The Site
Loktak and associated lakes are multifunctional systems providing the base of ecological and economic security to the entire northeastern region of India. These floodplain wetlands provide fish and vegetables, moderate floods, support rich biodiversity and are inextricably linked to the Manipuri culture. They extend to 469 sq km, with Loktak being the largest wetlands of the basin accounting for over 60% of the wetland regimes. The characteristic feature of the lake is presence of floating lands, locally called phumdis, which are thick mats of vegetation intermixed with sediments. Southern portion of Loktak Lake forms the Keibul Lamjao National Park (KLNP), which is the habitat of globally threatened ungulate species Cervus eldi eldi. Based on its high ecological and socioeconomic importance, Loktak was designated by Government of India as a Wetland of International Importance under the Ramsar Convention in 1990.
The diverse range of ecosystem services derived from the lake is under stress due to lopsided developmental planning within the basin. Water resources development projects for flood mitigation, agriculture and hydropower generation have led to modification of hydrological regimes seriously impacting the processes, functions and attributes of wetlands. In particular was the construction of Ithai barrage downstream of Loktak in 1984 entailing regulation of lake levels for hydropower generation. The barrage converted a naturally fluctuating wetland into a reservoir leading to inundation of peripheral areas, loss of migratory fisheries, reduction and degradation of national park habitat, and decline in water quality. Rapid growth of population in the hills has led to expansion in area under shifting cultivation enhancing lake siltation and loss of flood attenuation capacity. High levels of urbanization within the upstream reaches with inadequate sewerage systems has led to dumping of untreated sewage and sewerage into the lake leading to decline in water quality. Inundation of peripheral areas due to constant water levels forced an occupation shift from traditional agriculture – fisheries based livelihood systems to fisheries. Declining resource base with increasing population pressure forced propagation of harmful fishing practices ultimately leading to phumdi proliferation and choking of the central sector of the lake. The ultimate effect has been on impoverishment of livelihoods and enhancement of poverty within wetland communities.
At the core of lake degradation is lack of integration of ecosystem services into developmental planning processes leading to over provisioning of tangible ecosystem services while severely undermining relatively intangible regulating, cultural and supporting services of the wetland ecosystem. Water use for hydropower generation, despite being ecologically and economically inefficient, remains the major resource use. Despite an overall decline in health of lake ecosystem, water abstraction for hydropower generation has been on a continuous increase, because of its relatively visible impacts on the regional economy. The hydropower pricing mechanism in place at present does not recognize lake water as an input to production process. The actual costs of hydropower generation has phenomenally increased due to increasing environmental damages in the form of degraded habitats of KLNP, loss of fisheries and agriculture and enhanced siltation within the lake. The current management, by not addressing lake degradation generates Rs. 4.6 worth of environmental damages for every rupee worth hydropower produced. While the benefits of hydropower support economic activities within the downstream and upstream reaches, the environmental impacts have been shifted to the wetland communities through a gradual and continuous degradation of resources and livelihoods. Ultimately this would constrain the overall economic development of the entire basin, jeopardizing its ecological and economic security.
How and Why RUPES invloved?
Wetlands International – South Asia (WISA) and LDA implemented an India-Canada Environment Facility (ICEF) supported project during 1998-2003 aimed at complete and exhaustive inventorization of the ecological, socioeconomic and institutional features of the lake and its catchments and identification of restoration strategies through implementation of demonstration projects. The outcomes of the project supported development of river basin level management plan for Loktak and associated wetlands. The five year action plan envisages investment of US$ 110 million for lake restoration through implementation of action plans on catchment conservation, water management, biodiversity conservation, sustainable resource development and livelihoods, and institutional development. At the core of the plan is balancing water allocation for human and ecological purposes considering water requirements for maintenance of the national park and overall lake ecology alongwith hydropower, irrigation and domestic uses. The management plan is currently within first year of its implementation with US$ 11.10 million invested through the Planning Commission, Government of India into priority restoration programmes including phumdi management, catchment conservation and fisheries development.
While the current investment portfolio would address the major factors leading to lake degradation, sustainable lake management would require realigning and rationalizing of the incentive systems related with the lake resources. A unique opportunity therefore exists for internalizing the environmental externalities generated by unsustainable water management through implementation of a payment scheme transforming environmental damages into conservation revenue flows for lake management and incentivizing resource stewardship. The hydropower producing company and the lake management authority are envisaged to be respective buyers and sellers of sustainably provided water for hydropower generation. This would greatly complement the ongoing conservation efforts and rationalize water use for various developmental purposes.
