NATURAL
INFRASTRUCTURE
AN OPPORTUNITY
FOR WATER SECURITY IN
25 CITIES
IN LATIN AMERICA
Invest in Nature to Increase Water Security
The earth is nearly covered in water, but less than 3 percent of it
is the freshwater needed to fuel people and economies, as well
as nature itself. In fact, water security – both quantity and quality
– is one of the main challenges of our time, with two-thirds of the
global population expected to face shortages by 2025 (UN
Water Development Report, 2007). In 2010, The Nature
Conservancy in collaboration with the Latin America
Conservation Council set a goal of using nature to secure clean
water for 25 of Latin America’s most at-risk cities. The first step
was to identify the 25 cities, with the focus shifting slightly to
zero in on those cities with the highest return on investments in
natural infrastructure. This study reports on those cities.
The Latin America Conservation Council was formed precisely to address regional challenges like water
security, which require balancing development and conservation on our path to a sustainable prosperity.
For the past 15 years, the Conservancy has also been developing sophisticated financial mechanisms
that gather investments from water users downstream and direct the funding toward conservation of
key lands upstream that filter and regulate the water supply, while also preserving and restoring native
ecosystems and wildlife. Investors – primarily large businesses and government agencies – have seen
these “Water Funds” as a smart way to minimize treatment costs and reduce the risk of water shortages
in the future. The Conservancy’s first Water Fund was established in Quito, Ecuador, in 2000, and the
concept has rapidly spread across Latin America and other parts of the world.
With this joint publication we call upon public authorities, industry, lenders and concerned communities
to learn more about the role that healthy ecosystems or “green infrastructure” can play in improving
water security. The analysis uses reliable and comparable data that identifies the 25 cities that stand to
benefit most from investing in their source watersheds; using the interventions described, as many as
100 million people in the region can reap the benefits. This analysis adds to the growing evidence that
watershed conservation should and must be considered by water managers throughout the region as an
economically and environmentally sound complement to built or “gray” infrastructure. Watershed
conservation also creates added value to cities beyond water treatment, including economic
development and jobs, recreation, biodiversity protection, and climate resilience (mitigating risks of
drought and flood). Cities that are able to balance green and gray solutions and adapt them to their
particular challenges will lead the way to a sustainable future – for people and nature.
Hugo Contreras
Water Security Director for Latin America
The Nature Conservancy
LATIN AMERICA
Water for Cities
in Latin America
04
Where our Water
Comes From
05
Watersheds are
Natural Infrastructure
07
Latin America’s 25
“Opportunity Cities”
09
Looking ahead: Investing
in Nature for the Future
Call to Action
11
13
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Water for Cities
in Latin America
Delivering clean and reliable water may be the single largest
challenge that our growing cities face. In Latin America,
nearly 80 percent of people live in cities making it one of the
most urbanized regions of the world. Over the next 15 years,
this urban population will grow from 260 to 315 million,
generating a combined GDP of $3.8 trillion, an amount equal
to the U.S. federal budget. All these cities need a clean,
reliable water supply to thrive. However, many drinking
water sources are severely degraded. In the face of the twin
challenges of growing demand and climate change, it has
never been more urgent to protect and restore the lands
where our water comes from.
The Nature Conservancy (TNC) and the Science for Nature
and People (SNAP) collaborative1 completed the first ever
assessment of where conservation can help improve the
health of watersheds that provide water to Latin America’s
largest cities (>1M). The study was requested by the Latin
America Conservation Council (LACC), a group of visionary
leaders interested in promoting sustainable development
that balances growth and conservation. The resulting list of
25 cities identifies the highest opportunity cities for water
funds and other mechanisms to drive investment in natural
infrastructure to enhance urban water security. Socializing
the findings of this ground-breaking analysis – produced
with partners including Natural Capital Project (NatCap),
Inter-American Development Bank (IDB), Development
Bank of Latin America (CAF), University of Kassel and
McGill University, among others – will provide additional
options that governments, utilities, industry, lenders and
citizens need to consider to cost-effectively and proactively
maximize watershed management for the long-term.
1
Land-use coverage for Mexico and Central America may be
approximated to South America’s shown here.
LATIN AMERICA
25 CITIES 05
Where our Water Comes From
Watersheds collect water from precipitation, store groundwater in aquifers, release surface runoff and
provide habitat for plants and animals. As the natural ecosystems in these watersheds treat, store and
move water throughout the watershed, they modulate the quality and even the amount and timing of
water that flows downstream for urban and agricultural water users. (Figure 1)
Figure 1. Watershed services provided by healthy ecosystems
Healthy watersheds facilitate the
work of water treatment plant
and other ‘gray' technologies, but
without the expensive equipment
and with added benefits like
protection of wildlife habitats and
carbon sequestration.
