The Mechanism of Assessment of Payment for Ecosystem Services-a Case Study of Phewa Wastershed

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ABSTRACT

Ecosystem service is a new term in the context of our country. The concept of payment to environmental services is a broad umbrella for the conservation of watershed. Watershed is the important part in the livelihood of people. With the watershed people survive and help it thrive. People here are the makers as well as destroyers. Within the watershed there are upstream dwellers that mainly provide the service to the dwellers living downstream. Hence this project is for the conservation of watershed which is mainly based on the payment mechanism where the downstream dwellers receiving the services are paying to the upstream dwellers that provide services. The intention is to encourage upstream farmers, pastoralists and land managers to maintain practices that ensure and improve environmental services. Incentives can include both direct monetary payments as well as other indirect benefits such as secure land tenure and targeted development aid. Such incentive mechanisms are often referred to as Payment for Environmental (or Ecosystem) Services or PES. Phewa watershed is a serene and beautiful place which annually attracts hundreds of thousands of tourists. There are multiple benefits to the downstream dwellers with tourism, hotel, irrigation, hydropower etc. but there is constant degradation of watershed and with that the Phewa lake which is the heart of Pokhara is also decreasing. If this trend continues then Phewa Lake shall be a history to our children. Hence by establishing the relation between upstream and downstream for conservation purpose we will be able to restore the natural landscape of the watershed. The study was conducted using Contingent valuation method (willingness to pay/accept) for environmental services. On that basis 83% of the respondents were ready to accept and 75% were ready to pay 0.5- 2 % of their income. Hence with this WTP and WTA we found that the establishment of conservation council was supported by most of the people for the proper regulation of Phewa Catchment Area.

INTRODUCTION
Background
Nature has provided various kinds of services to mankind. Natural capital provides both ‘direct’ ecosystem services and “indirect” ecosystem services. Such as the provision of food and raw materials are some of the direct ecosystem services and services such as carbon sequestration, watershed protection, aquifer recharge and biodiversity habitat provision are indirect ecosystem services. (United Nation, 2009) These services have major role in running an economy of a nation or even the world. In last few years the world has slowly realized the linkage of economy and nature. Hence, there has been movement of greening the economy. There has been use of economic and market based instrument like eco-taxes, polluter-pays principle, for pollution prevention and ecosystem conservation. But most of them are focused on internalizing negative externalities where as now the new approach on environmental conservation is to focus on internalizing the positive externalities through appropriate economic incentives. (Kelly J. Wendland, 2010)Payment for Environmental Services (PES) is one of these new approaches which internalize the positive environmental externalities.

Figure 1.1 Payment Mechanism in watershedSource: (ICIMOD, 2008)

According to Wunder (2005), PES is defined by five criteria; 1.they are a voluntary transaction
2.they involve a well-defined environmental service
3.the service is “bought by at least one buyer
4.the service s “provided” by at least on provider and 5.the transaction is conditional on provision of that service To further explain above points, PES is any voluntary service where a well defined environmental service is purchased by at least one buyer to least one environmental service provider with a payment being conditional on the service being provided environmental service can be defined in terms of air, water or any character those environment posses. At its...
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