Payment for Ecosystem Services: Palampur in Himachal has a model in place

The first payment for eco-system services in India, which reduces water conflict by institutionalising a legal partnership structure, merits a study as Himalayan states seek green bonus

By Ashish Dash
Published: Tuesday 30 July 2019
The main Bohal spring collection tank. A concrete chamber that has an outlet for water to be collected by villagers was built by the Palampur Municipal Council (Photo: Ashish Dash / CSE)

“We have stopped cattle grazing in Bheerni Forest and now collect fodder for only 15 days a year,” says Anu Devi, an inhabitant of Mandai village above Palampur in Himachal Pradesh (HP). She takes pride in speaking of the authority the village women have to manage the forest, impose fines and receive an annual Rs 10,000 from the Palampur Municipal Council (PMC). 

The PMC has successfully managed the dwindling water source for the municipality, cut back substantially on high water treatment costs and is assured for the next 20 years of sourcing clean drinking water for its 15,000-plus population.

The first-ever payment for ecosystem services (PES) agreement in India between the Village Forest Development Society (VFDS) and the PMC has made this possible. Formalised in October 2010, it is a rural-urban engagement model for the sustainable supply of water and protection of the catchment area.

A large part of the country’s population is dependent for its livelihood on climate-sensitive sectors like agriculture and forestry. Any adverse impact on water availability threatens food security as well as causes the dieback of natural ecosystems, including species that sustain the livelihoods of rural households.

Palampur’s PES model is a step towards combating climate change impacts on water resources and can potentially be adapted for other natural resources. It has set a precedence for the country by institutionalising a partnership structure; it incentivises rural communities to protect catchment areas to meet the everincreasing urban demand for water, thereby reducing water conflicts.

The establishment of a commercial association in Palampur is significant in the Indian context, wherein most of the natural resource services for urban population are affected greatly by the action or inaction of their rural counterparts. PES has been able to address the issues of forest conservation and management, livelihood generation for local communities, resource conflict between rural and urban stakeholders and climate change adaptation. 

The background 

Water is one of the most important natural resources in HP. While the state is largely dependent on streams and springs for its drinking water, many of its urban areas have become water-stressed on account of over-extraction from mountain streams. Subsequently, water conflicts between the urban population and communities in upstream areas in the state have been on the rise. 

Palampur lies in the foothills of the Dhauladhar range and has historically had abundant water. In recent years, however, the weather in the region has been very erratic, with an overall declining trend in precipitation, RR Dhiman from the HP Eco-Development Society points out. He further explains that the weather and cultivation season mismatch evades the traditional knowledge of cultivators, and that global warming has resulted in early flowering in May-June (compared to July-August in the past) and blossom-drop, which reduces overall agricultural production. 

The average annual rainfall in Palampur has dropped from 2,800 millimetres in 1940 to 2,100 mm in 2010. Water discharge in springs and streams has declined over the past few decades owing to climate change in the Himalayan region as well as land-use changes, such as degradation of forests and mismanagement in upstream catchment areas. 

The PMC collects its water from four main sources: Bohal spring, Neugal river, Bagha Nala and groundwater pumped at various locations in the city. It caters to the drinking water requirement of nearly 5,000 residents and a daily floating population of 10,000 in Palampur. The water supply system connects to 852 domestic households, 168 commercial and 78 public enterprises.

However, water availability has been dwindling and the total water discharge from these sources over the past few decades has reduced substantially from 7-8 litre per second to about 3-4 litre per second. On account of changes in climatic conditions, urbanisation and increase in population, the PMC has been under great pressure to maintain both the quality and quantity of drinking water supply.

Water from the Neugal is supplied through a gravity-based system but it suffers from turbidity and bacterial contamination, leading to high filtration cost. Bagha Nala is used mostly during monsoons to avoid the heavy silt load in the Neugal, while the groundwater source has significant associated costs on account of pumping and taxes. 

Bohal spring is the oldest and purest source of drinking water. According to Ajit Bagla, ex-president of PMC, water at the Bohal source is cleaner than commercially available bottled water. However, a gradual reduction in the spring discharge meant that the supply was insufficient to meet the growing demand. The PMC realised that if steps were not taken to conserve and recharge Bohal spring, its climate change vulnerability would lead to the spring drying up permanently.

