Water and local development in Huamantanga: a pathway interpretation of opportunities and risks of the Law of Compensation and Reward Mechanisms for Ecosystem Services in Peru

Peru is one of the first countries in the world to introduce a specific law for the promotion and regulation of Payments for Ecosystem Services (PES). This ‘Law on Compensation and Reward Mechanisms for Ecosystem Services’ (MRSE-Law) mainly aims to protect and restore ecosystems that provide critical services to the Peruvian population, including hydrological services for year round water provisioning. Since many of the water-related services are produced and affected by poor communities in the uplands of critical watersheds, the PES-arrangements under the MRSE-Law are also held to contribute to reduce poverty and exclusion of and within these communities. Through a case-study of an innovative water management initiative in the village of Huamantanga, which could potentially benefit from the new mechanisms under the MRSE-Law, this paper adopts a pathways perspective to study the risks and opportunities of a water-related PES-arrangement in line with the MRSE-Law. It shows how such an arrangement is inevitably articulated with and embedded within the on-going power-laden institutional bricolage that generates the currently dominant ‘alfalfa-cattle market pathway’, which tends to undermine peasant community control and increases privatization and social differentiation. This raises concerns about the ultimate impact of the proposed MRSE-project, which might end up dispossessing poorer local farmers from their access to the mountain pastures without providing adequate alternatives. However, the participatory and peasant-community based features of the incubating process and the flexible MRSE-legal provisions provide some opportunities to counterbalance this emerging risk.