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Abstract: This case describes the process, and presents the main problems faced in levying, collecting and distributing funds from the water sector (hydro electricity and water users) for use in protection of the environmental services. In the framework of laws that allow for payment for environmental services, Costa Rica has introduced several cases of pricing water to pay for services provided by forests in watershed areas. The first catchment programs financed through cost recovery were started in 2002. As a result, Costa Rica’s watershed owners, both public and private, are beginning to be rewarded for providing water, whether for drinking or for generating electricity. The problem now is to ensure that these rewards are indeed spent in the catchments, to maintain environmental services.
Further information concerning the economic and legislative instruments used in this case study is available in the Global Water Partnership Toolbox.