The World Bank/WBI’s CBNRM Initiative

Case Received: February 7, 1998

Author: Álvaro Fernández-González , Bruce Aylward

Tel/Fax: +506 282-8323

Email: guidofer@sol.racsa.co.cr

The 41,000 hectare Arenal watershed in northwestern Costa Rica has strategic importance at the national level, given the goods and services it actually produces, as well as its future potential. Due to the construction of a 9,300 hectare reservoir in 1980, Arenal presently generates 44% of the country's hydroelectricity, administrated by the state's electricity institute (ICE) as a nation-wide source during the dry season. The reservoir also generates the water supply for Costa Rica's main irrigation district in the very dry Guanacaste province; the district currently covers 6,000 hectares, and aims at 54,000 hectares more in subsequent phases: the largest such project in Central America. The Monteverde cloud forest preserve, in the upper Arenal watershed, is a world-known ecotourist attraction, and the area is a local source of innovative regional trends in community organization, agroindustry, reforestation, and conservation. In addition, the watershed is the country's leading focus for geothermal and eolic energy prospecting, due to intense volcanic activity in the area, as well as very strong winds through the continental divide. Finally, carbon sequestration projects -in which Costa Rica has recently taken a world lead- have been drawn up by ICE for the watershed, as a prospective fund-raising mechanism for forest conservation and regeneration efforts in the area.

Downstream from Monteverde is the Río Chiquito subwatershed, whose 9,000 hectares contribute one-fifth of the reservoir's inflow, as well as a strong load of sediments which local environmental authorities consider might eventually split the reservoir in half, as it gradually accumulates beneath the river's mouth. Río Chiquito has a very rugged terrain, with steep slopes and profound cave-ins resulting from a 1973 earthquake epicentered in the locality. Over 70% of the area is pasture, the rest being mainly forest, increasingly interspersed ascending into the upper watershed near Monteverde.

Shortly after the earthquake, when ICE began planning for the reservoir and hydroelectric generation, the institution commissioned a world-known local environmental NGO, the Tropical Science Center (TSC), to conduct in the watershed the first environmental impact assessment in Costa Rica, and probably among the first in the world -avant la lettre. TSC's conclusion was that -given the watershed's slope and soil characteristics, and the large and growing encroachment of pasture over forest- the site was extremely vulnerable to erosion and sedimentation, particularly in the Río Chiquito area, drastically affecting the project's life expectancy. When ICE finally decided to start the project, in 1979, TSC was asked again to evaluate the ecological impact. This time, its recommendation was that the state buy out the land and convert all pasture to forest. Local ranchers were, of course, profoundly irritated by the suggestion, and took strongly to one of the first and most intense national debates opposing conservation and development.

Probably due -at least in part- to the evident financial and political costs of following TSC's advice, ICE implemented the project with little consideration of conservation measures, except for a nominal 50 meter wide riparian buffer strip around the reservoir. In addition, ICE's production engineers have strongly advocated the view that -being Arenal an inter-annual reservoir- forest cover is irrelevant. One official, in fact, has publicly expressed to conservationists in the area that the watershed "might as well be paved", with no negative consequence to its hydroelectric services -actually, this could even improve available inflow, given the infiltrating impact of forest cover. Naturally, this argument has been well received by local ranchers, who add that their King Grass pasture -while being financially more productive- is almost as good as pavement, not only in promoting runoff but in preventing erosion and subsequent sedimentation as well.

Nevertheless, conservationists held their stance, and gained new ground. In the early 1970's, the TSC -associated with a local Quacker community- began consolidating what is presently the 10,500 hectare cloud forest preserve in Monteverde. Another conservationist association in the locality had meanwhile acquired and consolidated a similar, neighboring extension of forest land. Finally, in 1993 a conservation area was set up in Arenal by the Ministry of Natural Resources, building up on the existing preserves and adding more forest land with millionaire aid from the Canadian government, administered by WWF Canada. In addition, the Arenal Conservation Area (ACA) is also fostering sustainable development demostrative projects within its buffer zones and areas of influence, in agroindustry, reforestation and ecotourism. Even ICE has taken the Monteverde trend a step further, promoting reforestation activities in the Río Chiquito area, as part of a nation-wide watershed management program initiated in 1994. A carbon sequestration project for the subwatershed is part of this new environmentalist drive.

The creation of ACA, with the ensuing arrival of a host of environmental-minded professionals and technicians, further aggravated the confrontation with local ranchers. ACA mapped the watershed for both actual and potential land use, and amply disseminated the dramatic contrast thereof -particularly in Río Chiquito-, implicitly incriminating ranchers for their short term and privately focused profitability horizon. A more social and long term view evidently argued -or so it appeared- for pasture to forest conversion. The conservation area officials, with Canadian support and technical advice, then took to designing a watershed management plan under this assumption. In a participatory vein, field teams discussed the maps and their inferred policy implications with local stakeholders throughout the Arenal watershed: in the Río Chiquito case, medium to large beef ranchers in the lower watershed, medium to small dual purpose ranchers going up to Monteverde, coffee-growers cooperatives, municipal officials, and other local government agencies. The plan asserted what was initially assumed: in Río Chiquito, pasture to forest conversion should be promoted, as well as technological improvements of cattle-ranching itself (such as stabulation or better grasses).

