Longwu Water Fund

Funding

One unique feature of the funding source in Longwu is that it comes mainly from business profits produced by transitioning the conventional bamboo industry to a more environmentally-friendly one. With an initial investment of US$50,000 from partner donations, the water fund earns its ongoing funding from organic bamboo shoots, eco-tourism and educational activities. It is expected that this eco-friendly business venture will allow the water fund to be financially self-sustaining. In 2021, the Longwu Water Fund signed an agreement with the water utility company and local government, which agreed to pay on behalf of all water users, thus creating a sustainable financial mechanism.

Governance

Similar to water funds in Latin American and other countries, the Longwu Water Fund is governed by a multi-stakeholder advisory board, which includes The Nature Conservancy and Wanxiang Trust, a trust company which operates the water fund and local village government. Farmers can enter into a five-year contract for the fund to manage their forest land via a property right trust. Wanxiang Trust serves as the legal trustee and the main management body of the water fund. The Nature Conservancy serves as an advisor for trust execution and provides watershed conservation model design, forest land management planning, conservation impacts assessment and coordination of public resources.

Implementation

An operating company under the water trust fund implements most of the environmentally-friendly projects. For example, the company is responsible for producing and selling organic bamboo shoots online. It also is in charge of designing and operating nature education and eco-tourism. In late 2015, the water trust fund project began a pilot project on more than 6.5 hectares of forest land with organically grown bamboo shoots. The monitoring data show great improvements in total phosphorus and dissolved oxygen in the downstream reservoir. Following the pilot project, in late 2016, the water fund continued to expand in the reservoir catchment area. It included more than 70 percent of the bamboo forest of the catchment area in integrated management by the water trust fund to address the challenges related to fertilizer and herbicide application. While the fund is modest in scale, it is an important step toward demonstrating how transparent, science-based, collective-action water funds can achieve water security for people and protect the integrity of ecosystems across China.

Since 2021, with financial support from the local water utility company and local government, the water fund plans to cover the entire bamboo forest in the water catchment area to achieve water security.

Social Impact

The success of this source water protection project and the natural beauty of this village in a valley in rural Hangzhou drew attention of many different businesses. In 2018 Rong Design Library, China’s biggest traditional handcraft research institute, has moved its museum to Qingshan Village with China’s biggest traditional handcraft collection. Rong also launched a handcraft farmer education project with TNC and put water-themed exhibitions in several major cities including Milan, Shanghai, Hong Kong, and Beijing. In 2019, with support from Alibaba Foundation and Wanxiang Trust, TNC created Qingshan Nature School, rebuilt from an abandoned and collapsed primary school. Qingshan Nature School has organized more than 200 nature education activities and attracted more than 2000 volunteers to participate in community development. Until now, nearly 60 young people from the outside have chosen to come to this village, to work and to live here, which is rarely seen in nearly all villages in China, where migration to cities for better opportunities is the overall trend. Qingshan Village has been designated as a “Future Village” of Hangzhou City since the district governor paid a visit and acknowledged the story that originated from water conservation. Since 2020, there are annually more than 30,000 visitors coming to village for different kinds of activities, spurring local economy.