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Alternative financing in support of Waos watershed program

Payment for Ecosystem Services

Presented during the: Philippine Conference on Capturing Economic Benefits from Ecosystem Services 25 Aug. 2011; ADB Headquarters


ELVINO B. BALICAO, JR. Municipal Mayor Wao, Lanao del Sur, ARMM

Municipality of Wao, Lanao del Sur

Population: 42, 100 (NSO 2007) Diversed Cultures: Ilokano, Ilonggo, Cebuano, Maranao, Tausug, Waray, Tagalog, Ibatan, Batangueno, Boholano A post-christian-moro- conflict zone Land Area: 35,459 ha Forestlands: 19,819 ha Natural Forests: 12,412 ha Rate of natural forest loss: 4.6%

Situation Prior to PES

Declining water supply

Waos watershed feeds 5 river systems that irrigates 19,000 hectares of farmlands (in Wao & 5 nearby municipalities in Bukidnon, Cotabato & Lanao del Sur) One main source of water, the Diomel Spring, used to discharge 100 lps during rainy season; NOW its down to 15 lps

Main cause of declining water supply: Forest degradation

Illegal logging & kaingin
In 1998-2002 alone, Wao lost 2,000 has. of forest cover due to illegal logging and kaingin, causing water shortages during summer, and flash floods during rainy season. Some creeks historically with year-round water flow have gone dry during summer Waos watershed was mostly open access illegal occupants could just come in -- with no accountable & responsible tenure holder to help manage it

Initial attempts to solve Waos upland problem

Inventory of areas under cultivation Extensive tree planting activities in denuded watershed Establishment of a Municipal Nursery Local civil society actions against Timber Industries of the Philippines, Inc. logging operations in Wao


Lack of participation of stakeholders Fragmented approach in forest management Absence of well-defined Property Rights in uplands Absence of on-site management Lack of transparency Unclear accountability

Actions taken to address forest degradation

FOREST LAND USE PLANNING introduced in 2002 developed with assistance from USAIDs EcoGov project and DENR-ARMM; signed in October 2004 & identified 4 forestland allocations:
1. Protection Areas/Forest 2. Buffer Zone 3. Community-Based Forest Management Areas 4. Community Watershed
1 2 3 4

Actions taken to address forest degradation

Co-management of watershed - Following the completion of the FLUP that involved various stakeholders, a co-management agreement between Wao & DENR-ARMM was signed, giving the LGU a lead role in forest management
Signed in April 2006 Total area: 2,184 hectares With 329 HH settlers Water source of WWD Water source of WDC Affects flooding downstream Nursery establishment, rehabilitation and forest protection started in 2005

Actions taken to address forest degradation

Under co-management scheme, actual occupants in watershed awarded with Individual Property Rights (IPR) Certificates, a sub-agreement between the IPR holders and the LGU-Wao, providing them security of tenure over their claimed area and making them partners of the LGU in forest management.

Watershed Area- 2,184 hectares

Actions taken to address forest degradation

163 (almost half of upland settlers) were issued with IPR agreements; 240 hectares developed into agroforestry; IPR issuance ongoing Beneficiaries given training; such as in farm planning, operating a cooperative & law enforcement; also provided with seedlings (abaca, coffee and rubber, fruit trees) under a

plant-now-paylater scheme

Looking for alternative financing

Wao increased LGU investment on Forest Management - Php 1M / Yr from 2005 date, a 3rd class Municipality it could only provide For Wao to be able to provide continued support for the forest development efforts of IPR holders & sustain forest protection efforts, it had to encourage other stakeholders to give their share

PES as alternative financing scheme

In a roundtable discussion in Nov. 2009, stakeholders agreed to a PES scheme to sustain forest development program In Dec. 2009, forged MOA with Wao Water District to contribute P75,000/year In Aug. 2010, signed MOA with Unifrutti Philippines (P100,000/year contribution in cash or in kind) Also in Aug. 2010, signed MOA with Wao Truck Owners Association for a contribution of P10/truckload of agricultural products In March 2011, had MOA with Wao Development Corporation (P100,000/ year contribution in cash/in kind). Wao also established Mountain Spring Resort (50% of proceeds will be allocated for the Community Watershed Program)

PES contributions, expenditures

SOURCE WWD 2010 June 2011 Expenditures 75,000.00 75, 000.00 Rubber & coffee seedlings 100,000.00 Rubber & coffee clones 100,000.00 Rubber, fruit trees & cash & kind coffee Seedlings 43,600.00 Rubber & coffee clones 318,600.00


Unifrutti Phil. WUTOAI 7,940.00 Total 82,940.00

PES proceeds are placed in special account intended for environment programs. Disbursements are approved by Municipal Environment and Natural Resources Council, a multi-sector oversight & policy-making body set up in 2003 to help ensure sustainability of environment programs, regardless of whoever sits as Mayor of Wao.

Initial results, impacts

163 IPR agreements awarded to watershed settlers, forest management activities of these people are sustained with help from PES proceeds 240 hectares developed into agro-forestry that provide forest cover as well as livelihood to upland dwellers (who used to cut trees & engage in kaingin for a living) Soil & water conservation & biodiversity recovery is ensured through shift in farming system from pure corn to multiple crops with perennial crops of rubber, fruit trees and endemic wood species Carbon benefit: 8,952 tons of carbon/ year (about 41 ha. natural forests prevented from being destroyed each year avoiding annual release of 8,487 tons carbon stock and sequestering 45 tons of carbon every year; 100 ha. matured Improved Peace and Order as conflicts are avoided since upland dwellers now have equitable access to resources & today working together to protect the forest
plantations sequester about 420 tons carbon each year)

Lessons Learned

Forest stakeholders are willing to pay for environmental services if: - LGU leadership shows seriousness & political will to properly manage the forests - governance principles, such as transparency, accountability and participatory decision-making are observed in planning & implementation - stakeholders see where their contributions are going

Initial results, impacts 2010 Wao became GALING POOK Awardee in ARMM

2007 Wao declared as Learning Center for Environmental Management in Mindanao (among EcoGov-assisted LGUs)