Longwu Water Fund

​Longwu Reservoir is located northeast of Huanghu town, Yuhang district, Zhejiang Province and supplies drinking water to two villages of approximately 3,000 people.

Total nitrogen and total phosphorus levels have been rising in the drinking water, while dissolved oxygen has been dropping. The nutrient pollution is largely the result of over-application of fertilizer and pesticides for bamboo planting in the catchment. The Longwu Water Fund was established on November 1, 2015 to reduce this nonpoint source pollution and improve farmers’ livelihoods. Although this water fund is small, it represents the first of its kind as an innovative collective action case in the China context.


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.


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, a farmer representative and a food company. 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 will continue to expand in the reservoir catchment area. It plans to include 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.