Sunset over the Cumbaza River.
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The Nature Conservancy in Peru

Peru

Water Security. We are using nature to secure freshwater for Peru’s most at-risk cities.

icono agua peru nature
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Alianza Fondos de Agua

2020 Outcomes
  • By 2020, NASCA will have 3 water funds in Peru, 1 of them in consolidation phase (Lima) and 2 more with the asssitance of technical local partners (Piura, Cusco).
  • By 2020, two countries in NASCA will have a complete, approved and fully operation water tariffs scheme with real conservation and mantainance costs canalized by water funds in Peru and Costa Rica.
  • Peru will have 8 corporations that incorporate nature as a sustainable practice.

The Nature Conservancy is demonstrating how investing in nature—protecting and restoring headwater ecosystems can help retain freshwater, filter pollutants, and reduce erosion, among other critical services. These practices save cities moneyand help them achieve water security.

Water is essential for life on Earth. It is also crucial to social and economic development. Rising water demand and greater variability in quantity and quality of supplies resulting from climate change and degradation of natural areas that provide water are only a few of the threats to water security. Global water consumption is doubling every 20 years, and by 2025, at least two-thirds of the world’s population will likely be living in water stressed areas. Cities, in particular are at risk: currently one in four cities is water stressed. Ecosystems influence water flow and water quality: Wetlands store runoff, recharge aquifers and filter organic waste; while forests shade streams, reduce runoff and halt erosion. However, most cities around the world have neglected to include the costs of watershed conservation and management in water pricing. The Nature Conservancy (TNC) is helping cities protect their water supplies by creating partnerships between urban and rural communities and other stakeholders to protect the resources on which they rely, and by finding ways to finance watershed conservation.   Our ambitions are bold: To fundamentally change the way land managers, water utilities, cities and corporations manage our most precious resource—water—for the benefit of people and nature. The Nature Conservancy has undertaken an ambitious initiative to use nature to secure clean water supplies for Latin America’s most at-risk cities benefiting up to 100 million Latin Americans by 2025. TNC has three Water Funds at different stages of development in the most critical cities in Peru, in terms of water security, Lima, Piura and Cusco. Lima is the second largest desert city in the world, and gets most of its water from three rivers— the Rimac, Chillon, and Lurin—that originate high in the Andes Mountain Range and flow to the Pacific Ocean. Other similar city is Piura, where most of the water provision comes from Chira-Piura watershed, in the north area of Peru. Finally, the city of Cusco, the capital of the Inca Empire, is developing a compensation mechanism for water availability, for the city. 

The introduction and development of Water Funds, a financial and governance mechanism, aimed at promoting the conservation of the watersheds. Water Funds are innovative financial mechanisms that harness investments from the private and public sectors to help protect and restore forests and ecosystems in upstream watersheds that, in turn, capture and clean the water we need to supply our cities and economies downstream. These resources are used to fund projects involving the local communities in the implementation of green infrastructure, promoting a new water culture to citizens and training farmers in sustainable resource management. TNC and other partners created in 2011 the Lima and Callao Water Fund (AQUAFONDO). Now we are supporting the strengthening of the Piura Water Fund (FORASAN) and the design and creation of the Cusco Water Fund. Adjustment of the water tariffs to cover for watershed conservation costs, in order to ensure that the water tariffs in Peru include a fee aimed at investing in ecosystem services efforts that guarantee water provision to cities and economies. Sustainable water management, to identify strategies, and engage the private sector in the reduction of the risks associated with water use, by incorporating and supporting ecosystem services as part of their production costs.

Strategies in action

TNC’s water strategy in Peru focuses on the conservation of priority watersheds and landscapes that contain our primary natural infrastructure for securing reliable supplies of water. Our efforts focus on three lines of action:
The introduction and development of Water Funds, a financial and governance mechanism, aimed at promoting the conservation of the watersheds. Water Funds are innovative financial mechanisms that harness investments from the private and public sectors to help protect and restore forests and ecosystems in upstream watersheds that, in turn, capture and clean the water we need to supply our cities and economies downstream. These resources are used to fund projects involving the local communities in the implementation of green infrastructure, promoting a new water culture to citizens and training farmers in sustainable resource management.

