Introduction to the Conservation Project of Longwu Water Source Area

Part 1 Abstract of the Project This project, through piloting the Longwu reservoir, aims to explore the conservation of small-scaled drinking water source areas that are of large quantity and lack of management and financial support. It works to reduce non-point source pollution with ecological methods so as to ensure drinking water safety and enhance ecosystem service functions of small-scaled water source areas. At the same time, the project explores to establish the water trust/fund model, guiding the public and enterprises to get involved through non-profit organizations and providing funds for sustainable conservation through environment-friendly operational activities. On one hand, this model can reduce the pollution caused by agricultural activities. On the other hand, it can help local communities develop environmentally friendly industries, which facilitates the transformation from traditional agriculture to green economy.

Part 2 The Water Trust/Fund in Longwu 1. The Longwu water source area and the threat it faces—— agricultural non-point source pollution

The Water Source Area in Longwu The Longwu reservoir is located in the northeast of Huanghu Town, Yuhang District, Zhejiang Province，which supplies drinking water to more than 4000 residents from surrounding two villages. Overall, the water is of relatively good quality. The report of the survey about the background value of its water quality carried out in July 2014 showed that 26 items of the total 29 indicators about the reservoir met the second class of national water quality standard. Nevertheless, total nitrogen, total phosphorus and dissolved oxygen are at the level of three or four class. In the catchment area of the Longwu reservoir, 1600 acres of land are developing bamboo industry, accounting for about 61% of the total area. Up to now, it has been found that there are about 200 acres using fertilizer and herbicide. Nitrogen and phosphorus generated through fertilization are the main factor causing reservoir pollution. Although herbicide (glyphosate and paraquat) was not detected in water quality monitoring, it was found heavily-used in the catchment area in field surveys. This could cause residues in the soil and pose a serious threat to the reservoir’s water quality. There are no human beings living or industrial pollution existing in the water source area. Both local survey and field investigation indicate that agricultural non-point source pollution is the main threat to the Longwu reservoir.

2. Water Fund/Trust——United management of the forestry in the catchment area The Water Fund is an internationally-recognized and sustainable funding mechanism set for drainage area conservation. It is a platform that provides assistance from many parties to the government, enterprises, non-profit organizations and the general public through establishing the system in which beneficiaries to water source conservation pay people carrying out this task. This mechanism, taking the form of market operation like trust or fund, is adopted in the most cost-effective key areas in drainage area conservation, market-oriented investment projects and public welfare projects under the scientific framework of drainage area management. Based on the fact that the main agricultural non-point source pollution confronted by Longwu water source area and the land in this area are both controlled by individual farmers (with long-term tenure), and considering the tenure transfer policy on the land in Zhejiang Province, TNC and Wanxiang Trust worked together and set up the Shanshui Fund/Trust in November, 2015. This fund was used to manage water source areas and forestry in a centralized way and carry out ecological restoration on the polluted land with the aim of completely eliminating agricultural non-point source pollution in water source areas.

(The Good Water Fund Structure Diagram)

The Good Water Fund Trust Structure: a. Farmers delegate the Water Fund Trust by Property Rights in Trust to manage woodland franchise contract, and to realize the centralized management of land. b. TNC as the science counselor of The Good Water Fund Trust, offers mode design for protecting water source, forestry science management solution, protective result assessment and resource coordination; c. Organization (or individual) could also support the project by investment or donation (unrequited investment), investors shall get the bonus after the trust. d. The Advisory Committee consists of investor representatives, TNC and client representatives (Wan Xiang Trust), each party has the right of one vote to The Good Water Fund for major decisions, (fund utilizing、forest-land management、 decision making within the company) and in order to maintain the public welfare of the trust, TNC has the right of one veto. e. The Good Water Fund (Trust) as a sole proprietorship established the social enterprise (Hangzhou reservoir ecological agriculture development co., LTD), the company is responsible for managing the trust assets, downstream industry operation and business cooperation, the profit shall return to the Good Water Fund for other relative conservation business.

