Briefing Note
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Incentivizing groundwater recharge through payment for ecosystem services (PES) Success factors of an offsetting scheme in Kumamoto, Japan

Karen G.

Payments for ecosystem services (PES) is a market-based mechanism aimed at sustaining the flow of such services. Through a PES scheme, beneficiaries or users of the ecosystem service(s) compensate the provider or manager of those services, directly or indirectly. The provider and beneficiaries agree on the terms and conditions of the PES and usually enter into a formal agreement. PES could be a cost-effective solution for groundwater-based natural infrastructure as well. In the case of managed aquifer recharge (MAR), the major challenge for establishing a PES, however, is uncertainty related to the invisibility of the hydrogeological processes and the fate of recharged water. In addition, since groundwater is an open access resource, it is administratively challenging to define a boundary condition (i.e., which users within a certain area are entitled to the additional water), which is important as a basis for determining a cost-benefit sharing mechanism for the PES.

The PES for groundwater recharge in Kumamoto, Japan, is a successful case of MAR. Implementing this market-based instruments was relatively promising considering the importance of groundwater for the city’s water security as well as the mature agricultural business. It could be argued that a similar PES idea may be less feasible in developing countries, especially due to the rate of payments. However, the important message here is the viability of ecosystem-based recharge if it is backed by sound research and implemented effectively. Many areas in developing countries, especially in Asia, are seeing severe water scarcity, and groundwater resources are under pressure from both increasing demand as well as from climate change-induced droughts and rainfall variability. Climate funds could be strategically diverted to support PES-based MAR schemes. Direct financial flows would enhance the asset base of farmers adopting recharge measures, while the enhancement of aquifer storage could insulate farm communities and co-located and co-benefitting industries against climate change-induced water scarcity. The Kumamoto experience could be a good business model for groundwater-based natural infrastructure solutions.

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