1. Supply side Gerdien Meijerink LEI Ina PorrasIIED Fred MuchenaETC Davis OnduruETC Evelyn Kaari NjueETC

2. Background – collaboration of IIED, LEI, ETC Socio-economic feasibility on the supply side of green water credits: How will upstream farmers benefit from a GWC scheme, Which institutions can facilitate farmers’ supply of environmental services and manage payments What is the likelihood of farmer participation under different design options of the scheme?

3. Elements of the study Institutional and stakeholder mapping Profile of potential suppliers Upstream Costs and benefits of SWC Farmer willingness to participate in GWC

4. Methdology: Field research in the upper Tana basin Focus groups Existing institutions working in the area and farmers’ attitudes towards them Current practices in relation to SWC Barriers to and opportunities for introducing SWC practices Constraints in water use and supply Current channels for access to micro-credit and cash transactions The household survey Builds on LEI’s MONQI methodology (monitoring questionnaire and associated software) Indicators for household (livelihood) and farm management Choice modelling element Farmers’ preferences for different packages of compensation involving different mixes and levels of payments, credit and in-kind benefits such as technical assistance, community development projects as well as different length of contracts.

5. Preliminary results Household surveys available: MACHAKOS20 NYERI18 EMBU10 MBEERE1 Total58 Selection of target areas

6. Farm households: suppliers In general: High education level Small farms (< 1 ha) High number of household members (7 per hh) Labour availability (4.6 persons per ha)

7. Farm households: suppliers Area is characterized by great diversity: Cropping systems (tea, coffee, maize-beans, small-scale irrigation, livestock) Small plots are intercropped with 2 or more crops Gross margins differ from 400 US$/ha to 2000 US$/ha Share of non-farm income (average 30-40%) Slopes of plots (flat to 47%)

8. Soil and water measures Data only available for Kiambu, Mbeere and Githungi (Total 80 plots) Fanya yuu68% Grass strips28% None 4% Level of maintenance? Scope for extension and or improvement?

9. Institutional analysis Credit organizations: Most small farmers are not eligible for loans from or savings accounts at banks Revolving fund (group savings and credit) Extension organizations: Close relationships with Social Services (MoA) Group formation and capacity development, technical advice Donor organisations (GTZ, IFAD) Private sector (Bayer, pesticide sellers) Export contractor “Self help” groups Farmers organize groups around an economic theme Only successful if there is a clear economic incentive to join and comply with rules

10. Trade-offs Depends on the measures taken:  Enhance productivity (through SWC) Will increase water use but reduce sedimentation  Lower productivity (reduce irrigation…)  Increase labour costs for investment & maintenance of SWC structures  Need to achieve certain amount of produce: Food security Sales in local markets Fulfill obligations of exporter/contractor

11. Incentives required See SWC as a means to an end: economic tangible benefit “Payment” for service: Training & information sharing (transitional cost) Implements, tools Revolving fund administered by self help groups Option of no irrigation – compensation payments?? Cooperation is key

12. Contracting, monitoring and payments

13. Thank you End