Source: Forest Trends; modified
06
LATIN AMERICA
25 CITIES
The quality and availability of water supply, and hence the costs to move and treat it, depend heavily on
the condition of the surrounding land. Presently, the average source watershed in those cities in South
America is covered by 40 percent forest, 30 percent cropland, and 20 percent native grassland and
pasture. (Figure 2)
Figure 2. Average land use in source watersheds, analyzed watersheds
North America
South America
World
Other
Developed
Cropland
Grasslands/Pasture
Forest
Source: McDonald, R.I. and D. Shemie, Urban Water Blueprint:
Mapping conservation solutions to the global water challenge.
2014, The Nature Conservancy: Washington, D.C.
Water quality deteriorates as sedimentation increases, caused by converting forests into cropland or
ranchland. In Latin America, where sixty-four percent of global deforestation occurred between 2000
and 2005, making way for agriculture and cattle, this problem may be particularly acute when it occurs
in the source watersheds of cities. Water quality can also be degraded when excess fertilizer runs off
land to pollute streams and lakes. This problem will increase with our growing need for food production.
Investing in nature to conserve and restore the forests and natural grasslands that enhance water quality
and quantity is a cost-effective strategy for increasing the water security of millions of people in Latin
America’s cities.
LATIN AMERICA
Watersheds are
Natural Infrastructure
To identify where conservation can help secure
water for cities, TNC scientists first evaluated the
effectiveness of three common conservation
strategies for reducing sedimentation and
fertilizer pollution in source watersheds (Figure
3) —land protection, reforestation, and riparian
restoration—, serving the 55 largest cities in Latin
America which mostly depend on surface water
for their supply. The resulting analysis indicated
where conservation strategies in watersheds
could have the greatest impact and return on
investment on drinking water for the region’s
cities with populations of over 1 million.
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LATIN AMERICA
25 CITIES
Figure 3. Three watershed conservation strategies to help secure drinking water for cities
Strategy
Land Protection
Description
Purchase of easements, land rental,
fencing out cattle, and funding for
park guards to maintain watershed
services.
Reforestation
Restoration and planting of native
trees, grasses, and shrubs in critical
areas to reduce erosion and related
sediment transport.
Riparian
Restoration
River bank restoration and
protection to reduce erosion and
improve water quality.
Source: McDonald, R.I. and D. Shemie, Urban Water Blueprint:
Mapping conservation solutions to the global water challenge.
2014, The Nature Conservancy: Washington, D.C.
The analysis showed where the benefits for the water treatment plant exceed the costs of watershed
conservation. These ROIs are based on the conservation strategies above that take the least number of
hectares to reduce sediment or nutrient by 10 percent.
This positive return on investment is larger the higher up a city is in the ranking. These benefits in water
quality in turn help decrease treatment costs for water utilities and water-using industries like food and
beverage companies, and for hydropower. In the long term, investing in conservation is likely to reduce
capital expenditures, as well, as cities can effectively continue using less expensive water treatment
options rather than upgrading to more complex, expensive technologies.
Watershed conservation also creates added value to cities beyond water treatment, including recreation,
biodiversity, climate resilience (mitigating risks of drought and flood), and economic development with
favorable benefits for fisheries, aquaculture, agriculture and tourism.
LATIN AMERICA
Latin America’s Top 25
Cities for Investing in
Nature for Water
Using best-available science, the TNC-SNAP
collaboration was able to identify Latin American
cities with the greatest opportunity to benefit
from investments in watershed conservation to
improve water security, particularly water
quality. The ranking process prioritized the
following criteria: seasonal water availability and
stress; anticipated return on investment; and
flood risk mitigation co-benefit. (Figure 4). The
25 cities identified represent over US1.7 Trillion in
GDP, 100 million potential beneficiaries for
enhanced water security and all of their
watersheds with globally significant biodiversity.
The three cities at the top of the index are
Bucaramanga (Colombia), Curitiba (Brazil) and
Bogota (Colombia).
All possess enabling
conditions to deploy watershed conservation at a
scale that will result in measurable benefits. For
example, Curitiba is a large city (3.5M
inhabitants) with seasonal stress (the inability to
meet human and ecological demand for water
resulting from intra-annual water variability), a
relatively small watershed area with clear
potential for landscape restoration and forest
protection, and favorable socio-economic
conditions for the local utility and main industry
water users to invest in conservation.
