FORAGUA — Regional Water Fund of Southern Ecuador

FORAGUA (Fondo Regional del Agua del Sur) is a regional water conservation trust fund established in 2008 in southern Ecuador, initially by five municipalities in Loja province and expanded to 14 municipalities across Loja, Azuay, El Oro, and Zamora-Chinchipe. Unlike Ecuador's pioneering FONAG (Quito, 1998), FORAGUA is the first inter-municipal water fund in the country where diverse local governments, regardless of economic size, jointly finance conservation of a shared hydrological basin.
The PES mechanism collects small surcharges on municipal water tariffs, channelled into a protected endowment trust managed by FORAGUA's board of water utility representatives and conservation NGOs. Annual disbursements — approximately US$388,651/year on average — pay for upstream landowner conservation agreements, restoration activities, technical assistance, and watershed monitoring. The Nature Conservancy (TNC) and the Inter-American Development Bank (IDB) have provided technical and financial co-support.
By 2021, FORAGUA's 14 member municipalities had placed 337,000 hectares of cloud forest and high-altitude páramo under formal conservation and sustainable-use ordinances, and completed 1,500 ha of active restoration. The fund serves approximately 500,000 residents in cities including Loja, Catamayo, and Puyango, securing potable water supply and reducing downstream treatment costs. Peer-reviewed research published in WitPress conference proceedings documents the fund's institutional evolution and PES outcomes.
The 2030 expansion plan targets 39 municipalities, 600,000 ha of protected watershed, and over one million beneficiaries. FORAGUA fills the gap between Ecuador's national Socio Bosque programme and individual city water funds like FONAG, demonstrating that inter-municipal pooling of modest tariff revenues can sustain landscape-scale PES in a middle-income developing country.

Read the full analysis: https://www.ecosystemmarketplace.com/articles/first-person-how-11-ecuadorian-cities-pooled-their-resources-to-support-their-watershed/