Part 3 Protective Result 1. Centralized management of water source Through the assessments and investigations by the TNC scientists, there are 2600 mu of land in total found in Longwu reservoir (the border area in the picture in yellow below), with 1600 mu of bamboo forest, 400-600 mu of land where close to the gentle slope nearby the water source (red area in the picture below) used fertilizer and herbicide during the previous agricultural operation. The Good Water Fund (Trust) in the first stage centrally managed about 300 mu of land (green area in the picture below) by transferring forest-land rights, and plan to transfer the rest (area marked in yellow) where surround the reservoir in 2017. All the forest-land nearby the reservoir could be managed in centralization by transferring twice, and ensure the safety of the drinking water accordingly.

Polluted area (red) before the trusteeship After the land transfer (Green: already transferred Yellow: planning on transfer)

Manual Weeding (to avoid herbicide) Undergrowth Vegetation Restoration (to avoid soil erosion)

2. Keep and improve water quality The local water quality report from July, 2014 found that the total nitrogen (TN), phosphorous (TP) and dissolved oxygen (DO) were classified as category III-IV on water standard at the time.

Regarding with these three failed indicators TNC together with Dow chemical and environmental monitoring center of Zhejiang province (ZJEMC) formulated and implemented the water quality monitoring program, and conducted water quality monitoring in total of 6 times.

Dow Chemical Monitoring Map TP and DO, two failed indicator now have already reached National Category I (Best Water Quality indicator) from National Category III or IV after elimination of fertilizer and herbicide on Ecologically-significant area.

水样名称 总磷(mg/L) 类别 溶解氧(mg/L) 类别 2016 南入水口 <0.02 一类 8.78 一类 2016 出水口 <0.02 一类 8.6 一类 2016 1-1 <0.02 一类 9.02 一类 2016 1-2(北入口) <0.02 一类 9.12 一类 2016 2-1 0.05 一类 8.92 一类 2016 2-2 <0.02 一类 9 一类 2016 3-1 <0.02 一类 8.75 一类 2016 4-1 <0.02 一类 8.68 一类 2016 4-2 <0.02 一类 9.01 一类 2016 6-2 0.03 二类 9.01 一类 Comparison between Report of year 2014 and Report by on 2016, regarding TP and DO

TP Reduction Except for TN (Not in National Category II or III, with fluctuation), other water quality indicators have reached or kept National Category I. According to experts from ZJEMC, surface water in Zhejiang has generally high TN level, additionally, atmospheric sedimentation is another TN source since its adjacency to Hangzhou (46KM), capital city of Zhejiang. It is difficult to restore TN with only land trust and central management of adjacent land. Alternation of vegetation (in large scale) on land adjacent to water source and air pollution control are considered two possible effective method to restore TN, which however require sufficient funding (Roughly 100 thousand RMB for 1 year mainly for land compensation) and advanced air pollution control. If secured sufficient funding, it is possible to reduce TN with alternation of vegetation on land with longer land trust transferring land use-right.

Monitoring Location Ammonia National Nitrogen (AN) mg/L Category East Reservoir Entrance <0.025 I East Reservoir Entrance <0.025 I upstream 500m West Reservoir Entrance <0.025 I West Reservoir Entrance <0.025 I upstream 500m Drinking Water Intaking <0.025 I ZJEMC AN Report in 2016 TN includes Ammonia Nitrogen (AN) and inorganic N (nitrate), while AN is the main contributor to water eutrophication and human gastrointestinal disease/cancer by nitrite, an oxidized product from AN. National Category I of AN from report above also indicates TN reflected mainly are from inorganic N, which shows also no toxicity in National Category III or IV.

After one and half year of the implementation, both total phosphorous dissolved oxygen reached category I and total nitrogen has improved to category II.

