The presentation of Essam Yassin Mohammed, a researcher with IIED's Sustainable Markets Group, to the IIED-hosted Innovations for equity in smallholder PES: bridging research and practice conference. The presentation, made within the second session on new research to improve understanding of participants' preferences for different PES payment formats, focused on direct economic incentives for sustainable fisheries management in Bangladesh. More information on Mohammed's work: http://pubs.iied.org/16527IIED.html. The conference took place at the Royal Botanic Gardens in Edinburgh on 21 March. Further details of the conference and IIED's work with PES are available via http://www.iied.org/conference-innovations-for-equity-smallholder-pes-highlights, and can be found via the Shaping Sustainable Markets website: http://shapingsustainablemarkets.iied.org/

1. Innovative Mechanism
for Integrated Watershed Management in
Cidanau

2. Landsat Image Cidanau Watershed

5. Logical link Cidanau Watershed Problem

6. Integrated Watershed Management

7. Environment Services
Implementasi in Cidanau
Watershed
Fund and researches related to PES:
1. Study of willingness to pay, Isabel van de
Sand student of Imperial College London,
2004;
2. Implementation of up – down stream
relationship concepts by PES
mechanism, IIED, 2005;
3. Study of chemical fertilizer usage impact
to sosio-economic condition, Amanda J
Kiely student of Imperial College London,
2006;
4. Study of PES impact to member of
Forestry Farmer Group and non-member
Forestry Farmer Group, ICRAF, 2007;
5. Strengthening of PES, ICRAF, 2008;

9. Current PES Location in Cidanau Watershed

10. Cidanau Environmental Services Buyer
Period : 2005 - 2014
No. Pengguna (buyer) Type of Business 2005 -2014 (US$)
Presentase
(%)
1 PT. Krakatau Tirta Industri Water Company 183,333.33 86.27%
2 Pemerintah Provinsi Banten Government 29,166.67 13.73%
Jumlah 212,500.00

11. No. Farmer Group Location TA (Ha)
Total
Member
(person)
Contract Periode
Remarks
Begin End
1 Karya Muda II Citaman – Ciomas 25 43 30/04/2005 29/04/2010 US$ 100/ha/year
2 Maju Bersama Cibojong – Padarincang 25 34 30/04/2005 29/04/2008 Contract Discontinued
3 Alam Lestari Cikumbueuen – Mandalawangi 25 78 07/01/2008 06/01/2012 US$ 100/ha/year
4 Agung Lestari Kadu Agung - Gunung Sari 25 31 07/01/2008 06/01/2009 Contract Discontinued
Total 100 186
Seller of ES in Cidanau Watershed
Period : 2005 - 2009
Period : 2010 - 2014
No. Farmer Group Location TA (Ha)
Total
Member
(person)
Contract Periode
Remarks
Begin End
1 Alam Lestari Cikumbueuen – Mandalawangi 25 78 07/01/2008 06/01/2012 US$ 100/ha/year
2 Karya Muda II Citaman – Ciomas 25 43 28/08/2010 27/08/2010 US$ 146/ha/year
3 Karya Muda III Citaman – Ciomas 25,20 49 28/08/2010 27/08/2010 US$ 100/ha/year
4 Alam Sejahtera Ramea – Mandalawangi 25 58 17/06/2011 16/06/2016 US$ 100/ha/year
5 Harapan Maju Panjangjaya – Mandalawangi 26,80 77 17/06/2011 16/06/2016 US$ 100/ha/year
6 Karya Bhakti Ujung Tebu – Ciomas 26,96 36 14/06/2011 13/06/2016 US$ 100/ha/year
Total 153,96 341

12. Environment Services Payment Impact
1. In addition conserving the trees, the farmer group also planted more trees than the
agreed number of trees. The farmer group planted more than 12.500 trees in 25
hectares;
2. There were improving economic ability and the social order of society, those are:
• Improving nutrition consumption;
• Having a chance to save gold as a deposit;
• Having a chance to higher education;
• Having a chance to develop communal livelihood;
• Rehabilitating public network of water pipe;
• Helping the orphans and widows;
• Rehabilitating the worship building.
3. The stakeholders’ consciousness of conserving watershed hydrological function was
improving, not only for economical purposes but also for supporting sustainable life;
4. Cidanau becomes a reference study location for integrated watershed management in
Indonesia and other countries; PT. Krakatau Tirta Industri, as a buyer of Cidanau
environmental service, is nationally recognized as green company that have willingness
to pay the environmental service voluntarily;
5. As base of integrated watershed management, it needs a regulation to improve
management and environmental service.

13. Priority Villages & Projected Farmer Group
For Environment Services Payment Improving Location
Villages
Total Area
(Ha)
Projected
Farmer
Group
Cikumbueun 651,32 5
Panjangjaya 80,77 2
Ramea 415,01 2
Batukuwung 173,62 2
Cibojong 259,55 2
Kadukempong 416,55 4
Kadubeureum 322,79 3
Padarincang 147,02 1
Citasuk 258,59 2
Ciketug 129,80 1
Cisitu 122,90 1
Citaman 59,30 1
Panyaunganjaya 126,08 1
Sukarena 52,01 1
Ujungtebu 149,19 2
Total 3364,48 30

14. Priority Location for Environment Service Wider

15. Potential environmental services payments from Cidanau water usage based on the
Isabel van de Sand study (2004) at a price of US$ 0.042 per cubic with the use of 1.100
m³ / sec, the money can be mobilized from 36% water user of who have a willingness to
pay US$ 520.344,000 per year.
Meanwhile, to pay environmental services to the seller, with the assumption of US$ 100
per hectare per year for the area of 3364.483 hectares, requires US$ 336.448,250 per
years.
Buyer’s Funding Projected &
Seller Payment
Buyer Type of Business 2014 - 2019 (US $) %
PT. Krakatau Tirta Industri water company 104.167 55,25%
PT. Asahimas Chemical Chemical company 12.500 6,63%
Pemerintah Provinsi Banten Government 71.875 38,12%
Amount 188.542
Assumptions:
PT. KTI pay US$ 20.833 per year and Pemerinrah Provinsi Banten pay US$ 14.333 per year

16. Contract Allocation Mechanisms
 Supply (interested farmers joining the PES) exceeding demand (budget
availability from the buyers)
 Individual auction as the alternative to allocate contract efficiently
 The individual auction will not be applied, the reasons are:
• The local farmers engage in groups, not as an individual contract
• Different contract values within group members may raise internal
conflicts
• Low educational level of the participants: lack of knowledge on the
auction process, how a PES contract work and its implementation.
Group-level implementation is expected to induce collaborations and
self-support-system among the members

17. Collective “Auction” Method
• Conduct participatory landscape assessment (transect walk) to identify
environmental problem hot-spots with the local farmers;
• Discuss possibility of contract contents with the farmer groups;
• Initial awareness raising about PES and its proposal development for
submission to the FKDC;
• The proposal will consist of:
1. Institutional performance
 Group PES workplan for the next 5 year based on the findings of
participatory landscape approach, include:
 Land management
 Tree management: thinning, rehabilitation, maintenance;
 Utilization of PES money.
 Basic rules and governance issues;
 Women involvement;

18. 2. Detailed Land Management:
• Agriculture Calendar to determine planting time and potential income
from various agroforestry products;
• Simple construction plan for reducing sedimentation (ridging, sediment
pits, vegetative strips)
• Participatory water monitoring
3. Benefit Sharing
• Procedures of payment sharing among group members
• How they will utilize the money.
Terima kasih