Restoring Drying Lakes with Treated Agricultural Effluents under a Carbon-based Payments for Ecosystem Services Incentive

Abstract Wetlands store a significant proportion of terrestrial carbon, however, when degraded and dry, they can become net carbon emitters. Climatic stressors, such as rising temperature and reduced precipitation, further exacerbate carbon release risks. This study explores incentivizing adoption of constructed wetlands (CW) on agricultural farms for treating effluents and releasing into drying lakes. A payment for ecosystem services (PES) framework is developed to analyze land use allocation decisions of farmers towards adopting CWs on their private farms. Release of treated agricultural wastewater helps a drying lake remain wet under a warming climate preventing release of carbon stored in its soils. Results indicate that PES payments equaling 10,000 to 20,000 INR (150–300 US dollars) per mega litre (ML) can be effective in incentivizing adoption of CWs on farms in India, and their benefits to drying lakes can be significant. Specifically, life of lakes can be prolonged to more than 100 years under such PES based schemes besides resulting in substantial carbon storage in soils. Such PES schemes can be a cost-effective way to not only protect and conserve lakes for their biodiversity and livelihood benefits but also from a carbon mitigation perspective. Results further show that when a social planner allocates land between farming and CW, incorporating the carbon sequestration benefits of lakes and when facing a risk of abrupt and permanent drying of lakes, their adoption rate is higher compared to that of the farmers. When extrapolated, carbon benefits from such PES programs for the entire country could be nearly 15 trillion USD over the next 100 years.