Part 4 Summary of water source industry and public welfare activities Under the premise of protecting scientific Water Fund to subsidize the income of farmers, increase the income of farmers in the community and increase their awareness of the protection and support.

1. Natural Education a. To carry out field activities Alibaba public natural education base (Foundation of Lecheng Longwu Project) was built in Longwu Water Source Community, the Qingshan Village, in March 2016. From the base established, more than 1,000 Alibaba employees, other cooperative employees, Hangzhou citizens and students have come to participate in the Longwu natural education courses and public welfare activities.

Detecting water quality Cutting down withered bamboo

WaterRun public sports competition Ecological tea course

b. To develop natural education courses Based on the NatureWorks Everywhere developed by TNC and Discovery, Longwu Project Team jointed Chinese Academy of Sciences, Fudan University, Ecolab, Universal Trust, Xixi Wetland National Park, Ali Public Welfare and other organizations to develop the Natural Education Course which consists of 6 classroom courses and 6 field courses.

Longwu natural education course

c. TNC Youth Leadership Program TNC started Youth Program at the end of 2016. The program aims to select outstanding middle school students interested in environmental protection and make them understand the current situation of nature conservation and learn the advanced protection concepts and methods at home and abroad through the classroom teaching and field observation practice. Longwu Project as the first cooperative demonstration site of Youth project began to organize a one to two weeks of natural education and field practice courses.

Development of Youth Program

2. Cross-border cooperation of water source protection and arts, commercial brand

Designers and handicraft villagers Metal weaving

In 2016, TNC started cross-border cooperation with From Yuhang Design Library (one of the greatest traditional handicraft protection NGOs) in Qingshan Village. With the support from Robam Electrical (the biggest kitchen appliances brand which is located in Yuang), they started up “The Lake” Project. This project enhanced the traditional handmade bamboo craft with the German designer team, and deconstructed the bamboo craft to reconstruct the metal weaving skills based on the "Robam electrical" brand temperament. Designers taught local farmers of the Water Fund about metal weaving skills, so farmers could produce handicraft to get income and would have a deeper understanding of the Water Fund Project.

Copper leaf jewelry tray Design Shanghai exhibits display

Panorama of Design Shanghai exhibition "The Lake" art public exhibition landed the top Asian design exhibition "Design Shanghai" in March, visited "Milan Design Week" in April and landed Greek Ministry of Culture "Exhibition of Chinese culture." in June. Those public welfare products will also be sold in the national stores and various channels of Robam Electrical, and sales revenue will be used for water conservation projects and local community construction. In this project, water conservation projects get sustainable funds support, local traditional handicrafts are preserved, farmers receive income and recognize more protection projects, and enterprises have gained brand awareness through the project.

Part 5 Policy Impact and Social Influence The Shanshui Fund received government’s attention the time it has been built. In December 2015, the deputy Yuhang district head, Shi Jianhua, in Hangzhou commented on this fund, saying that the new model for exploration and protection provided by Shanshui Fund, which has been built by Huanghu town, is worth approving. In 2016, together with Zhejiang Provincial Environmental Protection Department and its affiliated provincial governmental offices, TNC has signed a cooperation agreement, launched the “Water Source Joint Development Program”, aiming to plan and establish the Natural Education Center, as well as develop natural education activities.

Renderings of natural school Plans of natural school In 2016, CCTV news channel’s staff for the TV program “Sincere Communication” came to Qingshan Village in Huanghu Town, Yuhang District, Hangzhou Province to do a report. The report has themed public welfare and environmental protection, combining The Action Plan for Prevention and Treatment of Water Pollution published by the State Council and A Total of Five Water Treatment policy by Zhejiang Province, told the story that the local government and public welfare organizations exploring and treating water source pollution with new models collaboratively.