TNC and other partners created in 2011 the Lima and Callao Water Fund (AQUAFONDO). Now we are supporting the strengthening of the Piura Water Fund (FORASAN) and the design and creation of the Cusco Water Fund.

Adjustment of the water tariffs to cover for watershed conservation costs, in order to ensure that the water tariffs in Peru include a fee aimed at investing in ecosystem services efforts that guarantee water provision to cities and economies.

Sustainable water management, to identify strategies, and engage the private sector in the reduction of the risks associated with water use, by incorporating and supporting ecosystem services as part of their production costs.

Water Tariffs Model

Water tariffs are designed to recover the costs for providing water and sanitation services; this is how utilities ensure proper service delivery and maintenance of existing infrastructure. Cost recovery is done by pricing services and transferring these to users through tariffs. Normally, water rates do not include all costs, and even rarely include the environmental costs of conserving the watersheds that regulate supply and water quality.

Water Funds Model

AQUAFONDO serves as the prime example of the Water Funds model in Peru. The fund is a civil society initiative created in 2011 to complement the efforts of the State in the preservation of water basins that provide water to Lima and Callao. It is a financial mechanism that mobilizes public and private funds to conserve water in the Chillon, Rimac and Lurin rivers; and thus contribute to water availability for its inhabitants. AQUAFONDO seeks to promote a new culture of water, contributing to solve the problems of watershed degradation, especially in water sources, through the development of green infrastructure projects, funded with revenue from the water tariffs and private resources for watershed conservation.

AQUAFONDO’s actions:

  • Implementation of green infrastructure as natural coverage restoration, wetland restoration, water seeding, crop water, reforestation, etc.
  • Implementation of hydrological monitoring systems to assess the impact of interventions.
  • Development of environmental education programs.
  • Support the processes of water governance through strengthening of the Water Resources Council of Chillon, Rimac and Lurin.
Water Funds in Peru

In Operation:
Lima Water Fund - AQUAFONDO
1. Improvement of natural grasslands in the San Mateo district, province Huarochirí
The project aims at promoting the adoption of sustainable and replicable practices for the management and recovery of natural prairie "Cancha Moya", countering erosion and generating greater availability of water resources through proper management of livestock and strengthening organizational management of the rural community of San Antonio.
2. Lessons learned for water governance in vulnerable cities in the Andean region: governance of the Lima basin The project aims at strengthening the recently created Water Resources Council of Chillon, Rimac and Lurin, promoting the active participation and capacity of the main actors in the basins of these rivers.
3. Hydrological impacts Monitoring of pasture conservation in the Huamantanga community
The project aims at implementing a hydrologic monitoring system to understand the cost-benefits of green infrastructure and its social impact on rural communities through intervention of cattle exclusion.
4. ROI analysis for the infiltration canal “Amunas” in Huamantanga
The project aims at describing the traffic flow of water in the soil and subsoil, in terms of travel and time of resurgence, captured by the Amuna. In addition, seeks to identify the potential of the Amuna recharge system and how much it contributes to a purely local recharge and / or for downstream users; which will allow the creation of scenarios with the expected increased regulatory function,for larger projects that benefit both users in Lima and in Huamantanga.
5. Recovery of an infiltration canal “Amuna” for water seeding in San Pedro de Casta
Recover an ancient practice of “water crops” and strengthen community organization, to contribute to a better understanding of the water flow in the community of San Pedro de Casta.

In design phase:
Piura Water Fund – FORASAN
TNC is working with partners to strengthen FORASAN, which aims at capturing, managing and channeling investments to ensure the quantity and quality of water resources in the Chira-Piura watershed. TNC has brought together a group of strategic allies at the local, regional and national level that include government and international cooperation such as: the water user association, private companies, regional government of Piura, National Water Authority through the Hydric Resource Council of Chira-Piura basin and the National Fund for Protected Natural Areas PROFONANPE. Also, SUNASS, TNC, The World Bank, USAID, The Swiss State Secretariat for Economic Affairs (SECO) and FONDAM.

