and USD) and the number of new PES contracts per
year in a 10-year period (2007 to 2017). ...................................................................................................................39
Table 7. Monitoring water stations in the Jaguari sub-river basin. ..................................................................42
Table 8. Ongoing monitoring research projects in the Water Conservator programme. ..........................43
Table 9. City of Extrema’s investments on scaling-up forest restoration in the Jaguari sub-riv