Financing water resources management through multistakeholder governance: The potential of payments for ecosystem services and donations

In light of constraints on public budgets and tariff revenues, complementary funding sources represent an important avenue for supporting water resources management (WRM). This research estimates the potential of complementary financing mechanisms to support WRM in the Brazilian context, focusing on payment for ecosystem services (PES) programs and donations. Scenarios were developed using official data, applying varying percentage values to parameters such as the potential area available for PES implementation and the volume of donations mobilized by civil society organizations (CSOs). The findings highlight three main issues: the limitations of tariff-based revenues, the continued dependence on government budgets, and the urgent need to diversify financing sources for WRM. Even under conservative (pessimistic) scenarios, revenues from PES programs and donations exceed those currently generated through tariffs. Under more favorable (optimistic) scenarios, these revenues may even surpass the federal budget allocated to WRM, although they remain below state-level public budgets. The Brazilian Amazon region shows the greatest potential for PES programs, while regions in the South and Southeast of the country exhibit greater potential for mobilizing donations. Greater diversification of WRM financing can be achieved through multistakeholder governance, engaging companies and CSOs. Rather than replacing existing funding sources, complementary mechanisms are intended to supplement them, thereby strengthening the overall financial capacity to address water management challenges. The study underscores the importance of broadening the funding base for WRM and reducing excessive reliance on tariffs and government budgets, while highlighting PES programs and donations as often-overlooked instruments within a multistakeholder governance perspective.