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Good practice Imported

Bakun Hydropower Payments for Environmental Services — Rewarding Upland Farmers for Watershed Protection

Philippines · Bakun · See the Philippines profile

Evidence: Descriptive / self-reported Top 89% 27/100 · Ask Evidence Copilot about this practice

Since the 1990s, hydropower plants on the Bakun River have rewarded upland farmers and villages in Benguet for reducing forest fires and maintaining slope terracing; researchers found reduced sedimentation but weak conditionality and no earmarked fund.

Details

Promoter
Hedcor, Inc. (hydropower operator) with Bakun local government units
Period
1993–2015
Keywords
hydropower, forestry, watershed management, upland agriculture

Context

Three Hedcor-operated hydropower plants on the Bakun River in Benguet Province, Cordillera region, commissioned between 1993 and the early 2000s, supply electricity to the Luzon grid. Increasing siltation, bank erosion and declining dry-season flow, driven by deforestation and unsustainable farming on the steep upland catchment, began to threaten plant operations, prompting the operator to engage upstream communities.

Activities

The resulting arrangement, documented in Philippine and international research as one of the country's earliest hydropower-linked payment-for-environmental-services cases, offers upland farmers and villages in Bakun non-cash and in-kind incentives: rewards for reducing the incidence of forest fires, support for continued terracing and riprapping of forest slopes, and assistance protecting private woodlots.

Results

A University of the Philippines CIDS discussion paper and a CIFOR-ICRAF book chapter on reward mechanisms for environmental services in Southeast Asia both report reduced sedimentation and improved dry-season water flow associated with the scheme, echoed in an earlier hydrology-focused study of PES applied to Philippine hydropower generation.

Conclusions

The same research is explicit about the scheme's limits: there is no earmarked payment fund, no verified monitoring linking specific payments to specific ecosystem outcomes, and the arrangement functions closer to informal corporate social responsibility than a conditional PES contract — a caution a 2026 regional review of PES mechanisms in Maritime Southeast Asia repeats when assessing the case's evidentiary strength.

Implementation
Indicative cost
Low (< €50k) — Non-cash and in-kind incentives (support for terracing/riprapping, fire-reduction rewards, woodlot-protection assistance) rather than a cash payment fund; no earmarked budget figure is reported.
Time to results
Long (> 3 years) — Hydropower plants were commissioned from 1993 to the early 2000s; the incentive arrangement is documented in research spanning to 2019/2022, with a 2026 regional review still referencing the case.
Staffing & skills
Hedcor, Inc. (hydropower operator), Bakun local government units, Upland farmers and villages

Conditions for success

  • Non-cash and in-kind incentives tied to concrete practices (fire-incidence reduction, terracing/riprapping maintenance, private woodlot protection)
  • Direct engagement between the private operator and upstream communities, motivated by the operational risk siltation posed to plant operations

Common failure modes

  • No earmarked payment fund exists
  • No verified monitoring links specific payments to specific ecosystem outcomes
  • Independent researchers, including a 2026 regional PES review, found the mechanism functions closer to informal corporate social responsibility than a conditional PES contract, limiting its credibility as a transferable model

Where it fits

Governance type
private hydropower operator plus local government units, informal community arrangement
Scale
single watershed/municipality (Bakun, Benguet)
Income level
lower-middle-income (Philippines)

Commonly funded by

Own resources / municipal budget

Indicative funding routes for practices of this type — always check each programme's current calls and eligibility rules.

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Data sources

Where this practice's information was retrieved from, and when.

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