It’s simple: No forests means no clean water for the billions of people who live in cities around the earth.

Denver gets most of its water from the rivers and reservoirs that store runoff from forests in mountains and hills, New York City gets its water from the Catskills, and Dar es Salaam’s water supply comes from the Eastern Arc Mountains.

Cities the world over depend on clean, abundant water from elsewhere. The forests that protect those increasingly scarce water sources — acting as watersheds that regulate the flow of water, store it, and act as filters by removing contaminants — need protection of their own.

Lima, Peru, like New York and Denver, recognizes that the city’s economy depends on the watersheds that feed it. This acute dependency is why the Peruvian Ministry of Environment (MINAM), working with Forest Trends, a nonprofit based in Washington, D.C., and with the support of the Swiss Agency for Development and Cooperation, has launched a financing mechanism called the Watershed Services Incubator.

The project draws on the incubator concept from the business world — the process of nurturing small businesses until they scale.

The Watershed Services Incubator is a real-world test lab where cutting-edge environmental anti-degradation strategies and tactics can be tested, scaled, and proven efficacious — and then exported to other sensitive ecosystems around the world.

The incubator represents an institutional commitment to invest in sustainable water management in innovative and comprehensive ways, such as compensating neighboring landowners to protect land at the water’s edge, focusing on reforestation, building the technical capacity of water utilities to better maintain watersheds, and creating government structures to support watersheds, among other strategies.

Through this integrated mechanism, for example, the Peruvian Ministry of Environment works with the water regulator SUNASS to define how water utilities should structure their tariffs to optimize conservation activities that protect the quality and quantity of drinking water. Such a cross-institutional relationship is far reaching in its implications, not just for Peru but also for nations around the globe that are dealing with water-management challenges.

“We are bringing together a constellation of skills and technical resources to establish long-term agreements to protect forests,” says Marta Echavarria, an expert on innovative finance for conservation who is leading Forest Trends’ efforts in Peru. “This approach implies working at the policy level to define rules of the game where all can collaborate.”

Beyond the direct impact the Watershed Services Incubator has on ameliorating the water crisis, the project’s collaborative execution also drives thinking creatively about nature and our economies, changing old mind-sets and opening the possibility for new solutions.

“The incubator works from the bottom up, helping to develop specific projects and models of investments,” says Gena Gammie of Forest Trends. “For example, we’re working with the regional government to facilitate these investments. Then, at the national level with policy, connecting the ministries and agencies … The Forest Trends model seeks a multilevel and collaborative approach with a variety of actors so we have systemic impact and scaled results.”

As we deal with a changing climate and meeting increased global demands for food, water, and energy, Peru’s Watershed Services Incubator provides a template for strategic conservation of natural infrastructure as a vital part of the climate change mitigation equation.

This post first appeared on Medium. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Michael B. Jenkins is president and CEO of Forest Trends.

Image: A woman jogs with her dog through a park during a sunny autumn day in central Sofia. REUTERS/Stoyan Nenov.