3Ps Sri Lanka Pilot Project: Watershed Investment Planning

Supporting food security, energy security & livelihoods through strategic management of the Mahaweli Watershed. 

Through modeling ecosystem services and an optimization analysis, the pilot focused on a proof-of-concept approach to understanding how upstream land use in the Mahaweli watershed can reduce soil loss and resulting sedimentation in downstream reservoirs, dams, and irrigation canals. This pilot effort is a first step in showing what is feasible with this approach. Key collaborators: Asian Development Bank (ADB); University of Peradeniya (UoP); International Water Management Institute; the Government of Sri Lanka. This is an initial pilot project within the People, Planet, Prosperity project.

The Challenge

Sri Lanka faces a number of challenges, including a foreign debt crisis, shortages of key commodities including fertilizer, and water scarcity in its northern dry lands. Sri Lanka is also highly vulnerable to climate change and its effects on water availability. New water infrastructure is being built to transfer water from the Mahaweli Basin to Sri Lanka’s dry zone in the north, to increase agricultural production and provide clean drinking water to over 350,000 people, promoting economic and food security and health. Erosion from land degradation and development, and subsequent sedimentation, compromises soil fertility and obstructs downstream irrigation and hydropower infrastructure.

The Solution

Investments in nature-based solutions, such as forest restoration or sustainable agriculture, in key areas can mitigate sedimentation. This project helped assess where such investments would be cost-effective and aligned with local livelihoods. It also developed capacity within Sri Lanka’s financial and research institutions, including the University of Peradeniya, the World Bank, and the International Water Management Institute, to understand the importance of ecosystem services and make the case for investing in natural capital as an integral part of solutions to the country’s interconnected challenges.   

The project team identified stakeholder visions and values for the Upper Mahaweli Watershed to determine key benefits and possible interventions to include in a natural capital assessment. They modeled sediment origins in the Upper Mahaweli Watershed under current conditions and under possible future watershed conservation measures (e.g., agroforestry, sustainable tea, restoration), to help prioritize watershed interventions and investment options based on sediment and other values. The team also developed the capacity of Sri Lankan partner institutions to carry on and refine natural capital approaches beyond this project, and to collaborate with ADB on new financing instruments (e.g., bonds and debt swaps) to mobilize capital for environmental projects. 

Funding: Gordon and Betty Moore Foundation