i
FINANCIAL MECHANISMS FOR WATER CONSERVATION AND THE
SURROUNDING DEBATES ABOUT PAYMENTS FOR ECOSYSTEM
SERVICES: AN ANALYSIS OF QUITO’S WATER FUND
by
Maria Jose Viteri Campuzano
(1311463)
2014
The dissertation is submitted as part of the Master of Arts degree in Evironment and
Development at King’s College London
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KING’S COLLEGE LONDON
UNIVERSITY OF LONDON
DEPARTMENT OF GEOGRAPHY
MA/MSc DISSERTATION
I, Maria Jose Viteri Campuzano hereby declare (a) that this
Dissertation is my own original work and that all source
material used is acknowledged therein; (b) that it has been
specially prepared for a degree of the University of London;
and (c) that it does not contain any material that has been or
will be submitted to the Examiners of this or any other
university, or any material that has been or will be
submitted for any other examination.
This Dissertation is 11060 words.
Signed: …………………………………….…………….
Date: …………………...………………………………
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ABSTRACT
Quito is among the nation's most populated areas that get their water supply structure from
the high plateaus of the Andean Mountains. Even though in great condition, this water does
not appreciate boundless or perpetual accessibility - it needs security. FONAG is the first
water fund created in Quito, and still is a working project. It is undeniable that in their
indicators, the watershed has been effectively preserved. However, there are still strong
difficulties, usually consequence of a market system, such as: poverty, and power and social
inequality. Also, there is a problem with representativeness from local groups, which makes
social exclusion a big limitation. The fund works with end users and resource providers in a
geographic area that spans the basin High Quality of Guayllabamba River in inter-Andean,
and the upper reaches of Oyacachi, Papallacta and Antisana. The difficulty FONAG support
for water users means that efforts have focused on the contributions of the largest users.
However, this also results in the concentration of power in decision-making and the right to
vote EMAAP-Q and EEQ.
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TABLE OF CONTENTS
ABSTRACT ............................................................................................................................ iii
TABLE OF CONTENTS ....................................................................................................... iv
TABLE OF FIGURES ............................................................................................................ vi
TABLE OF TABLES ............................................................................................................. vii
ACKNOWLEDGEMENTS ................................................................................................ viii
CHAPTER 1: INTRODUCTION ........................................................................................... 1
1.1 Background of the Study ............................................................................................... 2
1.1.1 Quito’s Water Fund Background ............................................................................... 4
1.1.2 Stakeholders of Quito’s Watershed ............................................................................ 6
1.2 Aim & Objectives of the Research ................................................................................ 6
CHAPTER 2: LITERATURE REVIEW .............................................................................. 8
2.1 Ecuadorian Legal Framework ...................................................................................... 8
2.1.1 Constitution and Sumak Kawsay (Good Living): the new environment and
development paradigm adopted in the Ecuadorian Constitution ........................................ 8
2.1.2 Legal and political context of water management in Ecuador ................................... 9
2.2 Incentives in the Natural Resources ............................................................................ 10
2.2.1 Sustainability in the Context of Natural Resources ................................................. 12
2.3 Payments for Ecosystem Services (PES) and Commodification Process ................ 15
2.4 Marx Ecology (and Engels) .......................................................................................... 17
2.5 Eco-Marxist approach .................................................................................................. 17
2.5.1 Economic Hegemony ............................................................................................... 18
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2.6 Political Ecology ............................................................................................................ 23
2.6.1 Deep Ecology ........................................................................................................... 24
2.6.2 Neo-colonialism ....................................................................................................... 25
CHAPTER 3: METHODOLOGY ....................................................................................... 28
3.1 Epistemology .................................................................................................................. 28
3.2 Research Methodology ................................................................................................... 28
3.3 Research Ethics ............................................................................................................... 30
CHAPTER 4: ANALYSIS AND DISCUSSION ................................................................. 32
4.1 Ecuadorian legal framework and FONAG ..................................................................... 32
4.2 FONAG as Payments for Ecosystem Services ............................................................... 33
4.3 Political Ecology for Quito Watershed ........................................................................... 36
CHAPTER 5: CONCLUSION.............................................................................................. 43
REFERENCES ....................................................................................................................... 45
APPENDIXES ........................................................................................................................ 53
APPENDIX 1....................................................................................................................... 53
APPENDIX 2....................................................................................................................... 53
APPENDIX 3....................................................................................................................... 55
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TABLE OF FIGURES
Figure 1: Life Cycle of Policy ........................................................................................ 11
Figure 2: Hierarchy of Power ......................................................................................... 22
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TABLE OF TABLES
Table 1: Initial Capital for FONAG’s Creation ................................................................ 4
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ACKNOWLEDGEMENTS
To my family and friends who through much love and support have helped me face this new
challenge.
To my supervisor Daanish Mustafa for encourage me to think outside the box.
To SENESCYT for financing the program.
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ABBREVIATIONS
Abbreviation Meaning
FONAG Fondo para la proteccion del agua
EMAAP-Q Empresa Municipal de Agua y Alcantarillado Publica - Quito
EEQ Empresa Electrica de Quito
NGO Non Governmental Organization
PES Payments for Ecosystem Services
TNC The Nature Conservancy
GTZ Deutsche Gesellschaft für Technische Zusammenarbeit
USAID United States Agency for International Development
SDC Swiss Development Corporation
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CHAPTER 1: INTRODUCTION
Jean Baptiste Say once said “the wind which turns our mills [...] and even the
heat of the sun, work for us; but happily no one has yet been able to say, the wind
and the sun are mine, and the service which they render must be paid for” (1829, p.
250). Since the beginnings of the economic conception of ecosystems and services
they generate to society, they have experimented fundamental changes (Gomez-
Bagguentum, 2011). The world faces a multidimensional crisis, economic, social,
ecological, and cultural where ecosystem services are not perceived as free public
gifts anymore; currently, there is a trend of incorporate them into a market system
through different financial mechanisms.
Ecuador, like many other countries, deals with environmental issues. Water
related problems are amongst the most sensitive ones especially in big cities. The
capital of the country, Quito, grapples with problems of water in quantity and quality
and the inability of keeping the supply for human consumption and irrigation
demands (SENAGUA, 2009). Consequently, some of the solutions set to cope with
the problem are related to financial mechanisms for watershed conservation.
Certainly, financing nature conservation under regular Payments for Ecosystems
System (PES) schemes has been largely contested.
However, some Ecuadorian and international NGOs and projects argue that
they have developed, over the last two decades, a new innovative, decentralized and
voluntary mechanism for watershed management: water trust funds. With these
characteristics in mind and after the incorporation of lessons from the early PES1
mechanisms, emerged FONAG (Quito’s Water Protection Fund), an innovative
mechanism capable of integrate water governance with conservation of watersheds,
1 Payments for Ecosystem Services
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thus improving the common practice of a PES due to include: public-private
partnerships in water funds, lowering transaction costs and provide long-term integral
watershed management (Goldman-Benner et. al, 2012; Kauffman, 2014).
In the following document, I will analyse the mechanism of water funds
through the lens of Political Ecology to understand if this innovative mechanism
allows people to have better living conditions whilst contributing to actual watershed
conservation. The purpose is to contribute to the academic debate on the matter by
establishing a framework and incentivizing further and deeper academic research on
PES and alternatives. Furthermore, to allow a constructive dialogue among different
proposals based on cultures and diverse views and promote reciprocity and back
feeding between all positions.
1.1 Background of the Study
Quito has a population of over 2.5 million. It is located in an Andean valley
2,800 meters above sea level (INEC, 2010). In total, the city consumes about 7 m3 of
water per second. A municipal public company, the Metropolitan Sewage and
Drinking Water (EMAAP-Q), distributes drinking water to more than 260,000
households. Consumption is expected to increase by 50% by 2025 (Southgate, 2001),
which will increase the pressure on water resources. At the same time, funding to
increase supply is scarce. An estimated 30% of consumption is not charged if water
rates are achieved receivable cover the costs of maintaining the distribution network,
much less reach to expand efforts to protect the watershed. Currently the municipality
and the central government have to subsidize the needs drinking water.
