What are market and incentive-based approaches?
Blue and John Crow Mountains, Jamaica. - Credit: Lyndon John |
Market-based approaches can be defined as transactions in which a party desiring a good or service provides a material inducement to another party to provide that good or service. The types of market-based approaches that could be considered for watershed management thus range along a continuum from incentives to free market exchanges between watershed service providers (for example, Forestry Departments that protect critical water catchment areas) and users (for example, water consumers).
Incentives for watershed protection are already in use in the region, for
example, free seedling tree seedlings programmes for hillside farmers.
Incentives differ from other types of market-based approaches in that the
price is determined not on the basis of the agreed value of the service
being provided (in this case by farmers), but by the minimum cost that
might induce the targeted group to modify their practices. Incentives therefore
require little negotiation between “buyers” and “sellers” and
are relatively easy to establish.
How can markets and incentives improve livelihoods?
The establishment of markets for watershed services could
provide a range of new livelihood opportunities for local people; what is
most difficult is structuring markets in ways that can provide some of these opportunities
to poor and other marginalised groups. The project will explore several potential options for doing this, including:
- increasing poor people’s stake in good land management by offering
secure tenure as an incentive;
- supporting income-generating options that would improve land use, such
as the development of appropriate tree crops or heritage tourism services;
- creating market opportunities for poor communities through the provision
of watershed protection services, such as protecting water intakes and
reforesting denuded hillsides within water catchments.
Who pays for water? Project Homepage >>
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Who Pays for Water? is the Caribbean component of the global project Developing Markets for
Watershed Protection Services and Improved Livelihoods,
which is being implemented by the International Institute for Environment
and Development with financial support from the United Kingdom Department
for International Development. The initiative includes activities in
India, Indonesia, South Africa, and other countries in addition to the
Caribbean. For more information on this innovative global project, click
here
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