Cusco Water Fund
TNC is working with local partners to create Cusco Water Fund, which aims at improving coordination between the Municipality of Chincheros, the Management Committee of the Piuray-Ccorimarca microbasin and SEDACUSCO. This partnership seeks to establish the appropriate institutional design for a water fund, learning from successful experiences with other funds, and the implementation of conservation projects in coordination with various public and private entities. Moreover, the SUNASS set in 2015 that 4.8% of the revenues from SEDACUSCO, will be destined to implement conservation projects in the watershed of Piuray, that provides 40% of the water of the city.

Instead of paying for expensive industrial filtration, by financing upstream landowners to use sustainable farming practices and conserve/restore natural areas, The Nature Conservancy protects water at its source, guaranteeing cleaner and less expensive water once it reaches users.

We are using nature to help secure clean water for Peru's most at-risk cities: Lima, Piura, San Martin and Cuzco by: 

  • Protecting and restoring critically important habitats that clean water at its source
    • We safeguard ecologically sensitive places and guide development towards sites with the least impact on nature.
    • We rejuvenate degraded landscapes, restore forests or plant new ones, to harness the many services nature provides (flood control, sediment and nutrients retention, water filtration, pollination, clean air, climate change resilience).
  • Transforming how we use nature to sustain ourselves
    • Through science and partnerships, we encourage innovative practices and policies like the Latin America Water Funds Partnership.
    • We partner with governments, local communities, indigenous peoples and industries, providing them with scientific tools to be the best stewards of their own resources.
  • Inspiring collective action
    • We are galvanizing leaders (from policymakers and communities to lawmakers and business leaders), ensuring the adoption of a sustainable rural development model that can be broadly applied. 
imagen agua peru nature
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The Nature Conservancy protects and restores upstream forests that clean and maintain steady flows of water for downstream users.

With local communities, governments and industries, in 2011 we launched Peru's first Water Fund in Lima, AQUAFONDO, a model watershed protection program that is funded by large water users' investments in upstream ecosystems.

  • The Lima Water Fund protects the water supply of 9.8 million Peruvians.

Salinas-Aguada Blanca Natural Reserve is located in the northwest part of the Arequipa Region in Peru and centered around the Salinas salt lagoon. The lagoon is 4000m above sea level and has abundant wildlife.
PLACE_HOLDER Above, the Salinas-Aguada Blanca Natural Reserve is located in the northwest part of the Arequipa Region in Peru and centered around the Salinas salt lagoon. The lagoon is 4000m above sea level and has abundant wildlife. The land surrounding the lake is grazed by large numbers of alpacas and llamas. © PLACE_HOLDER

In Peru, water fees never included the cost of conserving upstream watersheds that regulate water supply and water quantity- until June of 2015!

  • In 2015, with the help of TNC, Peru adopted a breakthrough policy that allocates a portion of water tariffs to watershed protection. For Lima, this means investing 1% of revenue on green infrastructure, and 3.5% in climate change adaptation and risk abatement- around $25 million in the next five years.
  • In 2016, Lima's water utility company (SEDAPAL) and Peru's first Water Fund (AQUAFONDO), launched by TNC, signed an agreement to design conservation projects for the Lima watershed. This historic agreement is a huge milestone for TNC's water protection strategy, and sets a precedent for how water tariffs can finance conservation throughout Latin America.

A young boy paddles his dugout canoe to school on the Yarapa River, a tributary of the Amazon in northeastern Peru.
PLACE_HOLDER Above, a young boy practices fishing on the Yarapa River, a tributary of the Amazon in northeastern Peru. © PLACE_HOLDER

TNC is galvanizing actions among governments, policymakers, corporations, communities and the general public to ensure the adoption of sustainable development models that can be applied broadly.