According Pourrut (1995), the basin has three types of climate: tropical
temperate semiarid; semi-wet and dry along the middle basin mesothermal; equatorial
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high mountain the eastern and western ranges. The variation in temperature ranges
from 24 ° C to 1,000 m, up less than 8 ° C, about 5,890 m in the Cotopaxi volcano.
The range of average annual rainfall is of 500-1700 mm (De Bievre et al., 2008). The
water resources that supply the needs of the population in the Upper Guayllabamba
come from transfers, surface water and groundwater- lines. Aquifers in Quito have
been gradually closed due to deteriorating wells and the economic and operational
advantages to supply potable water from surface water.
According to De Bievre and Coello (2008), the distribution of water demand
in the basin is for irrigation (49%), drinking water (22%), industry (20%) and
hydroelectricity (9%). Some of these needs are covered by transfers from the upper
reaches of the Amazon Andes: for drinking water (63%) and irrigation (0.21%). The
main basins where water is transferred to the Guayllabamba basin are high Oyacachi,
Papallacta and Antisana, where reservations are located Cayambe-Coca ecological
and Antisana. These, together with the Cotopaxi National Park and four protected
areas make up the Condor Biosphere Reserve, which is one of the most important
projects of conservation and sustainable use of Ecuador.
The goal is to establish FONAG integrated management of water resources in
the watersheds form their workplace. Management includes promoting the
strengthening and improvement of the application of national policies to override the
resource management sector, characterized by low governance. The actions
implemented should support clear and accurate information in the biophysical
performance of the basin and the socio-economic dynamics of its people. The
organizational scheme FONAG consists of a Board, a Secretariat-Technical and a
Technical Advisory Committee.
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The board is composed of one representative from each institution constituent
of the trust, who are managed with fairness and equality in participation and
decisions, however, the chair of the board is reserved for the senior partner, EMAAP-
Q. To support the ongoing work of the FONAG, the board appointed a technical
advisory committee composed for their technical representatives. Finally, the
Technical Secretariat is responsible for the administration of background; this
secretariat has an almost horizontal structure, divided between the technical secretary
and coordinators program.
1.1.1 Quito’s Water Fund Background
Effectively, the FONAG has come to be based on a value defined by each
participant as the entity's willingness-to-pay for the protection of the water resource:
EMAAP-Q with 1% of sales and EEQ with a set $45,000 a year contribution. It is
important to keep in mind that this case is a "work in progress". No projects have
been implemented yet, so results are still limited. The key result is that the fund has
been created and it is up and running, with one new member, the electrical utility, on
board, as shown in the following table:
Table 1: Initial Capital for FONAG’s Creation
Contribution to Fund
Payments starting
date Amount contributed
EMAAP-Q
Seed capital: $15,000
1% drinking water sales January, 2000 $305,000
TNC Seed capital: $1,000 $1,000
EEQ $45,000 per year September, 2001 $45,000
Source: (Pagiola, Bishop & Landell-Mills, 2002)
This amount of capitalization at the beginning was not sufficient to implement
activities. However, the expectation was that by the end of 2001 the fund should have
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closed to $450,000 due to an increase in EMAAP-Q sales and financial returns. This
would allow for some level of interest to implement a small project in the beginning
of 2002 (Pugh & Sarmiento, 2004).
The Nature Conservancy worked to develop FONAG’s institutional capacity
and strengthen community support. In this regard, FONAG permanently is making
efforts to look for alternatives, including a possible debt swap, user fees and transfer
of tax revenues for the Municipality of Quito. Currently, there are two other big
financiers CAMAREN and Tesalia Springs (Anonymous, 2014).
The fact that the Fund only uses the interest generated means that growth is
slow and that investment will also be slow. Yet, this is an advantage, because the
project can be learning and expanding its range of action over time, as it grows. And
this is where most watershed conservation efforts have failed. The money is available
for the initial years and when the project ends, there is no continuity (Moropoulou
et.al, 2003). A mechanism such as the FONAG complements other conservation
efforts underway. By involving the water users, those that benefit from the resource,
there is the expectation that the effort will continue for the long-term.
Watershed protection is a multi-stakeholder process with long-term goals. For
TNC, biodiversity conservation is the ultimate goal. For Condor, where a water-based
financial mechanism was created during one of the country's worst financial crisis, the
FONAG is seen as an effort that will take time to bear fruit. Experiences such as this
are few throughout the world, and the difficulties may be many (Echavarria, 2002).
The important message is that organizations involved, whether they are an
international or local NGO, a local government or business, have to give their
commitment for the long-term. The creation of the Fund guarantees a long-term
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institutional mechanism to pull together multi-stakeholder participation to leverage
the conservation of the Condor Bio-reserve.
1.1.2 Stakeholders of Quito’s Watershed
In order to design the mechanism, it is important to know which direct water
uses are involved. The Condor bio-reserve is the source of more than 20 rivers that
can be grouped in 6 large watersheds that provide water for the following uses:
Urban and rural drinking water (EMMAP-Q and communities)
Small and large-scale agricultural irrigation (commercial flower producers,
communities, etc.)
Small and large-scale electricity generation
Recreational uses such as fishing and hot springs
Additional users such as aquaculture, navigational, etc.
Each of these uses still needs to be studied in order to identify the
organization, individual or community involved. The amount of the current and future
water use must be determined as well as each organization's aims and projects, its
culture and its strengths and weaknesses. In addition, there are a series of actors that
do not directly use the water resource but have a stake in the resource whether
politically, legally or socially.
1.2 Aim & Objectives of the Research
The aim of this research is to evaluate the financial mechanism for Watershed
Conservation and analyse it under the lens of political ecology; specifically focused
on the financial mechanisms for Quito water conservation fund and the surrounding
debates about payments for ecosystem services.
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To highlight the ecosystem payment for Quito waterfund and its relation with
the National Legal Framework
To evaluate the impact of the political influence on the Quito waterfund and
its relation with communities and local people, through political ecology
To explain the problem, the global and regional water problem highlighting
how limited and threatened the water resource is, and evaluate if this financial
mechanism has a real impact on actual conservation and improving people’s
lives
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CHAPTER 2: LITERATURE REVIEW
This chapter provides the theoretical context needed to develop the questions
and to meet the objectives of the research. It basically covers Ecuador’s Legal
Framework for the development of financial mechanisms of watershed conservation;
and the basic theories of political ecology for analysing purposes. In this regard, this
review will focus on identifying the relevant aspects related to the establishment of
water funds for watershed conservation and the outcomes of the project. The proposed
approach of analysis for the water fund project through the political ecology lens will
allow a comprehensive understanding of the relation of this mechanism, effective
conservation and living conditions of people along the watershed.
2.1 Ecuadorian Legal Framework
2.1.1 Constitution and Sumak Kawsay (Good Living): the new environment and
development paradigm adopted in the Ecuadorian Constitution
Back in 2008, Ecuador adopted a new National Constitution where for the first
time in history Nature Rights were recognised. Furthermore, one of the main
objectives of the new Constitution was: to put an end to the classic neoliberal system,
responsible for leading Ecuador through several bad socio-economical crises (El
Universo, 2012). It establishes, as the main leading principle, that “We, the people of
Ecuador, hereby decide to build up a new form of public coexistence in diversity and
in harmony with nature, to achieve a fulfilled life, Sumak Kawsay” (Constitution of
Ecuador, 2008, p. 1). In this sense, it has been clearly stated that the new Ecuadorian
Constitution abandones the classic narrow views of development, exclusively based
on economic growth and instead, sets human beings as main priority in the process of
achieving Sumak Kawsay, or well living (SENPLADES, 2009). The concept of
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Sumak Kawsay is founded on the idea of a harmonic life among citizens, within
communities, with themselves, with their mates and with their surroundings and
nature (Acosta, 2013). It means that in Ecuador a new development paradigm must
emerge, one that merges development and environmental aspirations.
