This not only marks an innovative step in nature conservation, but it also links upstream stewards and downstream beneficiaries in a partnership. PES refers to arrangements where beneficiaries of environmental services, such as watershed protection, forest conservation, carbon storage, and landscape values, compensate the communities and land stewards who maintain them. By assigning value to nature’s services, PES helps ensure these benefits are protected and sustained for the future.

Worldwide, safeguarding the environment is essential to maintain the ecosystem services that support both human well-being and natural systems. As financial support for natural resource management continues to decline, PES schemes have increasingly emerged as viable mechanisms for sustainably funding conservation efforts.

What happens when the forest that holds water and the towns that depend on it enter into a PES scheme? It results into shared promise to promote sustainable watershed management and equitable benefit sharing between upstream communities and downstream users in Phuentsholing Thromde.

Under this arrangement, upstream communities receive financial incentives to protect and restore the Omchhu watershed, effectively linking conservation efforts with livelihood needs. In practice, the incentives are collected through monthly utility payments for ecosystem services, where the water users downstream will pay an additional five percent of their total water consumption. In return, 226 households from Wangdigatshel–Dophuchen and Deling–Marpji in Phuentsholing gewog commit to managing the watershed responsibly and implementing agreed measures to ensure a sustained and continued water supply for downstreams. The incentives will be used for the upstream communities, promoting their livelihoods._{^{PC: Tarayan Foundation}}
PES schemes have increasingly emerged as viable mechanisms for sustainably funding conservation efforts. 

Healthy ecosystems keep nature in balance and sustain both plant and animal life. When they function well, they also provide wide-ranging benefits to people, from essential goods like food, fuel, and water to non-material values such as beauty, recreation, and spiritual connection. These benefits are collectively known as ecosystem services.

Tarayana Foundation’s senior programme officer, Karma Uden, said that the initiative strengthens community empowerment while contributing to Bhutan’s commitments to the SDGs, carbon neutrality, and Gross National Happiness, all while safeguarding the environment and supporting rural livelihoods. “The project is structured around four work packages, with the second package targeting local water security through

Payments for Ecosystem Services that link conservation outcomes to direct community benefits,” she added. Tandin Wangchuk, a farmer from the upstream community, shared that such arangement only builds bonding between the two communities where we share the responsibilities of securing water, including an awareness of why it is important to safeguard the watersheds. “To look into it, we have to come to Phuentsholing for numerous reasons, where we also use their services, especially water. So, such an arrangement makes sense, and the community was forthcoming.”

Tarayana Foundation’s Technical Director, Dr Sangay Dorji, explained that PES was implemented following their assessment that showed the watershed areas were degraded according to the Watershed Classification Guideline 2016 and the water sources were declining. “This necessitated an action which was a sustained mechanism that would not only fund maintenance and restoration, but also maintain the water management. This is how we initiated the PES with communities and stakeholders following constant consultations for two years.”

A partnership between WWF-Bhutan and Tarayana Foundation, the PES initiative is implemented under the IKI Living Landscape Project, supported by the Federal Ministry for the Environment, Climate Action, Nature Con- servation and Nuclear Safety through the International Climate Initiative (IKI). The Department of Forests and Park Services, the Department of Water and the Ministry of Energy and Natural Resources provided the technical support.

The IKI Living Landscape’s approach protects High Conservation Values in the landscape and their integration into the national land use zoning system and policy of Bhutan. The project covers nine dzongkhags, namely Thimphu, Paro, Haa, Samtse, Chukha, Dagana, Tsirang, Sarpang and Zhemgang. It covers a total area of 9,967.45 km2 outside the protected areas network. These areas are home to rich biodiversity, including tigers, elephants, red pandas and hornbills.