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10
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25 CITIES
MAP OF TOP 25
OPPORTUNITY CITIES
Monterrey
Toluca
Guatemala
Maracaibo
San Jose
Panama
Caracas
Barquisimeto
Bucaramanga
Medellin
Bogota
Quito
Joao Pesoa
Recife
Maceio
Salvador
RANKING CITY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Bucaramanga CO
Curitiba BR
Bogota CO
Santos BR
Maceio BR
Salvador BR
Sao Paulo/Campinas BR
Barquisimeto VZ
Medellin CO
Recife BR
Quito EC
Ciudad de Guatemala GT
Joao Pessoa BR
Brasilia BR
San Jose CR
Rio de Janeiro BR
Caracas VZ
Maracaibo VZ
Santiago CL
Monterrey MX
Victoria BR
Belo Horizonte BR
Goiania BR
Toluca MX
Panama PN
Brasilia
Golania
Belo
Horizaonte
Victoria
Santos
Curitiba
Río de Janeiro
Sao Paulo
Santiago
Figure 4: The TNC-SNAP top 25 cities for investing in nature for water.
LATIN AMERICA
Looking ahead: Investing
in Nature for the Future
Cities shape the landscape for hundreds of miles around
them, defining a development route for themselves and their
rural neighbors. Cities need to assess the land use
surrounding source watersheds, investing in the conservation
of natural or “green” infrastructure as a standard practice in
water management to increase water security.
Sourcing water of adequate quality and in sufficient quantity
is a problem that will only get worse as cities grow and the
climate warms. Water funds and other investments to
protect upstream watersheds and water sources may be part
of the solution. The rationale for water utilities to finance
watershed conservation is to avoid higher treatment costs
and have more regular flows of water over time. Similarly,
industry water users can invest jointly in a Water Fund, a
replicable governance and finance mechanism TNC and its
partners throughout the region have developed to sustainably
pay for watershed conservation, guided by science to
maximize return on investment.
Similarly, banks, particularly multilateral institutions, should
include requirements for investments in natural infrastructure
within water-sector loans, which would improve gray
infrastructure’s efficiency and resiliency. Banks and their
clients can maximize the impact of these investments by
using Water Funds to direct those financial resources towards
proven science-based on-the-ground activities. In all cases,
the goal is to implement conservation actions to maximize
impact. For most cities the challenge is not securing adequate
funds, but deploying these funds outside the municipal
jurisdiction upstream. Global recognition for this innovative
approach by the Clinton Global Initiative (CGI) and
Rockefeller Foundation, as well as precedents in cities like
New York and Quito, make investing in nature a compelling,
sustainable alternative.
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25 CITIES
Incentives
Cash, technical
assistance, materials
Upstream Community
Stewards and providers
of watershed services
Watershed investment projects
follow a basic rubric: The beneficiary
pays the provider to implement
management action(s) to generate
environmental services via a financial
mechanism.
WATER
FUND
Balances upstream
and downstream
interests
PAYMENTS
Downstream
Water Users
Beneficiaries of
watershed
services
Source: Forest Trends; modified
Figure 5. Payments by downstream water users finance activities upstream to restore and/or
maintain beneficial watershed services.
Securing adequate, clean water supply for cities is a global challenge that will require both natural
“green” and engineered “gray” solutions, tailored to each city’s unique geography and land use needs.
Cities that are adept at weighing all their options will lead the way to a sustainable future, for their
citizens, their economies, and the planet.
LATIN AMERICA
Call to Action
Investing in natural infrastructure as a
complement to built infrastructure makes
technical and economic sense. The analysis
behind this ranking provides useful information
for a public policy case and the regional decision
making process in terms of watershed
conservation that maximizes return on
investment by prioritizing actions where they are
most needed, and will render the best results per
dollar invested.
The Nature Conservancy, together with the Latin
America Conservation Council, calls for the
relevant institutions in cities to include
conservation in water management portfolios by:
Convincing water operators and related
authorities
to
invest
in
watershed
conservation and to include resources for
these investments in their budgets and
sources of revenue;
Incentivizing industry water users to assess
their water risk, increase efficiencies and
offset use through watershed conservation
projects and water funds; and
Raising awareness among urban populations
about where their water comes from, to
develop support for these upstream
investments.
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Governments, companies, lenders and citizens all have a role
to play to protect watersheds, transform business as usual,
and inspire a new sustainable approach to long-term water
security.
To explore how you can participate, contact:
Hugo Alberto Contreras
Water Security Director for Latin America
The Nature Conservancy, Latin America Region (LAR)
[email protected]
+52 55 5661 1153 Ext. 30118
RELATED LINKS:
water.nature.org
waterfunds.org
water.nature.org/waterblueprint
www.snap.is
www.nature.org/latin-america-conservation-council
LATIN AMERICA
with the support of
25 CITIES 15
AN OPPORTUNITY
FOR WATER SECURITY IN
25 CITIES
IN LATIN AMERICA