This new vision of development is different from the development vision of
classical and neoclassical economics, where market beliefs are the ones that determine
concept of development; the idea of the liberals about market is based on believing
that high per capita incomes and economic growth are essential for upkeeping
sustainable development as well as human welfare (Clapp and Dauvergne, 2011).
After the adoption of nature rights, the perspective is the maintenance of its
evolutionary processes, functions, vital cycles, and structure, (Constitution of
Ecuador, 2008), always highlighting the relation with people, communities and
indigenous nations. Furthermore is recognised as a strategic sector where the State has
the control. Consequently, the logic of a liberal market is not acceptable, because the
use of resources and nature protection does not depend on the forces of the market but
rather relies on State priorities.
2.1.2 Legal and political context of water management in Ecuador
Communities in Ecuador play a very important role in systems for water
consumption and irrigation, especially in rural areas (FONAG, 2014). The 2008
Constitution establishes that water management is exclusively public or
communitarian; also, it sets State responsibility of supporting community
management and public-community alliances. However, there always have been gaps
in the law. The Organic Code for Land Management, Autonomy and Decentralization
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(COOTAD) designates water management competences to Local Governments and
the recently approved water resources law forbids any type of water privatization.
2.2 Incentives in the Natural Resources
Degradation of the environment occurs when a resource is exploited beyond
the ecosystem’s means of replenishing it. This reflects a disequilibrium between the
demand for a natural resource and its supply, which in turn denotes lack of resource
management expertise in the decision making process governing its use. It also points
out that there is insufficient information on the resource resulting in its inappropriate
valuation. With insufficient information resource managers, farmers and society
cannot place a proper value on the resource making for inappropriate use.
When incentives to promote sustainable resource management are designed
from a single disciplinary perspective, or within the context of a single sector of the
economy, they may be ineffective or even counterproductive. As Schneider and
Ingram (1997) state, "Public policy serves multiple roles in a democratic society: It
must solve problems as emphasized by the policy scientists; it must support
democratic values and institutions with rules and ethics through which communities
can engage in collective action for the common good; it must reflect and respond to
the mobilization and exercise of political power as emphasized by the pluralists; and it
must engage, enlighten, and emancipate citizens and serve justice as the critical
theorists contend. None of these perspectives, alone, is adequate to address the crisis
of policy and confidence in politics we now experience. Each must be considered as
part of a larger causal model."
Governments establish natural resource policies to recognize or change human
behaviour and its impact on the natural resource base and environmental quality.
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Frequently, policies are implemented to change behaviour that are perceived as
detrimental to the common good or to specific sectors affecting the common good. It
is important to understand that policy formulation is a never ending cycle. Today’s
solution will be tomorrow’s problem (Figure 1.1). As new information reaches
stakeholders, new groups have access to the decision making process, or as values
change, solutions that once seemed appropriate become obsolete. The policy cycle is a
normal process that is distinct from the issue of policy failure.
Figure 1: Life Cycle of Policy
In the interests of effective public policies with respect to natural resources,
policy makers are being directed to increase their reliance on incentive mechanisms
targeted at a broad spectrum of stakeholders, and to decrease their reliance on
command and control approaches (Tietenberg, 1993). Policy failure can be classified
as procedural or instrumental. Procedural failure often derives from the lack of a
sufficiently broad-based approach to policy formulation. Instrumental failure, on the
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other hand, refers to the result of an incorrect choice of the instrument of change (e.g.,
misspecified or inappropriate incentives). Procedural and instrumental failure are
often linked, with the latter being a consequence of the former. Inappropriately
designed incentives may actually motivate stakeholders to adopt behaviours very
different from those desired. This is especially likely when resources are not properly
valued by either markets or policy analysts.
2.2.1 Sustainability in the Context of Natural Resources
The stewardship of their natural resource base by a community reflects their
understanding of the importance of that resource base to their well being (Vosti and
Reardon 1994), and the signals they receive (e.g., through legislation, taxation,
subsidies) with respect to appropriate use and access. Poorly formulated signals can
impose unwarranted hardships and lead to the misuse of resources, as those affected
attempt to compensate by utilizing the resource base in a non-sustainable manner.
2.2.1.1 Land Tenure
One situation leading to misuse of natural resources is lack of secure land
tenure. A number of studies have shown that insecure tenure does not provide the
correct signals for sustainable husbandry of the land, and can lead to rapid
deforestation and soil erosion (Palmer and Synnott 1992, Rivas 1996, World Bank
1997a).
2.2.1.2 Access to Credit
Forest clearing in the Brazilian Amazon was the condition set forth in a
policy whose objective was to expand the frontier (Mahar, 1989). In Quito, Ecuador
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Government failure (through strict forest legislation which was unenforceable due to a
weak forest institution and lack of a clear land tenure situation) has effectively
reduced the original forest cover to 2 percent of the countries’ total area. Land tenure
is defined as the bundle of rights and obligations associated with access to and use of
land. Land tenure security refers to the extent to which these rules are binding. It
involves a combination of objective and subjective factors that affect an individual’s
assessment of the likelihood of maintaining his/her access to land. Access to credit is
a major limiting factor in the adoption of conservation practices that involve a change
in technology. The literature indicates that lifting this barrier can have a positive
effect on natural resource management, although access to credit is certainly not
equivalent to conservation (Cabezas 1998, Ledec 1992, McDowell 1998).
2.2.1.3 Education
A lack of education can also be an important stumbling block for the adoption
of sustainable resource management practices. Farmers with higher levels of
education have been shown to be more likely to adopt new environmentally friendly
technologies and practices (USAID 1996). Traditional farming practices are harder to
break away from when an individual has had little exposure to formal or non-formal
education. Education has the effect of expanding participants’ horizons, exposing
them to new concepts and practices. From an incentive perspective, education often
plays an important supporting role in the adoption of sustainable practices by farmers
and resource users.
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2.2.1.4 Access to Appropriate Technology
Appropriate technology is generally identifiable for specific agricultural and
natural resources situations (USAID, 1996a). The limiting factors for adoption of
appropriate technology are usually access to credit and information. Getting
appropriate technology to the right people is a critical task for any government
searching for a sustainable development path.
2.2.1.5 Transportation (access to markets)
Appropriate means of transportation (roads and vehicles) provide access not
only to markets, but also to health care, education and culture on a year round basis.
While providing many benefits to communities, transportation often also has the
dubious distinction of removing a principal barrier to higher rates of deforestation.
2.2.1.6 Poverty Alleviation
A number of authors have looked at the expansion of the frontier and the
reasons that people engage in environmentally deleterious practices. These authors
seem to agree that poverty drives people to resource frontiers and influences their
resource use patterns once they arrive (Cunha and Sawyer 1991, Pingali 1991,
Schneider et al. 1993, Vosti 1997). Relieving their poverty, and simultaneously
addressing environmental concerns will require new combinations of technologies,
policies, institutional arrangements and public participation - all of which shape the
incentives faced by households (Vosti 1997).
There have been fewer analyses of resource degradation in countries without a
large land base for expansion such as Quito, Ecuador. Countries that have already
reached the far comers of their borders no longer have the option of offering new land
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to offset the pressures created by internal migration and population expansion, and are
therefore in many ways worse off (USAID, 1996). Resources that are already in
scarce supply simply come under even more pressure.
2.3 Payments for Ecosystem Services (PES) and Commodification Process
The concept of sustainable development has become the centre of economic,
scientific, and even social disciplines, and it is mainly under the concept of Ecosystem
Services. For instance: forests provide protection to watersheds and they do not need a
societal cost for water creation or purification whatsoever. The values for ecosystem
services are calculated basically obtaining the cost of providing the service and
maintenance of facilities (Rojas and Aylward, 2003). The valuation exists as a way to
generate revenues, money from ecosystems, assuming that if it does not have a value
the forest would get cut down. In addition, in order to this idea to succeed a market
must be created. The idea behind it is the internalization of environmental costs of
capitalist production into economic calculations (Escobar, 2008). That is how PES are
calculated.
