Rio Claro Water and Forest Producers Project — Guandu Watershed PES (Brazil)

Since 2008, Rio de Janeiro's Guandu river-basin PES programme has paid smallholders to conserve or restore riparian Atlantic Forest in the catchment feeding the Guandu River Treatment Station, which supplies roughly 90% of the water used by the city of Rio de Janeiro, serving approximately 9 million people. The Water and Forest Producers Program was launched by the Comitê Guandu river-basin committee together with The Nature Conservancy Brasil and is funded through bulk water-use tariffs paid by municipal and industrial water users. Under the flagship PAF Rio Claro sub-project, 67 producers enrolled to preserve 4,036 hectares of standing forest and restore a further 514 hectares.

The programme aims to protect the riparian Atlantic Forest that filters sediment and regulates flow into the reservoir system supplying Rio de Janeiro's water treatment station. A parallel, independently evaluated PES scheme within the programme pays upstream landowners for riparian restoration, soil conservation, or forest conservation, with payments of USD 6.25 to 31.25 per hectare per year rising alongside the share of riparian area kept intact, subject to a minimum of 15% riparian cover. A 2015 second phase, PAF Sacra Família, aimed to extend the model to the municipalities of Mendes, Vassouras and Engenheiro Paulo de Frontin, targeting a further 1,000 hectares of preservation and 50 hectares of restoration.

Under the PES scheme, 41 contracts were signed with 38 landowners (28 men, 9 women and one company), who received payments differentiated by practice type. PAF Sacra Família landowners received cash payments, for example R$47,000 paid to producers in Engenheiro Paulo de Frontin in 2021. Complementary riparian restoration in the same basin is carried out separately by water utility CEDAE's 'Replanting Life' programme and by hydropower company LIGHT, which reports reforesting 600 hectares since 1992.

A peer-reviewed evaluation published in the journal Forests (2019) found that only 489 hectares of interventions were achieved against a 1,258-hectare target (39%), broken down as 64.2 hectares of riparian restoration, 90.8 hectares of soil conservation and 187.4 hectares of forest conservation. Only USD 98,812 of available PES funds were disbursed, roughly 50% of the budget, against an estimated USD 600,000 spent by project partners on planning, implementation, communication and monitoring — a ratio of about 1:12 between direct landowner payments and overhead. The evaluation drew on administrative monitoring and contract data for a defined set of interventions rather than a randomised or matched comparison group.

The study's explicit conclusion was that 'having funds is not a guarantee of success,' citing landowner participation and institutional constraints as the main bottlenecks to achieving physical targets. It stressed that ongoing ecosystem-service monitoring, not just payment disbursement, is essential to demonstrate real conservation outcomes.