New initiative will protect watersheds that supply water to 50 million people in Latin America and the Caribbean

The Nature Conservancy, FEMSA Foundation, the Inter-American Development Bankand the Global Environment Facility launch $27 million dollar partnershipto create Water Funds that will protect critical watersheds

Global business, financial, development and conservation leaders announced a new partnership that will protect threatened water resources across Latin America and the Caribbean or 50 million people.

During a kick-off ceremony hosted by Mexico’s Ambassador to the U.S., Arturo Sarukhan, The Nature Conservancy, FEMSA Foundation, Inter-American Development Bank (IDB), and Global Environment Facility (GEF) announced the $27 million Latin American Water Funds Partnership that will pledge to protect 7 million acres of watersheds in Ecuador, Colombia, Peru, Brazil, Mexico and other countries.

Grasslands, cloud forests, tropical rainforests and even deserts and dry forests provide the water that supports our lives. Such ecosystems capture, retain, filter and supply vast quantities of freshwater. In addition to providing drinking water for people, these places provide habitat to rich biological diversity across the globe.

But watersheds around the world face serious threats from pollution, development and climate change. As these natural resources are degraded or disappear, millions of people are at risk of disease and starvation due to lack of clean drinking water. Local economies are also threatened as businesses such as sugar cane growers or manufacturers cannot produce their goods without a sufficient supply of clean water.

In Latin America, more than 77 million people lack access to clean water, according to the United Nations.

“Water Funds offer a triple-win for businesses, communities and nature,” said Mark Tercek, president and CEO of The Nature Conservancy. “By investing in green infrastructure, such as forests and rivers, companies and water utilities can save money on the construction of gray infrastructure, such as water filtration systems. Communities benefit through the development of sustainable incomes and clean water supplies, and natural systems are protected to provide habitat for wildlife and deliver clean water.”

“A key ingredient of the partnership we are launching today is the commitment to bring world-class research and rigorous science to the Water Fund concept,” said IDB President Luis Alberto Moreno. “We will be choosing a small number of watersheds in which to test and perfect conservation techniques related to water quantity and quality. And only then will we implement a replication strategy that will enable a much larger number of cities and countries to adopt these techniques.”

A Water Fund is an innovative way to help pay for nature’s services and reinvest that money in conservation. Since a healthy watershed helps minimize water treatment costs, the funds attract voluntary contributions from large water users downstream, like water utilities, hydroelectric companies, or industries. Revenue from these investments is directed to preserve key lands upstream that filter and regulate the water supply, through activities such as reforestation, ecotourism and monitoring water flows. Water Funds also help create incentives for green economic opportunities that have a positive impact on local communities, like sustainable farming.

The Nature Conservancy began working in Water Funds in 2000, when it joined other partners in the public and private sectors to create the first Water Fund in Quito, Ecuador. The project began with an investment of just $21,000 dollars and grew to $10 million dollars in only a decade. Interest generated by the fund —around $900,000 dollars per year— is successfully invested in local conservation actions to protect watersheds and biodiversity. Today, five funds in Ecuador have helped protect more than 1.2 million acres and benefited more than 2 million water users downstream. Similar success stories are also taking place in Colombia and Brazil.

FEMSA Foundation, IDB and GEF have now joined the Conservancy in the world’s first initiative to engage the private and public sectors and civil society on Water Funds, sharing a common vision: to preserve healthy watersheds and help protect important water supplies in Latin America, with environmental conservation and sustainable growth as its core values.

The Latin American Water Funds Partnership comprises investments of over $27 million dollars that will create, implement, and capitalize at least 32 Water Funds in Latin America and the Caribbean. This will support the conservation ofmore than 7 million acres of watersheds that, in turn, could benefit up to 50 million people.

“It is the scale of the Partnership’s model that makes it so interesting,” said José Antonio Fernández, CEO of FEMSA and President of FEMSA Foundation’s Board. “We will bring benefits to millions of people in Brazil, Mexico, Colombia, and other Latin American countries in just five years. It is also a sound way of creating economic and social value at the same time, creating a legacy for future generations, which is at the core of our philosophy.”

Private companies and local utilities are investing in the Water Funds because they have done the financial math and seen that they are cost-effective mechanisms to ensure the water quality and water quantity they need for the products and services they provide their customers.

The partners hope that as more and more actors recognize the benefits of Water Funds, they can also commit to working in favor of water and watersheds in Latin America, for nature and people. The expectation is that this watersheds conservation model can be adapted and replicated in other regions of the world as a tool to address global challenges that can translate into water scarcity, such as climate change. Efforts are already underway in the United States, the Caribbean Islands and Africa.

The Partnership looks forward to the upcoming Rio+20 Earth Summit, just one year away, as an opportunity to scale up this innovative tool.