During the time of their implementation, PES have risen big expectations in
the transition to a less natural resources predator Economy which allows reconciling
conservation whilst improving indigenous and peasant communities lives (Gomez-
Baggethun, 2011). However, under current conditions PES does not only offer few
possibilities of acting as efficient mechanisms for wealth distribution but also can act
as a powerful vector of Westernization of conservation and of ecosystem
commodification. Firstly, the logic of PES responds more to the very worldview of
Western urban society than to the traditionally held by indigenous and peasant
communities to which these schemes are mainly directed (Gomez-Baggenthum,
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2010). PES promotion in the global South, from developed countries and from
international credit institutions, incorporates logic of conservation specific to their
market societies.
Its application can be especially disruptive in rural and indigenous
communities, where the utilitarian conceptions of nature, and private property of land,
often collide with the indigenous conception of reciprocity between human and nature
that still persists in greater or lesser extent within these communities. For instance: the
World Bank has promoted in Asia, land market in poverty areas. This situation has led
to the erosion of ancient systems of communal property (Toro, 2012). The idea of
extending private property to new ecosystems could end centuries of tradition and
equilibrium. In this sense, International Institutions (including ecologist NGOs)
promoting PES in the global south, as conservation and development mechanisms, act
as a new vector of westernization of cultures, to enhance the reproduction of specific
ideological and institutional structures of the market society.
Secondly, once PES is adopted, they imply that ecological functions become
commodities thus can be bought and sold in the market. This concept coined by
Gomez-Baggenthum: in reference to the absorption by the market of nature goods and
services, to inference of traditional goods have been neither produced by humans nor
intended for sale in the market (Gomez-Baggenthum, 2011). Once nature services
have transmuted into commodities, this functions are incorporated to capital
accumulation processes and they placed to the economic growth. From this optic PES
can become as a new way of accumulation by dispossession through market
appropriation of subsistence ecological means.
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2.4 Marx Ecology (and Engels)
In Marx’s manuscripts back in 1948 Marx manifests that humanity lives and
dies with nature. We are nature, and nature lives within us. If nature dies, we die.
From the mid 60’s of the XX century we face a growing tendency of caring about the
environment and its problems. These are the years of development of modern
environmental movements from the Rome Club, Stockholm, the Oil Crisis, and the
antinuclear demonstrations in the 70’s; everywhere, big industrial catastrophes help
build consciousness.
Definitely, it is just another recognition of what is already known, modern
societies are ecosystem dependent; as Ramon Fernandez Duran (2010) “human beings
are interdependent and ecodependent: the Homo economicus competitive and
independent of others and of nature is an absolute fiction” (Fernandez, 2010, p. 15).
An adequate approach should be socio-ecological. It is not possible to split society
and nature: human societies cannot escape entirely from their natural determinations,
nor nature is, since a long time, other than a humanised nature (Tanuro, 2011).
Therefore, the ecological crisis is a sociological crisis. What is failing is not nature, is
the society. “The ecological crisis and the social crisis are one and the same crisis: the
crisis of the capitalist system” (Tanuro, 2010, p. 168).
2.5 Eco-Marxist approach
The social ecosystem approach is not that apart from the eco-socialist
approach or the eco-Marxist approach; where the interrelations between population,
environment, productive sources and social organization provide explanations for
most of the dramatic environmental changes. Marx and Engels identified correctly the
emergence of class relations en the dialectic among nature and humanity, where
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dominant groups use to slave subordinated groups in order to expand their productive
capacity. From this perspective the ecological challenge lower or subordinated classes
face is, precisely, subvert the individualistic and alienating logic of the capital, the
commodity fetishism, in order to eradicate the objectification of the subject and
nature.
From this view it is consciously assumed that productive forces are not
neutral: they are capitalists in its dynamic and operation, therefore they are destroyers
of people’s health and of the environment. It is not just a relation of production and
property relations but the structure of productive forces. Marx thought of that logic:
workers cannot appropriate the bourgeois state apparatus and use it to the service of
the proletariat; it is not possible, because the bourgeois state will never be at workers
service. Thus, in order for it to change, it is about destroying that state and developing
other kind of power. A radical change for preserving the life in our planet; a social,
democratic and communitarian change (Tanuro, 2011).
This change should look for ending with the valuation of value, located
precisely in the private property of production means and the commodification of the
social and natural world, which is better expressed in a private and authoritarian
management of society and nature.
2.5.1 Economic Hegemony
“Native Americans from a very early date occupied the institutional position
of Other, as essentially different from their observers (Spanish), whereas the
descendants of black Africans have been located much more ambiguously, as both
inside and outside the society of their masters and observers” (Wade, 1997, p. 3).
History have discriminated Native American peoples. Being a Native American was
19
cultural, rather than a natural characteristic, therefore, a racial denomination. These
groups have experienced different ethnic and racial identities; and treated as marginal
groups with different roles in the nation, and forms of state control over them (Toro,
2012).
There are other factors and limitations of discussion such as gender that I will
not discuss in this document. Sundberg suggests that ethnicity/race and the
environment in Latin America was multi-leveled: “not only did` the colonial legal
system divide people into racial categories, it also defined their differing rights and
responsibilities accordingly, including what jobs they were eligible for, whether or not
they could pursue formal education, where they could live, and whether or not they
had access to natural resources” (Sundberg, 2008, P. 571). From colony times, there
has been a division among race and ethnicity. Each of these groups was considered
suited for a particular job.
At the beginning of 19th
century, after several generations of Spanish
descendants born in America, a process called as ‘mestizaje’2 begun and a landscape
of racial and ethnic heterogeneity was a possibility. However, “the type of mixedness
invoked was often biased towards whitening... and the process itself could be seen as
a progressive ‘whitening’ of the population” (Wade, 1997, p. 32). These racial and
ethnical categories are still present in Latin America (Toro, 2012).
Currently, the access and control of natural resources has been contested from
development and environmental perspectives. Even the same conservation
movements must be analysed critically. It turns out is not that outrageous to say that
protection of land and resources are coded by class, ethnicity or race. Furthermore, a
post-structural political ecology overview about the discourse of democracy and
2 Process where races of Spanish and Native American mix.
20
conservation is necessary. Often is very popular in Ecuador but mostly supported by
nation’s conformity to what economic development means for developed countries.
As stated before, it seems that there is a trend of commmodifying the natural world
into an economic market.
Environmental services have become one of the principal ways of
commodifying nature; the justification behind it is to internalize the externalities.
Consequently, the idea of an economic valuation for conservation rather than the
extraction for the use of resources is growing as the most sustainable way of resource
management, turning it into a profitable activity. Problems with environmental
degradation have a deep connection with capitalism and the ‘western’ capitalist
economy.
Reviews of development in the literature offer a historical perspective from
mercantilism to the current neoliberal model. Richard Peet attempts for explaining
reasons of how the world splits into two “the developed world” and the
underdeveloped (Peet, 1999). A neo-Marxist approach focuses on the dependency of
the relationships in terms of the geographical localization of economic power. As
such, the developed countries are enabled by destruction of the global south, through
control over their resources. This dependency theory is based on the fact that the
Global South exports cheap goods to the Global North and in return it gets expensive
goods. Also, most of big business and multinationals are in hands of the global north,
therefore small businesses in the global south tend to be only branches of
multinationals and become totally dependent of them. This theory have been
contested by saying that is too simplistic for analysing development as just part of the
dichotomy of industrialized or traditional means and sectors of production; however,
it is a good way to understand global power dynamics.
