Protect water sources to enhance local supply

Philip Morris International (PMI) is a leading international consumer goods company working to deliver a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector

PMI faced increasing pressure on freshwater availability in the Arroio Andréas Sub-Basin in Rio Grande do Sul. Water resources in the region were vulnerable to drought, livestock impacts, and land degradation, which affected both rural and urban communities. To address these challenges, the organization adopted a nature-based water management strategy focused on source protection, ecological restoration, and incentivizing local landowners to maintain natural water systems.

Location of the Initiative: Brazil

The initiative restores and protects water sources located on agricultural lands to improve local water quality and increase water availability. Key actions include:

• Fencing and isolating water sources to protect them from livestock intrusion and agricultural pressures

• Restoring riparian areas to stabilize soil, reduce erosion, and enhance natural infiltration

• Engaging small-scale farmers to act as “water producers,” providing direct access to cleaner water on their land

• Implementing Payment for Environmental Services (PES) to compensate farmers for conservation actions

• Conducting seasonal water monitoring (ongoing since 2011) to track water quality changes and demonstrate impact

This approach improves water flows, increases resilience to droughts and extreme weather, and creates long-term ecological and economic benefits for communities.

Sustainability Impact

Climate

The initiative indirectly contributes to climate adaptation by improving water retention, reducing vulnerability to drought, and moderating the impacts of extreme rainfall. It supports Scope 3, Category 15 (Investments) and Category 1 (Purchased Goods and Services) by enabling sustainable land management practices across agricultural landscapes.

Observed outcomes include:

• Increase in water flow from 48 L/s to 95 L/s over 15 years

• Improved water availability even during dry periods

• Enhanced natural infiltration and reduced runoff during heavy rains

Nature

• Reduced erosion and siltation of waterways

• Recovery of riparian vegetation and stabilization of soil structures

• Improved biodiversity within the protected sub-basin

• Better ecological functioning of the watershed

Social

• More reliable access to clean water for 26,000 local residents

• Additional income opportunities for small-scale farmers through PES

• Increased community resilience to droughts and floods

• Strengthened relationships between local residents, farmers, and environmental institutions

Business Impact

Benefits

• More reliable water availability, supporting operations and community needs.

• Reduced risks associated with drought, extreme rainfall, and water scarcity.

• Lower long-term water supply uncertainties, improving resilience planning.

• Strengthened local stakeholder relations and social license to operate.

Costs

Typical costs include:

• Investment in fencing, restoration materials, and monitoring activities

• Ongoing payments for Environmental Services to participating farmers

• Technical support for land management practices

Costs vary depending on:

• Size of water source areas

• Landowner participation

• Regional climate and soil characteristics

Cost reductions can be achieved by:

• Partnering with local organizations or universities

• Leveraging public subsidies for PES or restoration

• Prioritizing high-impact water sources during early implementation

Typical Business Profile

Relevant for companies in:

• Agriculture, food and beverage, pulp and paper, or industries with rural water dependencies

• Regions experiencing water scarcity, erosion, or extreme rainfall

• Organizations seeking nature-based climate resilience solutions

Approach

Step-by-Step Implementation

1. Assess water source vulnerability through hydrological and land-use mapping.

2. Identify priority water sources on agricultural lands.

3. Engage farmers and landowners to participate in conservation activities.

4. Install fencing and protective barriers to isolate springs and riparian areas.

5. Restore natural vegetation to stabilize soil and improve infiltration.

6. Establish PES agreements to provide financial incentives to farmers.

7. Conduct continuous water monitoring to track quality and flow improvements.

8. Scale the methodology to additional sub-basins as results are validated.

Stakeholders Involved

• Project Leads: Environmental management and sustainability teams

• Internal Functions: Operations, community relations, environmental compliance

• Main Providers: Local farmers participating as water producers

• Other Stakeholders: Academic institutions (e.g., local university conducting monitoring), local municipalities, watershed committees

Key Parameters to Consider

• Maturity: Proven and scalable nature-based solution

• Timeline: Long-term benefits observed over 5–15 years

• Lifetime: Indefinite with continued maintenance

• Prerequisites: Landowner participation, access to water sources, regulatory alignment

• Geographical Factors: Works well in agricultural regions with degraded springs

• Subsidies: PES or environmental conservation incentives may be available

• Other: Requires consistent hydrological monitoring to demonstrate impact

Implementation and Operations Tips

• Engage farmers early to build trust and clarify PES incentives

• Provide technical support for fencing and vegetation restoration

• Use transparent monitoring to demonstrate benefits and maintain participation

• Start with the most degraded but strategically important water sources for maximum early impact

• Maintain long-term monitoring to adapt practices and support scalability