ESPH Procuencas Watershed Tariff Programme (Costa Rica)

Heredia, north of San Jose, draws its drinking water from forested upper watersheds vulnerable to conversion to pasture and agriculture. In 2000, its public utility ESPH (Empresa de Servicios Publicos de Heredia) became one of the first Latin American utilities to fund watershed protection directly through a dedicated water tariff rather than general taxation or donor grants.

ESPH added an environmental surcharge to household water bills (about US$0.01 per cubic metre in 2004, roughly US$0.02-0.03 per cubic metre in later years), channelled through its Procuencas programme to pay upstream landowners approximately US$120 per hectare per year to conserve or reforest their land. The payment level was calculated against the estimated US$165-per-hectare-per-year opportunity cost of cattle ranching, adjusted by a hydrological-importance correction factor for each parcel.

By the mid-to-late 2000s the programme had signed contracts covering between 1,191 and 1,900 hectares with 21-23 landowners, funded by roughly US$1 million in cumulative tariff revenue, of which about US$800,000 had been disbursed for conservation activities. It is frequently cited by the CBD, IIED, Ecosystem Marketplace and Costa Rica's central bank as an early, replicable model for tariff-financed sub-national watershed PES.

Most of the publicly available quantitative results date to the 2000s. More recent independent figures on current hectares, participant numbers or measured water-quality and dry-season-yield outcomes are scarce in the literature reviewed, so the programme's impact beyond its pilot-to-early-scale phase is not well documented outside ESPH's own materials.

Read the full analysis: https://www.bccr.fi.cr/en/economic-indicators/DocWaterAccount/Brief_ESPH.pdf