21
In a Post-structuralist perspective, current scholars have began to think about
disparities in power at global level, starting from the very definition of development
Driven by the necessity of explaining economic disparities, ‘Western’ policy makers
have used NGOs like the UN to achieve a global development equal for all nations.
Basically, the goals are set under the standards of the prosperous and developed
countries (Escobar, 1995). It means that they are principally measured by
accumulation of capital; translated also into “industrialization, urbanization,
agricultural modernization, infrastructure, increased provision of social services, and
high level of literacy” (Escobar, 1995, p. 38). The countries that do not meet these
goals are considered as underdeveloped, therefore, in need of international
intervention. There is an imagined need of helping poor nations through institutions
such as: World Bank, International Monetary Fund, United Nations agencies. That
way, the control over the funds of the developed world is not seen as unequal power,
instead, is legitimised by the hegemonic discourse of development.
In his book Territories of Difference (2008), Escobar refers to the control over
resources, at a global scale, where the ‘white privilege’ prevails. It is important to say
that this does not have anything to do with the phenotype of people; it refers to a
world dominated for a Eurocentric view: “a way of life that worldwide has
historically privileged white peoples and the expense of non-European and colored
peoples; this is global coloniality at its most material” (Escobar, 2008, p. 20). In this
context, neo-colonialism within this document refers to the legacy of economic and
cultural power, currently present in local communities of the Global south.
In the Global South is common to find stratification based on class, race or
ethnicity, is the result of the colonial influences. In this case, the “whiter” would be
the powerful authorities. Often, the power lies on this authorities and allow the nation
22
or state to rule in favour of the dominant social groups and left aside minority groups.
Likewise, Global North has a major influence on the ways of pursuing economic and
social development in the Global South. Consequently, at a local and community level
every policy or governance strategy follows international models, mostly because
these groups do not have any political power. History has shown that attempts of
autonomy or power of minority groups often is significantly limited (Figure 2):
Figure 2: Hierarchy of Power
Local communities are shown at the bottom of this pyramid of world power
model; disempowered even when they represent the majority of world’s population.
The Global North, with the lesser population, has the highest power; whereas the
Nation-State stays in the middle dealing with international pressures of developing at
economic and political Global North demands and giving less attention to local
communities. Source: Toro, V. 2012.
23
Currently, Ecuador is part of conservation market-based schemes wave. As a
reflection of spaces that developed countries and NGO’s want to see: democracy,
homogeneity and stability. This imaginary adds elements to international concern for
conservation and underdevelopment (Toro, 2012).
2.6 Political Ecology
Political ecology applies Marxist theory to ecology. Under this conception,
social inequality is perceived as a class struggle where “the bourgeoisie” (dominant
class) controls all means of production at the expense of “the proletariat” (lower
class). Consequently, the control over economic resources is a political move that
results in power and class disparities (Escobar, 2008). Where Marxists theory
understands, at economic level, that social conflicts are result of unequal distribution
of wealth, political ecology understands social conflicts interconnected with natural
resources distribution.
It also acts as a framework for questioning the role of market and politics,
institutions, state and environmental problems. Is in this sense that political ecology
has opened the understanding of issues over natural resources from a new perspective;
as concerned by environmental degradation, it arises from the social/power struggle,
associated with poor land use policies, either for agriculture or for conservation.
However, political ecology also has received many critiques, arguing that it has not
explored enough socio-economic differences between local, state and international
actors (Escobar, 2008). In 2002, Campbell characterizes a post-structural ecology
where discourse and knowledge becomes the centre of power and inequality analyses.
Hence, discourse is used as a political tool where powerful groups are
dominant. Likewise Escobar (1998) applies this post-structural theory to critic the
24
concept of “biodiversity” frequently employed for legitimizing conservation
measures. Escobar says that even when biodiversity contains “concrete biophysical
referents.. it anchors a discourse that articulates a new relation between nature and
society in global context of science, cultures and economies” (1998, p. 55).
Furthermore, this discourse about biodiversity conservation is almost a luxury of the
scientists and the “environmentally conscious”. In consequence, it can underestimate
the ways of life of rural people and some ethnic and racial minorities; and
highlighting a nature apart from people.
However, Arturo Escobar, in 2008, has taken this as a framework for
proposing a new term “political ecology of difference”, in his book “Territories of
Difference: plan, movement, life, redes”, referring to a post-structuralist political
ecology. Under this Foucauldian perspective, environmental conflicts arise from “the
relative power, or powerlessness, accorded to various knowledges and cultural
practices” (Escobar, 2008, p. 14). The unfair knowledge-power relations are a result
of cultural differences where “western” thought and politics are taking the upper
hand, “ecological, economic, and cultural distribution conflicts are intimately
intertwined” (Escobar, 2008, p. 13).
2.6.1 Deep Ecology
Martinez-Alier and Guha make an analysis of the term deep ecology, which
basically argues that the environmental movement must shift its perspective and
become biocentric instead of anthropocentric. Preserving nature according to the deep
ecologists brings benefits not only for current human kind but for future generations.
A second characteristic of deep ecology is its approach to preserve unspoilt nature and
restoration of degraded areas into the most pristine conditions. This approach follows
25
the biocentric perspective; basically it states that plants, animals, and nature itself
have intrinsic value and the right to exist.
Deep ecology, have been suggested, has been practiced by ancient eastern
religions and now the ones who practice it, share the belief that they are at the
political vanguard of world environmentalism. It is worthy to say that the transition
from the arrogant anthropocentric view, in almost all traditions, should be welcome;
the problem relies on the radical conclusions of some groups that say that it is
primordial to preserve biotic integrity rather than satisfy human needs (Guha and
Martinez-Alier, 1997). Evidently, this approach shows little understanding of the
problems the world is facing: overconsumption by the developed world and by the
urban elites of the underdeveloped world, and the militarisation (arms race and
nuclear annihilation).
None of these causes has any connection with a biocentric or with the
anthropocentric philosophies. However, irrelevant, sometimes the emphasis on
wilderness is dangerous, when applied to the ‘third world’ (Martinez-Alier, 1997). It
sets aside poor people from areas where they have usually developed their lives in
order to preserve elements of nature the ‘first world’ considers important or of value.
2.6.2 Neo-colonialism
Many definitions of sustainable development, basically the one adopted by
NGOs, has shifted the discourse from the paradigm of development, of making the
underdeveloped nations into developed nations, to a discourse where the ‘first world’
lead the ‘third world’ towards a sustainable development. The principle is based on
the focus of internalizing environmental concerns into economic models.
26
However, this does not necessarily implies the restructure of western
economic models, specifically of Western neoliberal economics; instead there is a
continuous infiltration of the Western economic dominant view in the ecological
issues. “Discourses do not replace each other completely but build upon each other as
layers that can be only partly separated. The sustainable development: basic needs,
population, resources, technology, institutional cooperation, food security, and
industrialism are all found in the Bruntland report, reconfigured, and reshuffled”
(Escobar, 1995, p. 195).
Guha and Martinez Alier found in the Bruntland report a disturbing statement
about how poverty is the main cause of environmental degradation. Even more
difficult to understand is why all the incentives for conservation set aside poor people
and they are the main affected by any market based measure to preserve nature such
as PES (mentioned above). These kinds of incentives support a national agenda and
usually are internationally funded. International institutions donate money just for
specific purposes, aligned with their institutional mission, that way funding stays
concentrated in certain ecological regions.
The term neo-colonialism refers to any interference: religious, economic,
political, and cultural practices in the affairs of developing countries, or ex-colonial
territories. Simply, it switches tactics of imperialisms claiming of providing
independence to its former subjects by ‘aiding’ for their development through
international organisations (Nkrumah, 1965).
In recent years, the term has taken a huge significance especially by activists
of developing countries against big international climate or environmental
negotiations. President Evo Morales, from Bolivia, has stated that green economy is a
new way of submission from capitalist governments, where life natural sources are
27
commodified and become prey of the relentless laws of market. The developed
countries seem to be trying to eliminate developing countries’ sovereignty over
natural resources through financial mechanisms as they interfere with national
policies (Morales, 2012).
