Phase 2

Step 2.05.02 , Social Impact Assessment

A Social Impact Assessment (SIA) is a tool applied to ensure that potential social impacts (both positive and negative) are carefully considered in designing Water Fund projects. 

Key Ideas

  • Social Impact Assessment is synonymous with a few other terms

    For the purposes of assessing Water Fund projects, Social Impact Assessment (SIA) is synonymous or the same as 'socioeconomic analysis', 'social and biodiversity impact assessment (SBIA), and so on.

  • SIA is about more than financial impacts on society

    A Social Impact Assessment (SIA) isn't just about evaluating how the monetization of watershed services will affect society in financial terms, it’s about understanding who the key actors are and how a Water Fund might present risks and benefits to existing livelihood strategies and social structures. This analysis should not be treated as a secondary or 'additional' assessment.

  • A Water Fund can have both positive and negative social impacts

    Water Funds and other similar Investment in Watershed Services programs have the potential to generate both positive and negative social impacts, depending on how they are designed and implemented. Ensuring that water funds do no harm and generate positive social and economic outcomes for diverse groups of local communities, farmers, and other rural land stewards is critical from an ethical and equity perspective. It is also important for program effectiveness as participants are unlikely to continue, expand, and advocate for the Water Fund if they do not feel they are benefitting in a meaningful way. 

  • What are social impacts?

    There are many frameworks for conceptualizing social impacts and human well-being. One useful framework, broadly used in the SIA field, is to think about social impacts as including changes to:

    • People’s way of life – lifestyles, work, recreation
    • Culture – shared customs, beliefs, values, and language
    • Community – cohesion and character
    • Political systems – participation in decision making; local norms and governance systems
    • Environment – natural capital, ecosystem services, air quality etc.
    • Health and well-being – as defined by the WHO as a state of complete physical, mental, social and spiritual well-being and not merely the absence of disease or infirmity
    • Personal and property rights
    • Fears, aspirations, and security

    (adapted from Richards and Panfil 2011 and IAIA 2003)

  • A Water Fund will have many projects

    Many distinct projects will be carried out by a Water Fund over different time periods and locations. While each of these projects could undergo separate SIAs, teams will likely need to prioritize these studies given limited resources.     

  • Why is assessing social impacts important?

    These reasons include (adapted from Richards and Mwampamba 2013):

    • Improve project design and social sustainability of the project;
    • Identify potential negative impacts and risks and develop risk mitigation strategies;
    • Select indicators for long-term monitoring that can be used for adaptive management; and
    • Increase participation and ownership of project goals and objectives by diverse stakeholders.

    At a minimum, an SIA should do the following (adapted from Richards and Mwampamba 2013 and Esteves, Frank, and Vanclay 2012):

    • Provide a good understanding of how interventions will affect the social landscape, including vulnerable and under-represented groups;
    • Anticipate positive and negative impacts and how they will affect different stakeholder groups;
    • Assess attribution (have a way to address the causes of outcomes and impacts);
    • Develop a monitoring program that allows for adaptive management;
    • Assess risk and develop a risk mitigation plan; and
    • Include participation of project stakeholders, including local communities.


The study of socioeconomics /social impact assessment is a broad field that will widely differ depending on the aspects that are being analyzed. 

Accordingly, a Water Fund may seek to apply a range of tools to gain further insights into the relationship between those components (e.g. downstream and upstream beneficiaries). It’s also important to note that the application of some tools earlier in the development process may provide important insights for decision-making under the design studies (e.g. Willingness to Pay Studies, results of polling, etc.).

At a minimum, this assessment will typically seek to address the following questions (*note: some of these questions may have already been addressed to some extent under the previous Stakeholder Analysis):

  • Who are the main beneficiaries of the hydrologic services (who are the water users), how much water they use, what are their main concerns regarding water?
  • What is the existing land tenure?
  • What are the socioeconomic benefits or impacts of the Water Fund? (e.g. in terms of avoided sediments, would the fund’s investments improve or maintain water quality, would they improve the regulation of water flow, etc.? In socioeconomic terms, would the fund create more employment? Who will bear these costs?)
  • For people living in the watershed(s) that may be impacted: how are people currently valuing their land (i.e. not only in a monetary sense) and how will a water fund affect that valuation (e.g. positively or negatively)? How can the Water Fund be designed to strengthen the existing livelihood strategies?
  • What are the potential benefits for upstream/downstream populations?
  • Who are the main stakeholders institutions related to water management/ecosystem services management?
  • Are there socioeconomic conflicts around water in the study area?