Utility engagement with payments for watershed services in the United States

This research demonstrates the growing use of payments for watershed services (PWS) by drinking water, wastewater, and electric utilities in the USA to meet a variety of objectives and considers the potential these widespread and long established institutions hold in driving PWS implementation and mainstreaming ecosystem services approaches. We developed a working typology highlighting similarities and differences among 37 identified programs covering source water protection, fire risk mitigation, point source pollution offsets, voluntary customer offsets, and hydropower mitigation. We identified six distinct mechanisms for funding the identified programs. Sales taxes and bond measures generated the most annual funding per capita while voluntary ratepayer contributions and donated water conservation savings generated the least. A variety of actors were involved in the implementation of these different programs. Notably, nonprofit organizations were critical to each program type and often acted as important intermediaries, facilitating transactions among utilities and landowners. We found these initiatives face multiple challenges including the difficulty of demonstrating the business case for investments in ecosystem services and changes in the regulatory environment that can decrease ecosystem service demand and limit flexibility in pursuing PWS approaches.