Earlier this year, Peruvians were shocked when severe droughts gave way to tumultuous rains triggering landslides that killed at least 20 people, forced thousands from their homes, and — ironically — deprived many in the country’s two largest cities, Lima and Arequipa, of water when swollen rivers clogged treatment plants with rocks and debris.

The wet and dry seasons have been there for millennia, but natural forests, wetlands and man-made pre-Incan structures high in the Andes used to smooth those seasons out by absorbing water in the wet and slowly releasing it in the dry.

That changed over the last century as farmers and settlers cleared forests and wetlands to make way for urban areas and farming, leaving the cities downstream more vulnerable to natural disasters. 

Now, Lima is returning to nature by diverting 1 percent of water fees to restore Andean forests, grasslands and wetlands that provide critical "ecosystem services" such as regulation of water flows. As the city was both drowning and thirsting, it took concrete steps towards putting that money to work.

The first step took place Feb. 7 and 8, when the city kicked off a 12- to 18-month planning phase that could chart the course for the next 30 years. Lima’s water utility SEDAPAL is attempting to develop a first-of-its-kind planning document focused on nature-based interventions: a Green Infrastructure Master Plan that seeks to leverage nature in ways that enhances and complements grey infrastructure.

The water utility quickly found, however, that such an undertaking is far from easy.

It’s never been done before

Not many planning documents explore how green interventions complement grey infrastructure, making this entire effort all the more unique.

This "master plan" that SEDAPAL is developing should help the company understand how it stands to gain from investments in green infrastructure and how these investments can benefit the company’s grey infrastructure, said Gena Gammie, associate director of the Water Initiative at Forest Trends.

Lima is the world’s second-largest desert city and Peru’s most populous city, with 9 million inhabitants drawing water from a complex system of pipes and tunnels. Four Andean watersheds serve the city: the Rimac, Chillon, Lurin and the Alto Mantaro. Water from the Alto Mantaro travels from the Amazonian side of the Andes to where Lima sits on the Pacific coast.

Asking the right questions

Experts agree that wetland and grassland ecosystems upstream of Lima help reduce erosion and are critical for soaking up heavy rains and then releasing water during dry periods. But Lima also has several large reservoirs, raising several challenging questions: Should they, for example, focus on conserving the ecosystems around those reservoirs, thereby reducing sedimentation, or is it better to complement those reservoirs by working in ecosystems outside their catchment areas? What about the middle and lower parts of the watersheds that supply Lima with water? How effective and far-reaching is restoration in these regions?

These are some questions SEDAPAL has to answer in order to create its Master Plan, and it’s getting help from several sources including Peru’s federal government, which in the past few years passed groundbreaking policies related to green infrastructure and payments for ecosystem services.

Lima is returning to nature by diverting 1 percent of water fees to restore Andean forests, grasslands and wetlands that provide critical 'ecosystem services' such as regulation of water flows.

In 2014, legislators approved the MRSEs, in English the "Mechanisms of Compensation for Ecosystem Services" law, which created a legal framework for payments for ecosystem services projects that harness public funds. Last summer, the Ministry of Environment released formal regulations for the legislation offering clear guidance on how to implement it.

Meanwhile, lawmakers approved a modernization of the water sector law that mandated all 50 of Peru’s water utilities incorporate green programs alongside their typical grey infrastructure.

The aforementioned tariff for Lima water users is in direct result of this law. SEDAPAL is tasked with implementing it — and there are questions aplenty on how the company will deploy the accumulating finance. There’s already $5 million sitting in the pot, and it’s projected to reach $30 million by 2020.

SEDAPAL is new to the realm of ecosystem services and green infrastructure, but it appears to be embracing its benefits. After the tariff introduced it to the world of nature-based interventions, Forest Trends developed a green-infrastructure training course, which 12 staff members took in 2016.

Forest Trends co-hosted the Feb. 7 workshop with SUNASS and received support from the Swiss Agency for Development and Cooperation to kick-start this entire process. Besides Forest Trends, several other NGOs, the Ministries of Environment and Housing and the National Water Authority also participated.

The point of the workshop wasn’t to reach definitive answers on any specific query, but rather to determine what questions should be addressed during the Master Plan’s development.

Defining the challenges

"This document is not only about state-subsidized master planning at the landscape scale," said Tundi Agardy, director of the Coastal and Marine Initiative at Forest Trends. "This is also about finding ways that natural or green infrastructure can safeguard investments in grey infrastructure like dams, canals, water delivery pipes, irrigation systems and even roads."

With the Green Infrastructure Master Plan, water managers intend to address several challenges that are slowing down implementation of Peru’s green infrastructure policies. Chief among these is a lack of solid projects to invest in and a lack of clarity on how to evaluate them.

So far, only two organizations — CONDESAN and Aquafondo, a water fund that the Nature Conservancy and partners launched in 2010 — have submitted proposals for projects. Forest Trends has been involved in the project proposal process with both these organizations, and Gammie does acknowledge it’s a difficult process involving scouting project sites, community consultations and writing lengthy documents. Then, after proposals are submitted, SEDAPAL must review them to determine if their customers will indeed benefit from them.

Lawmakers approved a modernization of the water sector law that mandated all 50 of Peru’s water utilities incorporate green programs alongside their typical grey infrastructure.

Workshop participants recognized that capacity building across the board is critical for short-term implementation and long-term planning among project developers, SEDAPAL and other project evaluators and the upstream communities and municipalities.

While experts lack the kind of data needed to make precise evaluations, they have a general sense of where the high-priority areas are.

"We have some educated guesses, but in most cases we aren’t able to say what will happen if we plant trees here or lose a wetland to cattle ranching there," Gammie said. "But the relative uncertainties about the contributions of the upper watersheds are lower compared to the uncertainties in the middle and lower parts of the watersheds."

Practitioners call the highest reaches of the watersheds, which receive the majority of the region’s rainfall, the "no-regret areas" for projects.

Given current data gaps, Gammie said the Master Plan should build in a research agenda with pilot projects. The plan should adapt as they learn new information on the effectiveness of various green infrastructure interventions over time.

Some of those data gaps may soon be closing. During the workshop, participants discussed a partnership with NASA to use satellite imagery to collect watershed data.

Upward and onward

SEDAPAL has a busy year coming up with some unique opportunities to drive home the benefits of including green infrastructure in its planning. To align itself with the priorities of the new political administration of Pedro Pablo Kuczynski, who took office last summer, SEDAPAL is updating its Optimized Master Plan, a company-wide planning document that has a 30-year projection. Those working on the Green Infrastructure Master Plan are aiming to have it completed so it can be included in the company-wide optimized document.

SEDAPAL wants to wrap up its Optimized Master Plan by the end of this year so parties involved on the green side have a tight deadline to complete a difficult endeavor. Difficult but not impossible: The political will in Peru is strong and the nation continues to be a pioneer in the nature-based solutions space.

"The advances that Peru is making are incredible," Michael Jenkins, CEO and founding president of Forest Trends, said during the workshop. "Developing this master plan for green infrastructure is a first-of-its-kind in the world."