Payment for services offers a sustainable conservation model

Pay per use agreement
Buyers and sellers of environmental services exchange agreement letter. Photo: UNDP Nepal

Conservation works are often expensive and finding a continuous source of funding has always been a challenge. But a pilot programme in Kailali and Kachanpur districts in Nepal offers viable model for generating revenue at the community level. The Western Terai Landscape Complex Project (WTLCP), a joint project of UNDP and the government, has piloted ‘Payment for Environmental Services’ (PES) in Kailali and Kanchanpur district.

PES is a market-based mechanism where people involved in conservation get payment from those people who receive or use environmental services. For example communities living upstream get paid for the conservation works by the communities living downstream.


  • Haldekhal River, which flows through Siddhanath of Bhimdutta Municipality of Kanchanpur district, is conserved by 300 members of Siddhanath Community Forest Users Group. 202 households of the same municipality, who use water from Haldekhal River to irrigate 220 hectares of their farmland, pay Nepalese Rupees 30 per hour for the water.

“Farmers have always paid to buy things such as seeds, fertilizers and tractors, but paying for ecological services is a new concept,” says Prakash Joshi, an environmental activist in Kanchanpur.

But the payment scheme has resulted in change in people’s attitude towards the environment—with a growing willingness among them to pay for even environmental services. This has lead to wise use of ecological services and a decrease in resource related conflicts.

Initially five potential communities were identified for piloting the scheme. Eventually the project was implemented in three places with encouraging results: Barhakunda and Brahmadev lake systems in Kanchanpur district and Geta VDC in Kailali district.

A total of Nepalese Rupees 120,000 was collected from selling environmental services in the first year. Of the total amount generated, more than two-third was spent on maintenance and distribution of the service, one fifth on forest conservation and remaining on monitoring and evaluation.

The revenue generation from selling of services are so far maybe nominal, but there is room for growth. Though some external funding may still be needed for some time to ensure adequate conservation works, these pilot projects have shown that a system like this can work.

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