Ecosystem loss and degradation contributes to water insecurity worldwide – natural infrastructure strategies that protect and restore natural systems aim to halt and reverse this trend. Suzanne Ozment and Rafael Feltran-Barbieri discuss how water utilities can profit from restoring ecosystems.
The world’s largest water treatment plant is nestled in the hills of Southeast Brazil. The Guandu Treatment Plant provides 92 per cent of drinking water for the Rio de Janeiro Metropolitan Area.
Because of the huge volume of water moving through it, even a small rate of pollution can result in high costs. By our estimate, treating the water for just one of the primary pollutants, turbidity (also known as sediment pollution), costs about USD 40 million per year. These costs are likely to balloon – to keep pace with water demand, water supply may need to increase by 50 per cent by 2030.
Adding to this tremendous pressure is a legacy of deforestation and degradation in the surrounding watershed. While this region used to be nearly 100 per cent forest, today, only 25 per cent of the watershed is forest. Continued forest loss upstream of the city is continually causing soil erosion, which generates more pollution, and fills reservoirs with sediment instead of water.
These combined challenges have driven the local water utility, as well as a network of policy makers, NGOs, and businesses, to start searching for solutions outside the treatment plant’s own fence line, and into the upstream landscape. Numerous pilot projects have garnered attention of Rio’s water managers, inviting the question: Can investing more in nature help provide clean water to more people downstream and reduce water treatment costs?
Weighing the Costs and Benefits
WRI found that restoring 3,000 hectares of forest around Rio would require an initial investment of approximately $26.4 million, but would avoid costs of $79 million over 30 years, or $2.6 million per year. The benefits don’t stop there. Beyond the obvious biodiversity and carbon sequestration benefits of restoring forests, the environmental benefits of this strategy also translate to the water utility itself. We found that using forests as natural infrastructure would spare the use of an estimated 4 million tons of treatment chemicals and 260 MWh of energy in water treatment over the next 30 years.
We also found that parallel investments in research, capacity building, and partnerships are critical to ensure meaningful results from natural infrastructure interventions.
Investing in Partnerships: In general, water managers often express concern that the skills and effort needed to set up and implement natural infrastructure projects goes beyond their core competencies and time availability, such as engaging landowners who can steward the land, supporting reforestation efforts, etc. We found these hurdles can be overcome through partnerships.
Forming strong collaborative partnerships that leverage the skills, resources, and connections of multiple organizations also requires significant effort in itself. We estimated that in Southeast Brazil, transaction costs such as building partnerships, engaging landowners, and managing contracts may comprise as much as 20 per cent of total natural infrastructure project costs.
Investing in Science, Monitoring, and Evaluation: A heavy investment in scientific research and continued monitoring and evaluation is needed to address key sources of uncertainty. Natural infrastructure proponents in the region readily acknowledged the need to expand data collection and impact evaluation in order to make better predictions about the level of benefits natural infrastructure provides. Without more trustworthy evidence of natural infrastructure’s impacts on downstream water supply, water sector investors may hesitate to invest, jeopardizing the longevity of the project.
Globally, systematic reviews of scientific literature have pointed out the stark lack of green infrastructure project monitoring and called for further research specifically on restoration sites that intend to impact water supply. Watershed investors in Rio de Janeiro, as well as globally, should put much more emphasis on building a monitoring system that can evaluate if the natural infrastructure investors in Rio de Janeiro are getting what they pay for.
Designing Natural Infrastructure to Attract Finance at Scale
Further crucial elements of project design include a plan to secure sufficient funding for program activities, outreach to engage a diverse group of investors, and definition of mechanisms to support financial flows to the program at scale.
The price tag of over $26 million to restore forests for water may seem high to some. But, importantly for cash-strapped states like Rio de Janeiro, natural infrastructure does not necessarily require additional financial resources – rather, it may involve rerouting a portion of existing funds and aligning them with other efforts already funding landscape restoration. Because natural infrastructure can do much more than purify water, it can also attract investors interested in reducing carbon emissions, boosting rural livelihoods or protecting biodiversity.
Rio de Janeiro has an advantage in that it already has a mechanism for financing natural infrastructure through its water charge, which raises $8 million annually for the Guandu Watershed Committee projects. In addition, local stakeholders are exploring opportunities to join forces with FIRJAN, the state industry association, which represents hundreds of water-dependent companies operating in this region. Meanwhile, development banks such as the Inter-American Development Bank and World Bank have expressed interest in increasing investments in green infrastructure projects – however, it remains to be seen if the watershed stakeholders in Rio de Janeiro can prepare their program for an investment from an organisation such as these, and what it would look like in practice.
With 70 per cent of Brazil’s population currently lacking treated sewage and wastewater, safe drinking water and sanitation is a national priority. Rio de Janeiro’s experience shows that incorporating forest restoration into water management not only helps improve health and resilience, but can also help overcome financial challenges that water utilities increasingly face.
For more about our research and methods, see the report, Infraestrutura Natural para Água no Sistema Guandu, Rio de Janeiro.