MPA@UNC Student Travels to Ecuador: Week Three

MPA@UNC student Megan Garrett traveled to Ecuador for a three-week service-learning trip with the UNC School of Government Environmental Finance Center. Read about the first and second weeks of her trip.

People across the world agree on the importance of clean drinking water. But where does clean water come from? Before it comes from a tap, or a bottle we buy at a store, water from rivers, lakes, and streams is treated in a treatment plant.

As consumers of water, we pay treatment plants to remove pollution from water. Our public officials, however, are in charge of deciding the best ways to spend money to fight pollution. A spending option, which is increasing in popularity, is the protection of watersheds, or areas that drain into a main waterway.

Here in Ecuador, we were lucky enough to hear about two financial solutions to watershed protection, and we were able to visit one of the watersheds itself.

The first solution is Quito’s water fund—the Fondo Para la Proteccion del Agua, or FONAG— an interesting study in collaboration and navigating government. FONAG works on a trust fund system. First, several investors from The Nature Conservancy provided seed money for a water-protection fund. Later, private and public companies, nonprofits, and NGOs began contributing to the fund. The interest earned from the trust fund money, as well as donations, creates a budget that FONAG proposes to their board of directors.

The second financing solution we learned about comes from the province of Imbabura. Imbabura province created a seed fund with donations from the European Union, Ecuador’s environmental ministry, the InterAmerican Fund, and a United Nations affiliate called Desarrollo Forestal Comunal.

The provincial government takes 20 percent of the residents’ water bill revenue and pays it quarterly to landowners in the watershed to preserve the area. The amount landowners receive depends on the type of land they own. Those who have a more established forestry, which protects the stream, get slightly more money.

Both of these financing systems can be controversial because the consumers of water—as opposed to the polluters—are paying to keep a water source clean. This gets especially complicated because several municipalities are involved in a single water system. Consumers are often in a different municipality than the watershed, and municipalities have to collaborate—but they don’t always agree.

It’s our job, as public administrators, to ask, “Who should pay to preserve and clean the water?”

Water financing gets more complicated in Quito, where the water utility serves 2.5 million people. The cost of the water utility is subsidized for residents with commercial and industrial payments, but it’s not enough to cover the expense of a sewage treatment plant. The utility’s upcoming projects will cost $1 billion over the next 10 to 15 years—$600 million of which will go to sewage treatment and decontamination. The rest is earmarked for preserving watersheds by buying up land, restoring ground coverage with trees and plants, and donating to FONAG.

Ecuador’s water financing system is complicated, but the hope is to improve the strategic planning over the next few years to get Ecuador on track with their budget and, as written into their constitution, protect the rights of the environment, as it cannot speak for itself.