CCTV News Channel broadcast “Water Conservation Documentary” in October, 2016

In April 2016, experts from the Chinese State Council Institute of Environment and Resources came and investigated Longwu Water Fund, and decided to build another water fund for Chishui River in Guizhou Province. In June 2016, the main person in charge from Chun’an County and Jiande City Development and Reform Bureau in Zhejiang Province visited Longwu water source and communicated with the project staff about experiences of ecological water treatment and innovative protection. In August of the same year, together with the World Bank and the Thousand Island Lake local government, TNC has reached an agreement to officially start the small watershed management in Thousand Island Lake and to explore the ecological service compensation water fund model. the Chinese State Council Institute of Environment and Resources Chun’an County and Jiande City Development and Reform Bureau

Part 6 Experience to Share 1. Threats to Rural Drinking Water Sources The status quo of drinking water security in China’s rural areas is quite worrying. Water pollution is of large quantity and various sources. The lack of reasonable planning and layout leads to difficulties in controlling and management. Regulatory mechanism of conventional environmental protection fails to meet the demands of rural drinking water source protection. Factors causing pollution to drinking water sources could be categorized into the following three aspects: (1) Soil Erosion. Inappropriate exploitations have brought changes to ecological systems and deterioration to natural environment, compromising its capability to retain moisture. Vegetation degradation in certain grassland areas has resulted in serious soil erosion. (2) Non-point Source Pollution. This happens when toxic substances — such as chemical fertilizers and pesticides used in agricultural activities — enter rivers, lakes, reservoirs and pollute the surface sources. (3) Emissions of Domestic Sewage. In some rural areas, pollution often occurs when, due to the lack of proper management, domestic sewage and livestock manure are discharged directly into the drinking water sources, or when livestock drink directly from them.

2. Measures to Protect Rural Drinking Water Sources All three types of pollution mentioned above could be dealt with through simple and applicable approaches. For instance, ecological protection measures could be taken in water source catchment to improve the infilteration rate, so that pollutants could be filtered off before entering the surface water. Cases of water source management as well as TNC's experience in North and Latin America tell us, that forest protection, afforestation, riverbank restoration and optimization of agricultural management can effectively reduce sediment or nutrient load, thus producing "significant influences" on agricultural pollution treatment.

TNC considers that these measures should include, but are not limited to: a. Optimization of Agricultural Management. Plant cover crops and adopt contour farming to prevent the loss of sediment and soil nutrient. b. Forest Fire Management. Reduce the impact of forest fires as well as the resulting sediment and dust pollution through controlled burning or mechanical treatment. c. Forest Protection. Maintain forest area by taking protective measures, such as implementing easement-purchase or land leasing policy, signing protection agreement, planning and investing in forest protection. d. Efficient Irrigation. Replace surface irrigation with more water-saving methods, constructing canals and ditches to reduce the leakage and net water consumption during the irrigation. e. Optimization of Animal Husbandry Management. Reduce livestock-related land deterioration by adopting the Silvopasture model of alternating free ranging and captivity. Meanwhile, deal with livestock manure properly to ensure good water quality. f. Afforestation. Plant local trees and shrubs in critical areas to reduce soil erosion and associated sediment transport. g. Riverbank Restoration. Restore and protect the riverbank, reduce soil erosion and improve water quality. h. Road Management. Construct precipitating wells alongside the road and level the soil or gravel pavements in order to reduce sediments carried away by flowing water. i. Wetland Restoration. Return farmland to wetland, reduce soil erosion and eliminate pollution.

3. Costs of Rural Drinking Water Source Protection Rural drinking water sources with a generally small catchment area (usually between 1-10 square kilometers) are often confronted with single threat (mainly agriculture-related), and therefore cost less in protection. A relatively small-scale input will considerably improve the water quality, so as to ensure the drinking water safety. According to TNC's experience in the first pilot project of China Water Fund, the provision of six-year long protection services for a small water source through above measures requires about RMB 400-500 thousand. Compared with the national standard of water source governance, it is more cost-effective, since it promises to achieve better protecting effects with a smaller expenditure.