Use of Market-based Incentives in Watershed Management: Driving the Green Economy through involving Communities & the Private Sector


Access to reliable, clean water is integral to sustainable development and the transition to a green economy. But the world is consuming freshwater at rates that simply cannot be sustained, and freshwater ecosystems are under threat.

Aquatic ecosystems are degrading faster than any other, and 60 per cent of the services they provide are being lost (MEA 2005). Globally, 24 per cent of mammals and 12 per cent of birds connected to inland waters have been classified as threatened (UN WWAP 2003). The situation is particularly daunting in developing countries, where 90 per cent of sewage and 70 per cent of industrial waste is dumped untreated into surface waters (UNWater, 2010). The international community has awoken to many of the threats facing our freshwater supply, but the importance of sound watershed management has been too often overlooked.

As this report shows, the transition to sound watershed management will require a shift in thinking. Managing watersheds shouldn’t just be about regulations. It should be about developing complementary models for the protection and rehabilitation of watersheds through community participation schemes, public-private
partnerships and private investment structures. And it should employ proven market-based incentives to promote the adoption of sustainable land-use and watershed management practices. By applying such methods, policy makers can strengthen the participation of local communities and the private sector, reverse ecosystem degradation and safeguard critical ecosystem services.

This report is meant to serve as a resource for governments and stakeholders who are interested in learning about market-based incentives for watershed management. It presents 26 watershed-level case studies that demonstrate how market-based incentives have been used in different contexts across the globe, and it outlines key countrywide policy recommendations that governments can use to facilitate the uptake of market-based incentives. More importantly, the report can help policy makers understand the prerequisites for the successful implementation of market-based incentives for watershed management.

Managing and investing in watersheds is essential to addressing water security for both people and ecosystems. It is UNEP’s hope that this report will encourage new investments in watershed management and promote reforms to existing regulation schemes. By managing their watersheds smartly and sustainably,
governments can support local communities, strengthen the private sector and promote important synergies between ecosystem health and human well-being.

Mette L. Wilkie
Director, Division of Environmental Policy Implementation, United Nations Environment Programme


Files and links

Sustainable Development Goals
Publication | 24 October 2016