As gravity supply from Bohal meant no pumping cost, and a consequent comparative cost advantage, and good quality water even during the monsoon meant low filtration cost in comparison with other sources of water, it was in the interest of the PMC to ensure regeneration of the Bohal source. 

Although the land on which Bohal spring emerges was bought by PMC in 1952, the catchment area falls in Bheerni forest and is managed by the local community: The three nearby villages of Bandla Panchayat, Mandai, Bohal and Odi; the PMC had to engage with the local community to revive the Bohal source. 

Bheerni forest is categorised as a ‘protected forest’, formally under the ownership and control of the forest department (FD). It lies within the Bohal spring catchment area that extends over 286 hectare (ha). The forest is close to habitations and the local community uses it for grazing and fuel wood through the year, seasonally collecting fodder (leaf and grass).

The community comprises 60 households in Mandai, Bohal and Odi, with a population of 273 of the nomadic Gaddi caste. Their livelihood comprises animal rearing, marginal agriculture and migrant labour. While the FD has encouraged participatory forest management since the 1990s, most village-level agencies formed under donor-driven projects failed as soon as the project funding stopped. 

Women from the villages have organised themselves into a Mahila Mandal since 1999 to locally manage and protect the forests. The primary interest for the local community to engage with the PMC through the Palampur Water Governance Initiative (PWGI), however, was the possibility of establishing an institution that would give them the legal authority to manage and protect their forest.

The Mahila Mandal’s initiative and self-motivation also elicited the FD’s support in institutionalising it. This entity would also provide better opportunity to receive grants and aid for forest management, which would be an additional source of funds for the local community. 

The PWGI is a unique example of PES in India, where the receiver of an ecosystem service pays the community for the protection and conservation of a spring recharge area. Under the PWGI, PMC and VFDS, formed primarily from the Mahila Mandal, entered into an agreement on October 16, 2010. As per this 20-year agreement, PMC will pay Rs 10,000 annually1 to VFDS as PES for the protection and management of Bheerni forest. In return, the VFDS agreed to protect and conserve the catchment area of the Bohal spring (see: Highlights of the 20-year forest management plan).

Highlights of the 20-year forest management plan

  • Complete ban on grazing
  • Leaf-fodder extraction allowed for only 15 days a year in January. The forest is divided into two parts, one to remain closed and only one person per house to be allowed to extract in the other part. This will allow both forest parts to rejuvenate in tandem.
  • Grass-fodder extraction allowed for seven days a year at a time decided by VFDS. Only one person per house to be allowed.
  • Mandatory for one person per house to participate in forest protection work. Fine to be imposed on a per-day basis in case of non-participation.
  • Complete ban on extraction in the Bohal spring recharge zone.
  • Annual fee of Rs 100 to be paid by each household for implementation of 20-year Action Plan.
  • VFDS to select and appoint ‘rakha’ (guard) for forest protection.
  • Fine on grazing, theft of leaf and grass fodder, fuel wood and damage to the Bohal spring recharge zone.

Apart from the PMC, FD and VFDS, other stakeholders in the PWGI were the Irrigation and Public Health Department (IPH), Bandla Gram Panchayat and GIZ. IPH made a commitment to design a separate drinking water system from the regular water supply and was closely associated with the entire process, while members of the Gram Panchayat sensitised the people and supported the formation of the VFDS. The project initiative was by the GIZ and it acted as a facilitator.

The VFDS aims to manage the Bheerni forest region and protect the Bohal spring recharge zone. It was registered on October 1, 2010, under the Himachal Pradesh Societies Act 2006. Its executive committee comprises 11 members elected from the three villages (four from Odi, three each from Bohal and Mandai, and one ward member of the Gram Panchayat). All members except the ward member are, interestingly, women. 

The negotiation process 

All the stakeholders were brought on board to contribute as per their abilities to help protect the catchment and secure water supply. As in any project, PWGI had its share of challenges in implementing PES in Palampur that were addressed during the nine-month-long negotiation process. 