28
CHAPTER 3: METHODOLOGY
3.1 Epistemology
Based on philosophy; epistemology is a realm mostly concerned about the
nature of knowledge, its limitations and the origin of the sources (Kleim, 2005);
basically, it focuses on the comprehension of issues related to the circulation
understanding, and dissemination of knowledge and information (Steup, 2005). For
this research the methodological currents will be focused on: naturalism. It states that
the real world exists by its own and it is independent of the human experience of it;
thus humanity gains knowledge out of that world by recording their experiences lived
in it (Moses and Knutsen, 2007). This methodology is based on the observation and
description of nature patterns, and their hypothesis can be empirically proved;
therefore, knowledge is created through fact accumulation and it become the
foundation of law. According to this current, sciences should be objective and free of
value (Bryman, 2012).
On the contrary, but also important to understand for this analysis the current
of constructivism in modern social science uses a different approach; it assumes and
recognises that each person has a particular view of the world, and that those views
are determined by contextual influences or presuppositions and a mix of social
encounters (Moses and Knusten, 2007). This is the reason why elements like politics
and money cannot be fully understood because it relies on interpretations of different
social actors.
3.2 Research Methodology
Literature indicates that qualitative methods enable an inductive approach to
study relationships between theory and research (Bryman, 2012). In this sense,
29
qualitative research relies on constructivist approach of epistemology, basically
because it highlights the social understanding of the world and nature and how
people’s ideas and beliefs are shaped (Dezin and Lincoln, 1994). A quantitative
research would be based on a positivist epistemology, meaning that it tries to test
theories based on observing interactions in societies as an external observer (Bryman,
2012). In order to meet the aims and objectives of the research, the approach for this
dissertation will be qualitative, principally because this work intends to understand the
FONAG project and how it is or not related or contested by theories and debates
surrounding payments for ecosystem services schemes. Therefore it is important to
understand the construction of these theories as a dynamic process where on social
actors and political elements interact.
For trying to clear doubts on the research and fulfil the objectives of this
dissertation, there are methods that could be useful:
Discourse Analysis: The objective is to understand how the knowledge or
truth has been constructed through spoken and written language. It mainly focuses on
socio-psychological characteristics of who developed the discourse, what are the
intentions, but it does not pay attention on the textual content (Gee, 1999).
Document Analysis: With this method the objective is to gain understanding,
elicit knowledge and develop knowledge (Bowen, 2009). The reviewing and
evaluation of documents is made systematically to sort information. In order to
develop a good understanding, discover new insights and meanings about the
research, it is important to have documents of all types; this provides relevance to the
research problem (Merriam, 1998). Although it is important to point out that these
documentation is created with specific objectives, and not just for a research purpose;
30
in fact they are related with an agenda, but they are not reactive, meaning that the
presence of the researcher does not affect the content (Bowen, 2009).
All of these methods have their uses because they allow analysing
perspectives, different people of the project and citizens, peasants and from other
institutions (Phillips and Jogersen, 2002). However the information gathered through
documents needs to be enhanced and validated with additional information for
analysis and discussion; consequently, in order to do that six interviews will be held
to people from different backgrounds: who have worked or know the situation of the
FONAG program, its influence area, and of the institutions that have worked or have
been somehow related to FONAG’s project.
The main objective of this is to improve and validate the information, as well
as covering possible information gaps. The qualitative method for this research
corresponds to semi-structure interviews. It is important to be consequent to the other
methods so this one is correspondent to the epistemological tradition of
constructivism, basically because it permits exploring emergent ideas to support
knowledge construction (Hockey et. al., 2013). The main characteristics of this kind
of interviews is that they are flexible; therefore they offer a fluid process where the
interviewer and the interviewee interact during the time they talk, also it allows to
explore different topics and different depths of those topics (Mason, 2004).
3.3 Research Ethics
This dissertation topic was chosen based on a well-intentioned approach and
trying provide the most of benefits from the research in order to make it an attractive
topic, and to encourage further analysis and discussion. There is no possibility of any
psychological, economic, or social harm, to any person or entity involved while
31
conducting the research. Also, ethical considerations and parameters have been
followed strictly throughout all the dissertation: respect, confidentiality, voluntary
participation, and anonymity have been the guidelines and foundations of the entire
research. It is also worth mentioning that any kind of bias has been avoided.
32
CHAPTER 4: ANALYSIS AND DISCUSSION
4.1 Ecuadorian legal framework and FONAG
In 2008 with the approval of the new Constitution the Ecuadorian and the new
water resources law, it seemed like FONAG was going to have problems because the
national legal framework emphasises water as a strategic resource, not susceptible of
ownership and management is only as public and communitarian. However, after an
extensive analysis it turns out that FONAG is running under approach of the legal
national framework.
The concept of water management used in the law is understood in the field of
supply services (Benitez, 2014). It is not part of the management of water
conservation activities or mechanisms to protect water sources; this is the key factor
for water funds. Water funds do not supply water as such, instead they work
protecting and restoring ecosystems that regulate the quality and quantity of water
(Saenz, 2014). The FONAG is conceived by TNC and their partners as an entity that
only works for water conservation, it has nothing to do with water supply.
Hence, it is unlikely to speak of water resources privatization because the fund
works for conservation purposes. Malki Saenz (2014), also have argued that FONAG
has not any conflicts about environmental services; all of FONAG’s decisions are
taken by the stakeholders, who are mainly public stakeholders: public enterprises and
municipality. There is a number of private funding but these are also designated to the
activities biggest stakeholders consider more important. There is another aspect of the
recent approved law that FONAG considers as a support for its activities.
The water resources law incorporates several areas in water pricing, including
the environmental component. This constitutes a nod to conservation and restoration
33
of water sources through funding mechanisms that support the actors responsible for
water management (Water National Authority and Local Decentralised
Governments). However, it is inconsistent with national guiding principles. As stated
in the literature review and in the first part of the discussion, the Ecuadorian law
forbids any kind of water resource privatization. By allowing more financial
mechanisms to manage public goods, some privatization is implicit. Every big
decision will be in the hands of ‘technocrats’ (Lowy, 2011); whereas these decisions
should be taken democratically, from the societal objectives and needs of the
population covered by the same national plans. Water is a fundamental right, the law
acknowledges it, so it should be available to everybody, by pricing it automatically it
is exlusive for those who can afford it. In a eco-socialist society all decisions must be
democratic (Lowy, 2011). Therefore the establishment of any mechanism should be
made after a true representation and active participation of all groups involved.
4.2 FONAG as Payments for Ecosystem Services
FONAG is a non-decreasing endowment fund which can receive money from
the government, private organizations and NGOs (FONAG, 2001). An independent
finance manager invests the funds and returns on investments are used for watershed
protection. The endowment fund is not depleted. The logic of using only the financial
returns is to ensure the availability of resources in the future. FONAG is governed by
a contract that states the terms of the fund, its institutional structure and resource
purposes.
The fund's objective is to gather payments from water users and channel these
funds to activities of watershed protection (FONAG, 2001). To achieve its objective,
FONAG is managed by a board of directors and overseen by a technical secretariat to
34
review its financial performance and ensures the implementation of projects. After an
open tender was selected Link Funds, part of a particular bank socially responsible as
CFO FONAG. The technical secretariat checks how CFO distributes investment and
sends periodic reports to the board of directors. Currently being developed regulations
to establish project management procedures and project areas to be financed.
In fact, having a structure with an open government, which aims to encourage
broad participation of all stakeholders, is particularly important because the payments
water users make are volunteers and the success depends on there being a willingness
to pay. To encourage participation, all contributing money to the fund can become
board members, either individually or elect a representative in the case of a small
group of users in an irrigation system. To ensure commitment, donors must sign the
contract of the fund. The power of the vote depends on the amount of resources
contributed to the fund.
