Arid Lands Newsletter--link to home page No. 44, Fall/Winter 1998
Conflict Resolution and Transboundary Water Resources

Water as an instrument for sustainable regional development

by David Barkin and Carlos Pailles

"The fundamental principle of compensating peasant and indigenous communities for environmental services that offer tangible benefits to downstream users and society as a whole is an essential part of any serious effort for regional planning, contributing to the possibility that these communities will continue their conservation and protection activities."


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This essay examines an approach to river basin management designed to increase the quantity and reliability of water supply by encouraging water production in the upper reaches of river basin watersheds. While the particulars described here concern the semi-arid forests in mountainous watersheds that rise up to 2,000 meters and flow into an aquifer on the narrow coastal plain in the state of Oaxaca, Mexico, the general principles and techniques described could be adapted and applied in other regions of the world, including those involving transboundary river basins.

Thumbnail map of Huatulco region
Thumbnail link to Huatulco map, ~8K file

In this particular case, a mega-resort tourist development program was implanted in the Bahías de Huatulco, a spectacular series of inlets on Mexico's Pacific coast. The previously isolated region is home to about 50,000 people of four different ethnic groups. These indigenous people live in some 150 subsistence communities widely dispersed over 700,000 hectares in the surrounding highlands or in a number of small fishing villages located along the coastline. The new mega-resort and accompanying infrastructure catapulted the region into the international market, inducing a self-reinforcing cycle of speculation and investment that accelerated the process of impoverishment among the indigenous populations and provoked a growing water shortage. The sudden destruction wrought by Hurricane Paulina in October 1997 intensified these problems.

In 1992, a local NGO, the Centro de Soporte Ecológico (CSE), was founded to channel local and international resources for a regional resource management program to promote sustainable development. Initially, the CSE concentrated on collaborating with local indigenous communities to rebuild their denuded mountainsides through a long-term program of reforestation; this also included initiatives for landscape management and a modest ecotourism project with quality bungalows to accommodate visitors. Following Paulina's impact, it became clear that a more ambitious program was needed; one of the smaller river basins within the region was selected as a site for a pilot program of intensive reconstruction, involving a series of local works projects to protect river beds and banks, clear the waterways of debris, and regulate water flows and infiltration to underground aquifers.

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Thumbnail link to reforestation image, ~32K files

Perceiving an opportunity to improve and broaden its program, the CSE is now frontally attacking these problems with a series of productive activities designed to stem environmental degradation and increase total water availability in the region; two of the major instruments for the "production of water," as we call this approach, are large-scale reforestation and river management work to assure greater supplies and stabilize flow rates (Barkin, in press). The fundamental principle of compensating peasant and indigenous communities for environmental services that offer tangible benefits to downstream users and society as a whole is an essential part of any serious effort for regional planning, contributing to the possibility that these communities continue their conservation and protection activities.

The principle of the production of water

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The regional resource management program addresses the shortage of water. It starts from the premise that the problem can be attacked at its source if rural indigenous communities are mobilized to produce water -- that is, to increase the supply of water available for their own needs and, by extension, for society as a whole. Increasing society's ability to produce water, as well as use it more efficiently, can bring about an interrelated series of benefits that will dramatically improve environmental, sanitary, and productive conditions among some of the poorest social groups in Mexico, while reducing water scarcity throughout the impacted region. This approach involves implanting new methods for collecting and storing water for local needs as well as developing land and water management practices to reduce run-off and erosion, increasing the ecosystem's ability to absorb water and consequently recharge the lowland aquifers, as well. Such a project is ideally suited to peasant communities in much of the Third World because they occupy substantial parts of water-short regions where, furthermore, the modernization of production and abandonment of traditional crops and lands has significantly reduced the absorptive capacity of various ecosystems.

Traditionally, local communities in arid and/or rural regions have tended to collaborate regionally to protect local aquifers and provide water by means of rainwater harvesting for local use and recharge. Historical evidence abounds for elaborate social structures to ensure the construction and maintenance of such systems, and in some areas, this approach to water management remains central to patterns of social organization.(1)

On a larger scale, however, river basin management has often entailed expensive public works for water collection, transport and storage behind large dams (McCully, 1996). Since large-scale demands for water by farmers, industrialists, and citizens are generally concentrated in wealthier regions and urban areas, major water works have been preferentially located to serve this clientele. As demand rises, the expenditures required to assure adequate supplies increase more than proportionately, often wreaking great environmental and social damage on the regions from which the water is extracted. As a result, a vicious circle of environmental degradation and agricultural modernization in the lower parts of productive watersheds leads to further social polarization; poorer communities find themselves relegated to the more marginal areas, which tend to be in the higher reaches of the watershed. Furthermore, due to lack of resources and incentives to protect their areas, such communities then tend to contribute to greater land degradation (Barkin, 1990).

