The emergence and persistence of payments for watershed services programs in Mexico

Payments for watershed services (PWS) programs have become a prominent approach to protect or restore ecosystems and watershed services but little is known about where these innovative financing tools and governance systems emerge and persist. In 2008, the Mexican government launched a program where they matched funding from local partners to establish user-financed PWS, leading to the creation of 145 programs between 2008 and 2019. We study the factors related to the emergence and persistence of these local, user-financed PWS programs across Mexico. We assemble a unique database on these programs, as well as biophysical, economic, socio-cultural, and institutional variables, at the municipality level. We use logistic regression to analyze the variables correlated with the emergence and persistence of PWS. We find that PWS programs are more likely to emerge in municipalities with lower opportunity costs of forest conservation; that are wealthier; that have higher institutional capacity; and that have more collective land tenure and protected areas. PWS programs are more likely to persist in municipalities where watershed conditions are a concern; that have more wealth and institutional capacity; and that have a non-governmental organization or water utility involved as the local counterpart. These results suggest that emergence and persistence of local, user-financed PWS programs to address water security can occur when the opportunity costs of conservation are met; the provision of ecosystem services is enhanced; there are sustainable sources of financing; and there is institutional capacity that involves non-state actors.