Asia

Piloting a Payment for Ecosystem Service Mechanism in Sri Lanka: Conservation of Watershed Ecosystem Services with a Private Sector Owned Mini-Hydro Project

Extraction of water for mini-hydro power plant

Project title: Piloting a Payment for Ecosystem Service Mechanism in Sri Lanka: Conservation of Watershed Ecosystem Services with a Private Sector Owned Mini-Hydro Project

Location: To be decided

Duration: From 12th July 2018 to 31st May 2019

Project Background:

Sri Lanka is one of the biodiversity hotspots in the world. National Biodiversity Strategy and Action Plan (2016-2022) (https://goo.gl/R5DfNQ) highlighted the need to pay attention to the sustainable management of its biodiversity. To operationalize the NBSAP a Biodiversity Financial Needs Assessment (BIOFIN - FNA) was conducted (https://www.biodiversityfinance.net/sri-lanka) with the technical assistance of IUCN in 2017 and it identified a substantial gap in the resources required to achieve the country’s biodiversity related targets outlined in NBSAP.  

The BIOFIN – FNA Study identified 15 innovative financing solutions as most suitable for the biodiversity conservation including Payment for Ecosystem Services (PES). This pilot tests the feasibility to apply PES scheme in a mini hydro facility. With the financial assistance from the BIOFIN Initiative of UNDP, IUCN Sri Lanka implements the project to demonstrate a PES for watershed services by a mini-hydro power plant. The project also incorporates all essential biophysical and socioeconomic studies, assessments on required institutional support for a PES mechanism within the existing framework, the barriers and the mechanisms to overcome them for up-scaling and up-scaling plan for other potential mini-hydros in operation.

The Central Environmental Authority (CEA), Sri Lanka Sustainable Energy Authority (SLSEA) and Small Hydro Power Developers Association (SHPDA) are the key stakeholders of the project while the local level stakeholders are to be identified after deciding on the site for the field demonstration.

Objectives of the project

  • Develop a Payment for Ecosystem Services scheme for mini-hydro operators in Sri Lanka
  • Understand legal and institutional challenges to implement PES with a large scale hydropower generation initiative

Expected Outputs

  • An implementable PES mechanism developed for an identified mini-hydro project
  • Assessment report on legal and institutional challenges and possible solutions for upscaling a PES mechanism for a large scale hydropower generation initiative

Donor/s:  BIOFIN Initiative of UNDP

Partner/s: Central Environmental Authority (CEA), Sri Lanka Sustainable Energy Authority (SLSEA) and Small Hydro Power Developers Association (SHPDA), local partners to be identified

Go to top