By focusing on water production to increase water supplies in countries like Mexico, it becomes possible to identify ways to develop integrated policies that may reverse this trend. Thus, we focus on the social organization rather than simply on the public works required to harvest and recharge water. In this way, we can explore the significance of the obvious fact that water availability depends not just on natural endowments and technology. Clearly, the regions in question tend to receive much of the rain and runoff potentially available for recharge within a given watershed or basin. Effective polices must be designed to encourage indigenous communities in these regions to modify their cultivation, land management, and water management practices, as an efficient way to increase water supplies in lower parts of the watershed.

Because of their precarious existence, these communities must be compensated for their collective efforts to increase water production. To be effective, this compensation must include some sort of long-term guarantee for the peasants; the rewards can take several forms:

  • direct payments for their contribution to increasing water supplies, akin to the nascent mechanism of carbon sequestration bonds now being marketed to finance some forest conservation efforts in Central America, Bolivia and Mexico;
  • better prices for their goods;
  • increased output in existing systems; and/or
  • the introduction of new products and services that complement and add value to traditional output.
In the rest of this article we examine in more detail the CSE project which is combining all of these processes to implement a sustainable regional environmental management program.

The river basin supplying the Bahias de Huatulco

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In 1958, the landscape of the coast of Oaxaca, seen from the peaks of the Sierra Sur, was a symphony of greens contrasting with the blues of the Pacific Ocean. In the river basin feeding the coastal aquifer, minor breaks of less than 5% in the tropical dry forest included traditional fields of corn, beans and fruit trees. The coffee areas were covered by canopies of shade trees. Forty years later, the forest coverage had been reduced by 50%; only 20% resembled its former condition, while the rest suffered from a partial extraction of its timber resources. During the past 15 years the rate of deforestation doubled that of the previous 25 years.

These tropical dry forests are among the most fragile ecosystems in the world and are rapidly disappearing. Historically, the inherited culture of forest management within the coastal communities has been eroded by an antiquated and venal commercial structure. In spite of sustained demand for tropical hardwoods and attractive prices for such species as Rosewood and Lignum Vitae, a complex and costly system of intermediation discouraged communal planting and conservation and forced more intensive exploitation by drastically reducing local prices. Tourist development induced a heavy flow of migrants from the highlands and other regions to the narrow (10-20 kms.) coastal plain, overwhelming communal management practices that historically defined and restricted access to the forests in the mountains and coast.

Two-thirds of this destruction is due to the "walking milpa" (the system of slash and burn cultivation that encroaches on the forest for the short term planting of corn and associated crops) and agrochemicals. The other third is mostly due to the illegal cutting of trees encouraged by developers of the tourist corridor from Huatulco to Puerto Escondido. Devastation of the forests has been followed by soil erosion; as a result, the water supply to the Bahias de Huatulco tourist development area will be exhausted by the year 2020, unless some regeneration program is implemented.(2)

Most people in the region are not even aware of the depths of the impending water crisis. In Huatulco, urban consumers receive water for free and, although they complain, the hotels are only charged a fraction of what they would pay in other international resorts. Underpriced resources for the privileged urban population are yet another signal discouraging peasant society from continuing its arduous task of environmental management, truncating its time-honored commitment to assure water for its children and grandchildren. In the end this combination of factors contributes to a self-devaluation within peasant society, a seemingly irreversible loss of self-esteem.(3)

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Thumbnail link to image of hurricane damage, ~30K file

To add insult to injury, in 1997, Hurricane Paulina destroyed 6 or 7 million trees, increasing deforestation in the river courses by 80%, and damaging 66% of the peasant homes. But it also instilled a renewed sense of responsibility towards nature in most of those communities that had been able to maintain communal organizations. This is the basis for the growing enthusiasm of the communities to participate in the CSE's regeneration activities.

An alternative regional resource management plan

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Although there is very little consciousness of the water shortage on the coast, the upland communities are acutely aware of the problem. The CSE in Huatulco had been working to implement a pilot management program for the Magdalena River in the middle of the Central Coastal Basin of Oaxaca for at least five years before the hurricane. Initially focusing on repairing the damage from decades of deforestation, the NGO implemented a series of relatively orthodox approaches to improve the river's flow and to construct an ecotourism facility as an alternative source of income. In addition to foundation support, government funds were channeled to the project for river basin development and maintenance, while several of the hotels (including one that is part of a world-wide chain) made occasional contributions in kind for the NGO's work.