Villagers’ perspective 

Initially, many villagers were unfamiliar with the PES model and suspected payment for watershed services meant sale of forest and loss of community right over the forest. As the community is tribal, forests are part of their culture. The Mahila Mandal faced stiff opposition from the Youth Club of Bandla Panchayat.

The president of the VFDS, Anu Devi, narrates that members of the Mahila Mandal also had to tolerate heated arguments from the village men. Many villagers wanted to keep the forest open and were suspicious of external intervention and exploitation of forests by outsiders. Some shepherds also wanted to keep the area open for grazing. 

To familiarise the local community and PMC with an existing model of multifunctional forest management, an exposure visit to the Shimla Water Catchment Forest and Wildlife Sanctuary was organised. Dai Devi, chairperson of VFDS, says that this was her first trip outside her village and she was able to learn how forests could be managed for different purposes, including water requirements.

The visit significantly facilitated information sharing between PMC and Mahila Mandal members in an informal setting, and discussions were held with senior FD officials on a suitable institutional framework for upstream forest management. After the exposure visit, there were clear indications from PMC and the Mahila Mandal to collaborate for an agreement. 

The municipal council’s perspective 

PMC members were apprehensive of the new idea. Many argued against the need for paying villagers, since the PMC owned the land from which Bohal spring emerged. Ajit Bagla said: “PMC members failed to understand the principle linking spring water discharge with its catchment area, which lay in Bheerni forest.” Making new financial commitments in an already cash-strapped situation was also difficult for PMC and it was not open to the PES model. 

This was addressed, thanks to a scientific study by the Advanced Centre for Water Resources Development and Management (ACWADAM) in June-July 2010. A detailed hydro-geological assessment identified the main spring recharge zone for Bohal spring. After the study, members of PMC were convinced that the solution to secure the Bohal spring discharge lay in protecting and effectively managing the spring catchment area in Bheerni forest.

A payment for ecosystem services would further incentivise the local community to better manage the forest and protect the catchment area. VFDS and PMC have successfully collaborated for three years. “Water flow in the Bohal spring source has increased visibly,” says Balwant, a water supply worker with PMC.

The catchment area in Bheerni has become much denser and healthier compared to adjoining forest areas. The district forest officer, KK Gupta, adds that Bheerni forest has become so dense that even sunlight doesn’t penetrate to the ground. 

Natural resources are best managed by local communities when they have a sense of ownership, and the PES model has provided this platform for the people of Bandla Panchayat. Villagers report that owing to proper management and a good understanding, they are now able to collect the same quantity of fodder in fewer days. The hours saved in fodder and fuelwood collection allows them more time to engage in paid-labour activities. 

PWGI has created awareness amongst forest-dependent local communities on essential forest services beyond subsistence use and has supported the establishment of a system for the exploitation of forests based on a sound understanding of soil and water conservation measures. Undoubtedly, PES has been a win-win situation for all its stakeholders.

There is growing pressure across the country to address source sustainability issues in the context of dwindling water resources as well as climate change adaptation and mitigation. For the overall production and utilisation of a common resource with multiple uses, as water, the involvement of multiple participants, lack of community participation, and challenges of convergent planning and action by various stakeholders responsible for the production and utilisation add to the complexity of the issue.

PWGI is an invaluable model for establishing rural-urban and rural-rural linkages to secure future water supply. It can be used as a tool for combating climate change. 

Commonly observed and likely weather patterns in Himachal Pradesh

  • Warming, erratic rainfall and rainfall changes, floods
  • Changes in precipitation patterns
  • Likely shift in snowline, agriculture/horticulture line
  • Significant impacts on agriculture production, water resources, forests, natural wetlands
  • Increase in health risks; instances of malaria, jaundice and other water-borne diseases may break along riverbeds
  • Impacts likely to affect large percentage of population depending on natural resources
Source: Himachal Pradesh State Action Plan on Climate Change, 2012

Source: Palampur Municipal Council records, 2012
Source: Palampur Municipal Council records, 2012

This was first published in the 2014 book Rising to the Call

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