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Douglas Southgate Ohio State University

______________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006.

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Douglas Southgate Ohio State University

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  1. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Analysis required for Payments for Watershed Environmental Services Bridging Project Report Douglas Southgate Ohio State University

  2. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Original Proposal Contingent-valuation (CV) estimation of: • the benefits of conserving the Paquiestancia watershed, which supplies Cayambe, Ecuador (near the national capital) with much of its potable water and • the costs of conserving that same watershed – including payments to small farmers who reduce agricultural land use in hydrologically sensitive areas.

  3. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Abandonment of Benefit Estimation Cayambe appears to have the least-subsidized prices for potable water in the entire country. To win public acceptance of this reform, the mayor recently promised a ten-year freeze on price-adjustments. The mayor, who supports the idea of payments for environmental services (PES), has been a valued partner in this project. He asked us not to carry out a CV survey of water consumers in Cayambe, as was needed for benefit estimation, for fear of raising doubts about his promise. We agreed.

  4. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Cost Estimation • Ecuador’s indigenous movement, like its counterparts in neighboring countries, opposes any and all measures that hint at water privatization. As far as many in the movement are concerned, PES is one such measure. • Paquiestancia is an indigenous community and, when new leaders took office in late 2005, our field research was suspended, pending an explanation from Ecuadorian investigators. A satisfactory explanation was provided, although this delayed our schedule for data collection and analysis.

  5. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Tentative Results A household’s willingness to accept conservation payments in exchange for reducing the area it farms depends both on the size of those payments and the strategies it employs to raise living standards and contain income-variability. • For example, agriculturally dependent households are more willing than others to accept fixed annual payments for withdrawing a hectare from production; this is because this production tends to be highly variable. • In contrast, households with more diversified income sources are less interested in such payments, perhaps because maintaining access to agricultural land is a way to cope with the variability of non-agricultural earnings.

  6. Probit Estimates of WTA/Hectare Reduced Function

  7. ____________________________________________________________________________________________________________________________________________________________________________ Annual Meeting Blacksburg, Virginia 18-20 April 2006 Spillovers of Bridging Project forHost-Country Counterpart Fundación Antisana, an environmental NGO working to conserve parks and reserves in the Cordillera del Condor (east of Quito), is facilitating the implementation of PES in Cayambe, Baeza, and other communities using two SANREM products. • In-country capacity for CV estimation of the benefits and costs of watershed management. • Legal assessment of PES, financed by Bridging Project.

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