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Nudo del Azuay: Developing a Payment for Hydrological Services Mechanism


Establish a funding mechanism for conservation and sustainable – use activities to ensure sediment control and flow stabilization by providing incentive payments to upland landowners. Develop a structure to leverage funds by direct water users (hydropower) and central government incentive payment support.

How it will work:

  • Establish a PES scheme for hydrological services based on conservation agreements with upland landowners
  • Design incentive mechanisms and develop hydrological data, models, and monitoring frameworks
  • Design an incentive mechanism to channel hydrological services payment to landowners
  • Create a funding structure to leverage local user funds, Hidropaute (largest hydroelectric generator in Ecuador), and central budget financing from the national incentive scheme

Project Development Support:

  • Technical input for incentive scheme design
  • Support for local partner organization (Fundación Cordillera Tropical) to conduct screening and selection of potential incentive recipients, based on risk, tenure and biodiversity criteria, and will be engaged in impact monitoring

Project Partners: Fundación Cordillera Tropical
Project Details:  Click here to view article in The Mountain Forum bulletin describing Nudo del Azuay project
Market:  Finance from local water users
Location: Ecuador
Project Types: Water and Biodiversity services
Biome: Tropical montane forest and  Andean grasslands
Hectares:  Target of 35,000-50,000 has
Total Reductions: N/A
Status:  Implementation
Developer: Fundación Cordillera Tropical
Price:  $30/ha
Contact: Jacob Olander [jolander[at]]; Catherine Schloegel (director[at]