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Thumbnail link to nursery image, ~30K file

With Hurricane Pauline, the CSE perceived an opportunity to start a more ambitious program for the region as a whole. Federal agencies charged the Center with intermediate-term responsibilities for reconstruction, once the immediate disaster relief programs were terminated. Bureaucratic back-tracking and persistent negotiating created an opportunity to complement the pilot project with a more ambitious program to reforest target areas with a view to restoring biodiversity--a concern of people within the communities--while assuring that some of the species would serve the demands of the marketplace. The forestry program was part of a broader program for regional development and environmental protection. Because economic viability was a criterion from the beginning, technological innovations were associated with existing market opportunities to allow wood products rather than raw trees to be marketed, with more employment and value accruing to the communities. This is a fundamental feature of the program.

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Thumbnail link to water works image, ~29K file

This reforestation program has already shown great success. The first round of plantations resulted in germination rates exceeding 90% and replantings brought the effective rate to virtually 100%. The selection of varieties, the techniques used and the anticipated marketing opportunities are creating an extraction profile that will allow the first harvest only five years after the initial effort. Furthermore the program proved effective from the very beginning as a water production measure; the minor land management works and tree planting have already acted to reduce the speed of water runoff, reducing erosion and visibly increasing water infiltration.

The organizational structure is also innovative. The CSE is a constitutive part of a several local trust funds that channel resources from governmental agencies, the communities and the private sector into the program. Individual enterprises that are being established by the communities themselves (including a pure water-bottling program in the highlands and the ecotourism project) are coordinated from the CSE. To that end, it has established a formula that attempts to create a solid foundation for future activities: prices for goods and services must be sufficient not only to cover the direct costs of production, but also to make substantial contributions for further investment in the community and environmental programs in the region as a whole. This is the essence of the international "fair trade" movement.

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Thumbnail link to image of seed collectors, ~26K file

During the initial stages, the communities involved have displayed a remarkable capacity to integrate these programs into their existing structures. The assemblies where the initiatives are discussed reveal that the current inhabitants' forebears regularly engaged in such activities; we discovered that historical forest protection and replanting brigades used the same seed collection techniques and planting methods that are now being (re)introduced. This same process of interaction with the regional supervisors reveals the importance of water management and protection activities in the communities in past epochs, tasks that have been neglected as discriminatory governmental policies forced the peasants to search for income and employment in nearby towns or even in the USA.

The program envisions an eventual charge to the large water users on the coast to cover part of the costs of the regeneration of the river basin. At present, this is difficult because the water system is controlled by the tourism agency, which has been unable either to fulfill its commitments to deliver a high quality product or to maintain its infrastructure properly. In fact, inadequate water supply is considered to be a major obstacle blocking construction of at least a dozen new hotels in the area. Once the communities in the watershed's upper reaches have demonstrated their willingness and effectiveness in producing water, as well as in reducing the damage from seasonal rains, it is expected that the local authorities will be able charge large-scale users for these environmental services. In the interim, other mechanisms of explicitly integrating the coastal beneficiaries into the program are being explored:

  • The hotels are expected to provide some support for the indigenous communities' ecotourism activities, including promotion among their clients and financing of some of the construction.
  • Future plans include reserves for native flora and fauna, possibly including areas for large mammals, once common in the zone.
  • The communities will shortly begin developing a dependable capacity to supply fruits and vegetables to the hotels.
  • Contracts are being developed that will compensate the communities correctly for the real costs of water production, including fair wages for the workers and a charge for the environmental services that are normally not included by the market.
  • Regular channels are being developed for regional discussions of activities that will increase the overall attractiveness of the area for visitors in a sustainable fashion. This communication network is fundamental to successful collaboration among dissimilar groups and is essential for the long-term consolidation of the CSE agenda.


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The Huatulco experience clearly illustrates the possibilities of developing a water management program that contributes to sustainable development (Barkin, 1998). A number of original contributions are proving effective: Perhaps most important is the integration of water production and conservation programs into a broader process of diversified, community-based resource management for sustainable development. This is the only way in which the long-term goal of creating an integrated regional program can internalize the true environmental costs; the beneficiaries will participate by paying for the environmental services through the prices of products and services generated in the communities, a concept that will eventually be extended to the use of water itself.

