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Why Is Costa Rica’s New Agua Tica Water Fund Special?

Aug 24 2016 | Posted in: Research Highlight
By Stacey Solie
Julio May and Manuel Guerrero

Julio May and Manuel Guerrero at the 2016 Google Earth Users Summit in Mountain View, CA.

In October of last year the Latin American Water Funds Partnership launched the first water fund in Costa Rica. If successful, the project, called Agua Tica, will directly benefit over a million people who live in the watersheds that feed into the Río Grande de Tárcoles.

Two people charged with implementing the water fund, Julio May and Manuel Guerrero, of the Costa Rican NGO Fundecor, visited California’s Bay Area last month for a Google Earth Engine Users Summit. During a spare moment, they agreed to meet and tell me about the fund’s origins and relationship to NatCap.

Guerrero and May have been using NatCap’s RIOS software, co-developed with many partners including The Nature Conservancy and the Latin American Water Funds Partnership, to begin to figure out where to work within the watershed, and which activities will most improve both water quality and quantity. Informed by those maps, they then go out and visit landowners, offering them a chance to participate in the fund, which will pay them to do things like plant trees and build fences to keep livestock away from rivers.

Though the water fund is new, the groundwork for the program was laid decades ago, I learned as we walked from the Mountain View Best Western lobby to a nearby Starbucks, where we sipped lattes on a patio overlooking the scenic Camino Real (sarcasm: a six-lane road bisecting much of Silicon Valley). Despite our less than picturesque setting, my imagination was transported to the tropics as I heard about the work they’ve been doing. Here are a few things I learned:

1) In the Fundecor-produced video, “Tales From the Forest and the People,” one family talks about how being paid to conserve the forest has transformed their lives.   

“The logging company would show up and pay us so much an inch,” says one of the Fundecor program participants, Víctor, who used to call himself “a destroyer” because he cut so many  trees. “And it turned out there wasn’t even a permit to take out the wood,” he says. “It was illegal.” Beginning in early 90s, Fundecor paid Víctor and his wife Ana Ligia to start managing 18 hectares of forest, allowing select harvests that brought in money, while keeping many trees standing. “If there hadn’t been that strategy, I might have cut it down, little by little, like a lot of other people have done around me,” Víctor says. His son is now a tour guide. “We’re going to have well-being for the children, grandchildren, and great grandchildren, who will know what a forest is,” Víctor says. “And we’re going to show them, they need to conserve, protect.”

2) Long before this program was launched, Costa Rica nearly lost its forest reserves to deforestation.

This Central American country, just north of Panama, is known for aggressively conserving its tropical forests and wildlife by creating a generous series of protected national parks. But outside the parks, in the 1970s and 80s, Costa Rica was still seeing some of the fastest deforestation rates globally.

3) Rapid tree-cutting helped inspire one of the first known instances of using payments for ecosystem services.

The country couldn’t afford to create any more parks, so with seed money from the US Agency for International Development (US AID), the Costa Rican government created Fundecor to halt deforestation. Rapid tree-cutting was causing species to disappear, releasing stored carbon dioxide into the atmosphere, and destroying water quality as topsoil eroded into rivers. Fundecor, an acronym for Foundation for the Development of the Central Volcanic Range, which started paying families in a tropical lowland region called Sarapiquí, to keep their trees in place. The program was focused on mitigating greenhouse gas release, conserving biodiversity, conserving scenic beauty, and recharging water.

A crocodile

A crocodile in the Río Tárcolesone of the most-polluted waterways in Costa Rica, and the focus of the Agua Tica water fund. Credit: Don Faulkner/Flickr

4) In the 1990s, Costa Rica also became among the first in the world to fund carbon sequestration.

A program nicknamed CARFIX “was the first agreement for carbon fixation ever made on the face of the earth,” May said. Details of the complexity of doing these calculations are outlined in this 1997 white paper (p 29). Norway was an early investor in the program.

5) Paying to conserve forests is an expected part of life in Costa Rica.

Costa Ricans pay a small tax on their water utility bill that helps fund forest restoration. They also pay a 3.5% tax on fuel that funds conservation, and are in a race with Norway to be the first country to become carbon neutral.  

6) The two rivers that are the focus of the Agua Tica water fund are teeming with crocodiles and support rare birds and other biodiversity, though they’re also known as among the most-polluted waters in Central America.

The Río Virilla and Río Grande feed into the Río Tárcoles and are the primary water source for the residents of San José, Alajuela and the greater metropolitan area of Heredia. This watershed is home to more than half the country’s population and is also heavily contaminated by sewage, agricultural, and industrial waste.

7) RIOS is providing a starting place for Fundecor and partners.

“What RIOS does is, it simplifies things,” said Herrera. “If we do the calculations by ourselves, we will have to take all the data layers and come up with an algorithm. With RIOS, you put all the information in and then you run it, and that’s it.”

“But we always have to remember that that land belongs to someone,” May added. “That’s the big hurdle that RIOS doesn’t solve. Who does that land belong to? That’s where these grassroots organizations and NGOs come in, we have to get over that hurdle.”

8) As the process of creating the Agua Tica fund has progressed, it has attracted participation from traditionally competing interests.

Partners include the local bottling companies for Coca-Cola and Pepsi, FEMSA and Florida Ice and Farm, as well as a wide range of institutions, from local utility companies to the Ministry of the Environment, as well as hundreds of families who live in the watershed. “In the early 90s, when we first started approaching families, they thought the forest was just this thing that they had to get rid of in order to raise cattle,” said Julio May. “It’s been a process of mind-shifting.”


For more information:
Hydrological monitoring case studies for 6 water funds and INECOL online.
Social impact assessment of the Peru water fund with Forest Trends is online in English and Spanish.
Six Things I’ve Learned About Water Funds, by Leah Bremer

Stacey Solie is the Communications Lead at The Natural Capital Project.


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