But something didn't click. To begin with, in 1995, when new, independent consultations where begun -by research associates from TSC, the IIED (International Institute for Environment and Development, in London) and UNA, a local state university-, it became apparent that ranchers in the area where adamantly denying any agreement with ACA's purportedly consensual management plan. "Yes, we talked with them, but our input isn't there", was a common rendering of this annoyance. A strategic stakeholder in the plan was evidently at odds and non-cooperating.

The TSC-IIED-UNA research project assumed in this respect a stronger (albeit counter-intuitive) bottom-up, people-centered approach. Ranchers are not necessarily blind, they've been around for long, they might know what they're talking about. And even if the contrary is the case, they have to be in for sustainable management to ensue. Actually, the research and policy bias was the latter. From the outset, the project plan was to prove -through elaborate modeling of hydrological functions, sedimentation impacts and forest-to-pasture cost-benefit analyses- the underlying hypothesis: that forests would come out triumphant in the balance between the hydrological benefits and the sedimentation costs of pasture. And here things didn't go click either.

On the one hand, relating to taking in the ranchers, the research strategy was a three-step consultation. First, consultations were made with individual stakeholders, selected in view of the capacity to eloquently express their respective groups' opinions on what was right, what was wrong, and how could wrong be righted. These opinions were faithfully transcribed, clearly establishing both their agreements and disagreements. A second round of consultations was then made, taking transcriptions back to be corroborated, and communicating to all stakeholders the existing state of agreement and disagreement. The former had the virtue of establishing credibility for the research team; the latter was in fact a mediated way of developing the existing argument: stakeholders could then fight each other, without ever actually risking direct confrontation with the opponent. This allowed them to freely develop their conflicting views, without apprehension and needless offense or defense. The team then took this much richer material, systematized it fully in its proactive and consensual aspects, and devolved it to the stakeholder group in a one-day workshop. There, we first ran through the group's diagnostics and their common ground, set forth as a draft management plan for the Río Chiquito subwatershed. We then took the whole matter to discussion in subgroups, intentionally set up to allow for final confrontation among distanced parties. In one subgroup, the most radical rancher in the locality yelled out his full resentment at the conservation area's officials. But by then, this was just an afterthought in a management plan he was actually willing to support. On June 1, 1996, a Bridging Committee for Río Chiquito was set up to follow-up on the workshop's conclusions, with participation of all relevant stakeholders: the conservation area, the electricity institute, the municipality, the coffee coops and -for the first time on the same table- the local cattle ranchers association. The plan had very much in common with what the conservation area had already devised: pasture to forest conversion in critical areas (both from a biophysical and a financial perspective), technological improvement of cattle ranching, community infrastructure. The difference was subtle: everybody was really in.

On the other hand, relating to the biophysical and social cost-benefit analyses, the research project's conclusions were equally paradoxical or counter-intuitive, if not more. Extensive, innovative on-site studies of runoff, sedimentation, and evapotranspiration, contrasting pasture and forest land, were carried out, where none previously existed (either in Costa Rica or elsewhere). Elaborate economic modeling of these hydrological functions, as pertaining hydropower generation, was added. The startling conclusion, subject to further empirical and theoretical refinements -or eventual corrections-, is what ranchers and ICE had held all along: pasture fares better than forest in comparison, and even in the upper watershed, cloud forest land, where water sources for the reservoir originate, the hydrological impact could be improved by interspersing pasture where forest now reigns. So not only was the pasture to forest assumption invalid, but actually the contrary proved true: forest to pasture -with measure- might be an improvement.

The TSC leading researcher dramatically expressed this paradox, when he exclaimed "They're going to hate us for this!", in allusion to conservationists who have come to see the Tropical Science Center as an unflinching hero of forest protection and restoration. But then again, the research project's main limitation must be, in all truth, pointed out: the hydrological functions of land cover have been stressed, and not those related to other forest goods and services: local species conservation and restoration, bioprospecting, carbon sequestration, ecotourism. Longer-term impacts of forest conversion on water yield changes could be assessed, since conversion to pasture is likely to lower water yield. Sensitivity analyses with more weight given to forest benefits might take account of the longer-term biodiversity effects of biological corridors. In the long run, rising global timber prices might affect the pasture to forest balance; sensitivity analyses could also be used to consider international and national market trends in this respect.

But these are mere details. Perhaps the study's greater merit is that, in arriving at these paradoxes of reality (versus intellectual fancy), its recommendations are much more discrete, and therefore applicable: incentives for sustainable management of the watershed could be efficiently pursued through an auction system where user groups supply sealed bids reflecting acceptable payment for intervention in particular sites, to be judged by a neutral arbitrator, agreed upon by both users and funders. Thus, a truly bottom-up, people-centered institutional arrangement could be set up, worthy of being named "participatory".

Bruce Aylward, Jaime Echeverría, Álvaro Fernández González, Ina Porras, Katherine Allen, Ronald Mejías: Economic Incentives for Watershed Protection: A Case Study of Lake Arenal, Costa Rica (A research project sponsored by the Government of the Netherlands under the program of Collaborative Research in the Economics of Environment and Development, CREED), Interntational Institute for Environment and Development (London, United Kingdom), Tropical Science Center (San José, Costa Rica), International Center in Economic Policy for Sustainable Development (National University, Heredia, Costa Rica), 3 November 1997, draft final report, 312 pages.