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Good practice

Pimampiro Water Fund — One of the World's First Municipal Watershed PES Schemes (Ecuador)

Ecuador · Pimampiro · See the Ecuador profile

Since 2000, Pimampiro's municipal water fund has paid 27 upstream households US$8–12 per hectare per year to conserve 638 hectares of forest, financed by a 20% surcharge on 1,350 metered households' water bills — an early, widely-cited PES model.

27 households
Upstream households enrolled
638 hectares
Forest area under conservation contract
8 US$/ha/year
Payment rate — secondary forest
12 US$/ha/year
Payment rate — primary forest
20 %
Water-bill surcharge funding the scheme
1,350 households
Metered households paying the surcharge

Details

Maturity
Established
Promoter
Municipio de Pimampiro
Period
2000–present
Keywords
municipal water fund, forest conservation, watershed protection

Context

Following a 1999 drought that raised residents' willingness to pay for reliable water, the small Andean town of Pimampiro (Imbabura province, Ecuador) launched one of the world's first voluntary, decentralised municipal payment-for-environmental-services schemes in 2000 to protect the watershed supplying its drinking water.

Activities

The scheme pays 27 upstream households owning a combined 638 hectares of forest US$8 per hectare per year for maintaining mature secondary forest and US$12 per hectare per year for primary forest, conditional on conservation. Financing comes from a 20% surcharge on the water bills of 1,350 metered households in town, plus roughly US$500 per year in interest income from a dedicated environmental fund.

Results

The programme has been extensively studied by environmental economists, including a peer-reviewed comparison with Ecuador's national PROFAFOR afforestation programme, and is widely cited as an early proof-of-concept that helped shape the design of later Latin American water funds, including Quito's FONAG. A 2013 peer-reviewed follow-up study found the scheme's benefits were unevenly distributed, with better-off, larger landholders capturing a disproportionate share of payments relative to poorer smallholders.

Implementation
Indicative cost
Low (< €50k) — Total payments to 27 households across 638 ha at US$8-12/ha/year, funded by a 20% surcharge on 1,350 metered households' bills — a small municipal-scale budget, placing this in the low cost band.
Time to results
Long (> 3 years) — Running continuously since 2000, over 25 years — a long timeline band.
Staffing & skills
Municipio de Pimampiro (municipal government)

Conditions for success

  • post-drought willingness-to-pay among residents
  • dedicated water-bill surcharge providing a stable, ring-fenced financing stream
  • conditional payments tied to verified forest maintenance

Common failure modes

  • 2013 peer-reviewed study found better-off, larger landholders captured a disproportionate share of payments relative to poorer smallholders — an equity/governance limitation

Data sources

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

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