Although it is a voluntary mechanism, has made an effort to establish a
common approach to determine the amount to be provided by users. Ideally, the
amount paid into the fund should reflect the value of water for domestic use.
However, due to missing information on the value of water, it has been suggested that
a more practical option is to encourage water users who rely heavily on water
resources for their business, pay a percentage of their monthly sales.
FONAG received initial funding EMAAP-Q and The Nature Conservancy.
With regard to establishing a sustained flow of funds, is committed FONAG two
major water users: the EMMAP-Q and EEQ. In January 2000, the EMMAP-Q agreed
to pay 1% per month from sales of drinking water, making an average of $ 14,000 a
month. The decision to pay contributions from their income because it was believed
that the creation of a fee to users was not feasible was noted. However, when taking
35
into account the inadequacy of existing income, the expectation is that an additional
fee will be instituted in the future. The EEQ council also agreed to pay a fixed U.S. $
45,000 a year from September 2001 rate. To the last days of August 2001, the U.S.
had received FONAG $ 301.700.
Financial returns FONAG to date are overshadowed by the fast deterioration
in the global economic scene. Since 1998, Ecuador has one of the worst economic and
financial crises. As a result, revenues from investments FONAG, all placed in the
country, have averaged 7.6%, well below expectations (FONAG, 2001).
The activities implementation begun on the second half of 2002 after FONAG
accumulated enough resources. According FONAG rules, resources can be applied in
the project areas identified environmental education, communication, water
monitoring, productive alternatives. FONAG expected channel resources through
independent private and public organizations that meet a defined set of criteria, such
as a track record in the area to which the proposed project (for three to five years),
good relations with communities, institutional credibility and linking their proposal
with the business plans of reserves.
Although a cost analysis was not performed - benefit FONAG hopes to
provide powerful benefits. First, FONAG intended to protect the quantity and quality
of drinking water, household electricity use and the inhabitants of Quito. In particular,
it is likely that investment in the maintenance of water balance reduces current and
future costs of maintaining the water supply and electricity infrastructure, in addition
to investment costs in the future (Southgate, 2001). Although no estimates of how
much maintenance costs and reduced investment, the EMAP-Q feels confident
enough to think of a project to increase water $ 600 million, and thus enhance the
supply for 2016-2050.
36
Given the importance of domestic water consumption in total consumption, it
is reasonable EMAAP-Q which has the predominance. But the fact that two users
control the flow of water revenue FONAG is not only disturbing because it exposes
FONAG to changes in the willingness to pay of the two organizations, but also
because it gives these institutions a key role in FONAG government (Saenz, 2014).
EMAAP-Q, as the largest user of water, has enough power to impose their will and
their interests may differ from those of other users. For example, EMAAP-Q requires
large amounts of high quality water, which could result in denying access to other
users or limit their activities.
The hierarchy of power is also reflected in this situation. Communities of the
watershed almost completely disempowered, not only communities who don’t belong
to the metropolitan area of Quito, but from other cities that share the watershed as
well. In some areas where there are water catchments there is a big resistance against
FONAG, because it almost represent completely to the EMAAP-Q, the very public
enterprise who catches water that born in their territories to provide the big city;
leaving the locals with less access to the resource (Anonymous, 2014) supplying to
the big city whereas peasants receive less attention and sovereignty over their
resources and needs.
4.3 Political Ecology for Quito Watershed
FONAG is a budget financial mechanism established to operate for eighty
years as permanent and stable. The endowment allows you to use yields for co-
financing activities of conservation and protection of water sources that supply the
needs of Metropolitan District of Quito. Thus, it is intended to achieve goals and long-
range and ensure positive and lasting impacts on the conservation of water sources.
37
The fund works with end users and resource providers in a geographic area that spans
the basin High Quality of Guayllabamba River in inter-Andean, and the upper reaches
of Oyacachi, Papallacta and Antisana.
The difficulty FONAG support for water users means that efforts have focused
on the contributions of the largest users. However, this also results in the
concentration of power in decision-making and the right to vote EMAAP-Q and EEQ.
While it is important that those who pay say on how to spend the resources FONAG
(as this gives them a greater incentive for their contributions), there is a risk that the
interests of the poorest groups are not taken into account. Ecuador applies policies to
make pricing more transparent water and to eliminate subsidies in stages, particularly
for irrigation and drinking water. In 1998, the profits of the Q-EMAAP covered only
54% of their costs (Southgate, 2001). Although the company increases its prices
gradually to reflect the operational and administrative costs, to date does not take
account of watershed management.
However, this needs to change to the extent that the EMAAP-Q increase
payments for watershed protection and derive these costs to their customers. A survey
of water users in Quito reveals their willingness to pay higher fees (Corporación
OIKOS, 2002). However, this information or any information about FONAG,
whatsoever is not available to everybody in the city. FONAG has concentrated its
efforts to educate people in the countryside, where the peasants and local
communities live. They have taught them how to ‘improve’ their lifestyles, and
change their common productive practices into something more ‘environmentally
friendly’; whereas in Quito, almost nobody make an effort to change their ways
(Mancheno, 2014).
38
The signing of the indenture, the constituents formed an equity seed capital
U.S. $ 21,000, and the Q-EMAAP pledged to contribute 1% of their monthly billing
sheets of water and wastewater. During the first three years FONAG designed and
implemented an investment model in order to achieve the best return on capital. This
model considered three key variables: safety, yield and liquidity. From the third year
they began the first planning, institutional organization and socialization.
At present, and with the contributions of new members, the equity capital is
U.S. $ 4,451,000 (FONAG 2008b). The amount Total investments used by the Fund
in its programs and projects, 25% correspond to the yield and 75% to financial
contributions from donors and partners. Hence, activities and projects funded by that
25% of the investments are not necessarily priorities of the local people but rather
respond to donors demands. For instance one of the principal financer of projects has
been USAID. This agency has an agenda in several parts of the developing world. In
FONAG’s report to USAID for the period 2007-2014, they mentioned that water and
biodiversity are amongst USAID priorities rather than the ones of local people.
Consequently, they have supported three main areas: the commitment of water
users to conserve certain areas and ecosystem services, contribute to sustainability of
protected areas and, promotion of sustainable use of natural resources as alternative
productive activities for communities in the upper parts of the basin (Mancheno,
2014). As explained in the literature review, there is a tendency of developed
countries for guiding their way to ‘sustainable development’. Even more, aid agencies
and ecological movements are the ones promoting the idea that the poor are
endangering the environment, so they need ecological and financial ‘adjustments’ in
order to achieve ‘world’s’ conservation goals (Guha and Martinez-Alier, 1997).
39
It is worth to say that FONAG have found resistance to implement programs
in some places of the watershed, specially the sub-watershed of Pita River, a place
where a big amount of indigenous people from the Quitu-Cara and Cayambi cultures
live. The indigenous movement in this area is politically very active and they reject
any international intervention, especially from the US government; because they
perceive it as a way of resource appropriation (Anonymous, 2014), therefore, even
when the Ecuadorian state has banned the intervention of International Aid Agencies,
there are mechanisms that still are linked to North’s political and economic power,
and somehow can sway the economic, political and social structure. This kind of
power is part of what academia has denominated ‘neo-colonialism’ (Escobar, 2008;
Peet, 1999)
It is clear that the amount of procedures is not sufficient for the achievement
of objectives; therefore, in 2004, undertook FONAG a search strategy of investment
funds. To date, the administration has been effective and has enabled it to achieve
significant contributions from national and international donors, as well as
cooperation of local strategic partners. Collaboration helps to strengthen and reached
expansion of the Fund's objectives for management and management of water
resources and replication of experiences at national and regional level. Most of this
collaboration comes from the private sector.