The Loktak RUPES II initiative was therefore launched in March 2009 with the primary objective of rationalizing incentive systems within Loktak Lake to promote sustainable water management for ecological restoration and poverty alleviation. This is expected to be achieved through four interrelated components: a) Economic Valuation of Ecosystem Services; b) PES Instrument Design and Implementation; c) Institutional Development and Capacity Building; and, d) Policy and advocacy.
RUPES Works (So Far)
Valuing the ecological services of Loktak
An economic valuation of the various ecosystem services of Loktak Lake was undertaken to demonstrate and quantify the “hidden economy”. Application of market and non-market tools to assess the economic contribution of various ecosystem services of the wetland.
The assessments revealed that the annual benefits from Loktak Lake at 2006-2007 prices stood at Rs. 600 millions, which is equivalent to nearly 2% of the state’s gross domestic product. Direct benefits through provisioning of fisheries, water for hydropower generation and vegetation for use as fuel, food, fodder and raw material for handicrafts account for 48% of the overall benefits. Water use for hydropower generates 74% of the direct benefits accrued. Fisheries and vegetation account for 18% and 8% of the benefits respectively. Indirect benefits based on regulating, supporting and cultural features account for 52% of the overall benefits derived from the lake. Nutrient retention functions of phumdis forms the basis of 12% of non-use benefits.
The assessment clearly indicated that more than half of the total benefits derived from Loktak Lake do not have marked based prices. This led to significant underestimation of the overall contribution of Loktak Lake to the regional economy, and dominance of the more tangible use of lake resources, i.e. for hydropower generation.
Establishing the tradeoffs
A cost benefit analysis was undertaken to assess the economic impact of inefficient water management. The negative impacts of unsustainable water management were identified and quantified. The incremental sedimentation and phumdi proliferation resulting due to barrage operation were estimated based on abatement costs. Loss of agriculture and fisheries were estimated using current market prices. Habitat degradation of KLNP was assessed using ecological – economic modeling wherein the linkages of hydrological regimes with habitat and subsequently with willingness to pay for an improved habitat condition were established. Based on the assessment of costs and benefits, three parameters were derived: a) net private benefit to the hydropower company, estimated as the net operational revenue generated; b) environmental costs of hydropower generation which is the cost attributed to sedimentation, phumdi proliferation, habitat degradation and loss of agriculture and fisheries, and c) total cost of hydropower generation, which is the sum of environmental cost and the operational cost. An analysis carried out earlier clearly brings out the inefficiencies of current water management practices. The assessment established that the actual cost of hydropower generation from Loktak is 400% more than what is presently charged (i.e Rs. 5.16 / unit against Rs. 0.96 actually charged).
Future Programs
Conservation and management of Loktak mandates a strategic shift in water management balancing human needs with multiple values of the lake adopting a stakeholder driven process. Wetlands International – South Asia and Loktak Development Authority , the nodal government agency for lake management, are developing a water allocation strategy harmonizing water allocation for ecological purposes ( eg. restoration of KLNP, improvising water quality , restoration of natural fish recruitment) with human purposes for hydropower, agriculture and domestic use. This rationalized water use plan will form the basis of operation of Ithai and other upstream and downstream hydraulic structures to enable allocation of water for multiple purposes and maintenance of multi functionality of wetlands. This approach recognizes the crucial role of hydropower within the economy of the state, but proposes optimizing its generation levels in a manner that does not conflict with other functions and values of the lake and livelihoods of communities.
With the current restoration measures under implementation, Loktak Development Authority would be in a unique position to serve as a provider of lake ecosystem services for hydropower generation.
The hydropower producing company and the lake management authority are envisaged to be respective buyers and sellers of sustainably provided water for hydropower generation. This would greatly complement the ongoing conservation efforts and rationalize water use for various developmental purposes. The project would design an suitable PES instrument for the situation and build institutional capacity and arrangements for its successful implementation.
Local Partner:
Loktak Development Authority
Contact:
Ritesh Kumar
Conservation Programme Manager
Wetlands International – South Asia
A-25, Second Floor, Defence Colony
New Delhi – 110024, India
Email: ritesh.kumar@wi-sa.org