Forest Conservation - Nicaragua

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Acquisition of Forest to Prevent Deforestation in El Naranjo, Nicaragua

Short Description:

The Micro Hydro Power (MHP) -project in El Naranjo, Nicaragua, is buying the forest in the catchment basin of the river feeding the power plant. Deforested areas are reforested with self-grown seedlings .

The company cooperates with the farmer in the most critical area and provides advice on sustainable agriculture (supported by UNDP).

Micro Hydro Power (MHP) El Naranjo

Capacity: 220 kW

Beneficiaries: 750 households

The hydropower plant is administrated by Hidroeléctrica Los Nubes / El Naranjo S.A. (HINNSA). The company is owned by shareholders who are living in the beneficiary communities.

Catchment Basin

Total area: 4,800 manzana (32.6 km^2)

Critical area: 1,500 mz (10.2 km^2)

Owned by HINNSA: 354 mz (2.4 km^2)


The whole catchment area is privately owned by local farmer (they all have land titles) and bought the land from the government after the civil war.

The land acquired by HINNSA is legally transferred to the company and the land titles are now hold by HINNSA.

Actual Use

The whole area is a buffer zone (zona de amortiguamiento) of a natural reserve (Reserva Natural Bosawas). Officially only 10% of the catchment basin (microcuenca) are not covered with forest (for what I have seen, it's likely to be more). The deforested parts are mostly used as pasture but beans and maize are grown as well.

The land bought by HINNSA is mostly covered with forest (90%) or in regeneration.

Forest Conservation Project

History and Idea

The idea of buying forest in the catchment area was brought to El Naranjo in an exchange of experience by Rebekka Leave, who works at the MHP El Bote, Nicaragua. The feasibility study recommended to buy all land in the critical area (high and medium-high zone).

One year before the MHP stared operations 100mz of land in the very most critical area were bought. Since then more and more land was acquired, since it is seen as the only chance to avoid deforestation and assure the water flow in the dry season. It is seen as more urgent, since they are having problems in providing electricity to all households in the dry period and there are daily blackouts.

The land bought was mainly financed through selling shares. The monthly revenue can only buy 1-2mz of the remaining 1,150mz (see section below).

Therefore HINNSA is seeking cooperation with local farmer and plans to offer different incentives for forest conservation:

  • advice on agroforestry
  • incentives to grow coffee, instead of land intensive plantations
  • farmers might be offered a PV system, if they live in higher parts of the catchment basin, where the mini grid does not reach.

These efforts are supported by UNDP and the Ministry of Energy with capacity building in the management of catchment basins.

At the moment an (national) expert for sustainable forest management is contracted to assist in land conservation and cooperation with local farmer.


HINNSA has more than 700 clients and sells around 25-30 MWh a month. All households have meters and pay 0.19 USD/kWh, while special tariffs apply for social infrastructure (e.g. churches, schools, mayor's office). The minimum consumption is 12 kWh/month.

50% of the monthly revenue is invested in land; the other 50% are allocated to reserves. The monthly revenue is around C$ 20.000 (900 USD). The cost of the land that was bought is around 6,000-7,000 C$/mz (40,000 USD/km^2).

Shares of HINNSA are being sold since 2007. Huge parts of the revenue was invested in forest, as well.


Small Revenue

The revenue is to low to buy much more land. Furthermore, the price of electricity is sought to be cut by 40% and hardly any revenue will be left (The national energy ministry asked to cut the tariff to 0.11 USD/kWh and in return offered to waive HINNSA's debt.

Farmers are not Cooperating

Some farmer noticed that there are serious efforts in buying the whole catchment area with the national ministry and international donor involved. Therefore they are unwilling to sell their land at a reasonable price nor do they cooperate in land/forest conservation, but demanding a street for a better market access (arguing it is necessary to sell the coffee they are sought to plant). HINNSA is trying to solve this problem involving the Ministry of Natural Resources to prevent trees being cut in the natural reserve.

Further Information