The total investment amount is distributed as follows: 10% for administrative
costs and 90% for investment; of this amount, 80% goes to the implementation of
programs and projects 20%. The menu of financial services offered FONAG aims:
firstly, to donations investing in a second stage, specialized investment loans to local
authorities in formulate and implement projects in areas of interest related to the lines
of action of its programs. However, sometimes the work has its limitations due to
40
several factors, for instance: other smaller municipalities, which are also beneficiaries
of the ecosystem service, still do not have access to the same water conditions, as
Quito does (Anonymous, 2014).
The efficiency and effectiveness of investments are controlled and monitored
at different levels; and according to the accountability report, the areas effectively
conserved have improved according to FONAG’s indicators. For year 2013 numbers
show that there are 248900 new plants planted in the forests, 198 hectares of degraded
land recovered, 53 new hectares have been fenced to allow its natural recovery.
Additionally, FONAG with and Quinchucajas community plus USAIDs financial aid
has built a irrigation system that will beneficiate 105 families, also they are constantly
providing training to park rangers to support the work of Protected Areas (FONAG,
2013).
In terms of effective conservation FONAG is performing an outstanding job;
in fact its work has been an example in other places of the country and other countries
and the project is now being replicated, in each site with its own particularities. In
theory it seems like a great deal, however the impacts of the activities in the
watershed are, again, focused on the interests of the stakeholders. In the case of
FONAG, the social component is a little set aside, actually its aim is to assure water,
in quality and quantity to Quito and not focusing in support actions to alleviate
poverty or improve people’s lives (Saenz, 2014); there are no representatives of
communities in planning or management projects included, so basically the
participation of local people is minimal.
Consequently, the social power relations due to geography and economic
resources are manifested. The public water supply enterprise is who determines and
makes decisions over priorities to work and even the places where the fund should
41
intervene (Lopez, 2014). Sometimes places where the water catchments are people are
affected because they are left with less water for their own activities. This means that
the water supply is primarily to the urban and metropolitan area of Quito, and almost
nothing to the rural areas; and a conservation project that focuses its efforts only to
preserve nature and forget about people seem unethical (Mancheno, 2014;
Anonymous, 2014).
As Martinez-Alier and Guha in his book environmental of the poor say:
“diversity, sustainability and equity: these are the building blocks of the
environmental ethic in the making (...) an emerging philosophy called social ecology”
(Guha and Martinez-Alier, 1997; p.91). It is only fair to mention that in several stages
of FONAG the vision of Integrated Water Resources Management was being applied,
meaning that they worked in an effort to promote participation and integration of
communities from the upper watershed with the ones in the down side of the
watershed. They were applying an interesting mechanism for conflict resolution,
however, in the recent years, and under the pressure set by EMAAP-Q they have left
that activity aside, and now they are mainly focus on amount and quality of water for
the city and some big enterprises, such as: the national bottling company or the
national brewery which are project financers (Anonymous, 2014).
Several critiques imply that this kind of mechanisms implicitly incentive
privatization of water rights. According to them, the application of neo-liberal models
implemented on rural areas and policies supporting these do not tackle the root
problem: the different ways of economic, political and social exclusion, nor
acknowledge any cultural practice.
There is another issue with the strategy used by FONAG to collect the amount
the percentage of the 1% of the monthly bill of water users of Quito. The amount is
42
not visible in the monthly bill; in consequence, any of the citizens know they are not
aware of the work that is being done (Isch, 2004). Saenz (2014) considers this is not a
problem because who decides to provide the funding is not Quito’s population but the
EMAAP-Q, the public water supplier enterprise. However, if one of the activities of
the water fund is to create consciousness and awareness about the importance of water
and conservation of watersheds, as they do in the watershed, they should show it to
the people of the urban area as they do in upper areas of the watersheds.
43
CHAPTER 5: CONCLUSION
By means of conclusion, the main argument of these mechanisms of payments
for Ecosystem Services is to stop and revoke the continuous environmental
degradation of forests and soils process; it says that through flexible platforms of
negotiation of rights among groups of suppliers and beneficiaries it is possible to: stop
environmental degradation, assure urban supply and promote local sustainable
development. Under this logic, through these mechanisms it is expected that relentless
use of hydrological resources in urban zones and development sectors must be
beneficial for providers in the upper zones of the watersheds. Consequently,
impoverishment should, in theory, be gradually coped and the programs of rural
development, education and conservation would finally be a reality. Although, reality
have proved these mechanisms wrong.
FONAG is the first water fund created in Quito, and still is a working project.
It is undeniable that in their indicators, the watershed has been effectively preserved.
Actually they are trying to run models to show the real impact of this project by
setting different scenarios of how would the watershed be currently without the
presence of the fund (Benitez, 2014). Although, the result would be uncertain because
this work can only be made upon assumptions and it is very likely that without the
presence of the fund other kind of mechanisms would have appeared throughout time;
who knows, maybe even mechanisms proposed by local people applying and
respecting their views and traditions.
There are still strong difficulties, usually consequence of a market system,
such as: poverty, and power and social inequality. There is no clarity about what
territorial extension is part of the watershed, how do they developed and where to
apply any valuation model, or what method is used to negotiate. Also, there is a
44
problem with representativeness from local groups, which makes social exclusion a
big limitation. Even when FONAG’s aim is merely nature conservation, is
discouraging knowing that most of the priorities of the waterfund are developed to
meet donors demands rather than address social problems along the watershed.
One characteristic of water funds is the flexibility and the capability of
adaptation to different realities (Benitez, 2014), this is why the initiative is being
replicated in other parts of the world. There are other water funds in Ecuador, but
there is one specific fund in Tungurahua province, where groups of peasants and
indigenous peoples are part of the decision makers of the water fund, without
necessarily make financial contributions. The name is actually: Paramos and fight
against poverty fund, it would be interesting to see how they manage social conflicts
and if the limitations of FONAG are not applied; and also to see if the social
inequities and the environmental debt are finally copped and contested. However, this
would require further research.
Environmental services have become one of the principal ways of
commodifying nature; the justification behind it is to internalize the externalities.
Consequently, the idea of an economic valuation for conservation rather than the
extraction for the use of resources is growing as the most sustainable way of resource
management. However, this line of thought sets aside the relation of social problems
with environmental degradation, and does not recognise that they have a deep
connection with capitalism and the ‘western’ capitalist economy. The creation of a
market based solution to a market created problem points to Escobar’s criticism
of sustainable development is “that it continues the same market based mechanism
focused on the end goal of development, without questioning the problematic of
development or market based policies themselves” (Escobar, 2005, p. 53).
45
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APPENDIXES
APPENDIX 1: Geography Department’s Forms
Geography Research Ethics Screening Form
Geography Risk Assessment Form (Approved via email)
Ethical Approval Notification
54
APPENDIX 2: List of interviewees and interview questions
Malki Saenz Technical Secretary, FONAG
Silvia Benitez Replenishment Manager Water Security
Team Latina American Region, TNC
Carolina Mancheno Director of Water Monitoring, FONAG
Luisa Lopez Former Director of the Environmental
Education Program, FONAG
Anonymous Director of Conflict Resolution, FFLA
Interview questionnaire
1. Brief description of the project Quito’s Water Fund
2. What kind of contributions to communities, poverty reduction and the city does your
organization provide?
3. Describe the main challenges that the project has faced: economic, social, and
environmental…
4. How could those challenges be overcome?
5. What is the level of commitment and participation from the community? Is it different
among the communities?
6. Do you consider the financial mechanisms of the Quito water fund a payment for
ecosystem services?
7. What is your view of the financial monitoring systems for the project?
8. How do conflict resolution mechanisms of the project work?
9. To what extent is the project a top down formulations as opposed to a response to
demands from the community?
10. What is your view of the monitoring and evaluation systems for the project? How do
you define success in the long run in this case?
11. How would you respond to the criticism that inducting community’s life worlds into
the market system is morally and functionally wrong?
12. What do you think are the most valuable lessons and key aspects of the Fund that
make it so successful and an example for other funds development?