In the meantime, a solid basis is being built to balance downstream-user benefits with obligations. The project (CSE and the trust funds) has moved slowly but deliberately to educate and invite participation from the most important private sector groups; although only one of the hotels has participated to date, the intensity of the water problem will soon require some sort of further collective action. In contrast, several government agencies greeted the project with alacrity since it relieved them of several responsibilities they had been unable to meet adequately. Their contributions have generated temporary employment and supported this unique and efficient integrated regional development program.

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Even more important, this program reinforces the vitality of the region's indigenous communities. Since they are the organizational structure through which the program is implemented, not only are their direct environmental management services being rewarded, but their members are also benefiting as they are incorporated into new activities and begin to develop a better understanding of their opportunities in international markets. Through the CSE, they are forging a reciprocal set of obligations and benefits as part of the program of development and environmental reconstruction. By establishing new market relationships, introducing new technologies, and creating new products, the communities are once again taking responsibility for environmental management within their regions. As they assume these functions once again, they are also acquiring greater strength and authority among their own members and credibility to negotiate with other organizations, both public and private. In this way, they are once again able to define a set of priorities that will ensure their continuity as unique ethnic and/or social groups, while also raising the living standards for their members, now and in the future.


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1. There is ample evidence to indicate the collection, transportation, and storage of water in Pre-Colombian Mexico was extremely important and drought may have been the cause of the demise of the Mayan culture in the Yucatan. For an extensive compendium of community experiences involved with local water supplies, refer to UNEP, 1983, for a global perspective and Agarwal and Narain, 1997, who document the Indian case. (Back to text)

2. Data collected from the battery of wells that supply water to the coastal areas showed a 26% decline in the levels of the aquifers between 1986 and 1992. Extrapolation of this trend leaves insufficient water for cost-effective pumping in less than a quarter century. (Back to text)

3. The uprising by the Zapatista Army of National Liberation in January 1994 is dramatic testimony to the depths of this process and the latent reserve of pride in this endangered heritage. (Back to text)


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Agarwal, Anil and Suntia Narain (eds.) 1997. Dying wisdom: Rise, fall and potential of India's traditional water harvesting systems. Fourth Citizens' Report on the State of India's Environment. New Delhi: Centre for Science and the Environment.

Barkin, David. In press. The production of water in Mexico. In Managing a Sacred Gift: Changing Water Management Strategies in Mexico. S. Whiteford (ed). San Diego: Center for US-Mexico Studies.

Barkin, David. 1998. Wealth, Poverty and Sustainable Development. Mexico City: Editorial Jus and Centro de Ecologia y Desarrollo.

Barkin, David, R. Batt, and B. DeWalt, 1990. Food vs. feed: The global substitution of grains in production. Boulder, Colo.: Lynne Rienner Publications.

McCully, Patrick. 1996. Silenced rivers: The ecology and politics of large dams. London: Zed Books.

United Nations Environment Programme (UNEP). 1983. Rain and stormwater harvesting in rural areas. London: Cassell, Tycooly.

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Author Information

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David Barkin is a Professor of Economics at the Universidad Autonoma Metropolitana, Xochimilco Campus, Mexico City. You can reach him for comment by email at Pailles is Director of the Centro de Soporte Ecológico, Huatulco, Mexico.

Additional web resources

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There are numerous commercial web sites that promote the resort area of Bahias de Huatulco. Readers interested in exploring these sites can easily do so by entering the term "Huatulco" into any popular web search engine.

Ecotravels in Latin America
This site, maintained by environmental journalist Ron Mader, is an excellent starting point for materials on responsible tourism and ecotourism in Latin America.

ENTERWeb, the Enterprise Development Network, is an annotated mega-site of links to information on micro, small and medium enterprise development both in developed and developing countries. One section of the site focuses on Latin America (

ACCION International
This private, non-profit organization is dedicated to reducing poverty by providing loans and other financial services to poor and low-income people who start their own tiny businesses. ACCION is an umbrella organization for a network of microfinance institutions in 13 Latin American countries and 8 U.S. cities.

The Virtual Library on Microcredit
The Virtual Library on Microcredit was set up to be a repository of information on microcredit (in a broad meaning of the term to include microcredit, community development, NGOs, poverty, environment, microenterprises etc.). Urban and rural areas of low-income and transitional economies in Asia, Africa, Latin America and Central/Eastern Europe are the primary focus. The site is maintained by Hari Srinivas, Department of Social Engineering, Tokyo Institute of Technology.

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