Payment for Ecosystem Services (PES) Pilot Project

Developing and Piloting Payment for Ecosystem Services (PES) Scheme for Water Catchment Conservation in Sabah



Located immediately inland from Kota Kinabalu, the capital of Sabah State, the 3,001 hectare Babagon Catchment is part of the wider Moyog Catchment in the Crocker Range on the West Coast of Sabah.  The catchment comprises three Indigenous Dusun kampung (Tampasak, Babagon Toki and Kolosunan).  These NCR territories are de facto ICCAs that include some gazetted village land, some Native Title land held by members of ancestral communities, some land alienated by the state for conservation purposes, and some lands owned legally or illegally by non-natives and non-locals.  The area is mostly steep well forested lands, some of which are enriched with durian and other indigenous and cultivar fruit trees, with some small patches of cultivated rubber.  There are limited paddy lowlands with diverse gardening around village sites.  The rivers are healthy and back under the customary “tagal” management systems maintaining high fish biomass and keeping their rivers clean.


The key issue is that this watershed contains the Babagon Dam that currently supplies water to approximately 57% of the Greater Kinabalu population (though not to the three resident communities partnering with us in this project).  The construction of Babagon Dam (completed in 1997) displaced the village of Kg Tampasak flooding their ancestral graves, valley orchards and padi lands, and destroying an abundance of culture and traditional heritage.  Tampasak’s peoples have now been resettled outside their traditional territory to lands below the dam (see map); in which process they have suffered untellable hardships, many with long-term consequences. 


Forever Sabah - Babagon PES Image One -

*The data gathered to make this map is a result from 2-years community mapping done by the Community River Rangers in the project

The Babagon Dam

The importance of this dam has led the government to restrict socio-economic activities and livelihoods of these three Dusun communities to ensure the quality of water flowing from the Crocker Range. This means that the government has sought to take over from ancestral communities the landscape management and stewardship of the traditional territories (marked with red boundaries on the map above).  Moreover, the cultural relationships between the three neighboring villages have been fading because the dam at the center flooded the old routes up and down the valleys.   For Tampasak, farming has meant renting lands in other distant villages like Kolopis in the lowlands, where infrastructural development has, in turn, led to increasing floods.  Resettlement was implemented in a compulsory fashion and promised compensation and support was irregular and inadequate.  Confidence and trust of the communities in government agencies were deeply impacted by these events as were relationships with political leaders.  This tended to reduce further government attention to basic services, gazettement of village lands and so forth.


Combating Challenges and Building Resilience: Implementing the PES revenue deployment process


To attend to these complex histories and issues, and after a four-month scoping exercise and one year PES Readiness Phase of consultation and training, Forever Sabah agreed to facilitate a multi-year process between communities, government and private stakeholders to design PES arrangements with project funding from Yayasan Hasanah, and supplementary small grants from the Roughley Charitable Trust and The Shared Earth Foundation.


This next phase, which was completed in November 2020, transformed community capacity and significantly shifted relationships between government and the communities. It ultimately successfully secured endorsement from the NRO-Led Committee for a set of institutional mechanisms that would create a Babagon Catchment Water Fund, upon which the communities would be strongly represented as Trustees alongside government and other stakeholders, collecting and paying out to the resident communities monies derived from a variety of potential funding streams and sources.  When approved by the cabinet, with the associated recognition of the communities’ territorial rights, these flows can enable permanent establishment of many green jobs (in such areas as water monitoring, catchment management and restoration).


The project currently understands the institutional relationships and financial flows as illustrated below:

PES Cycle 2020-01.png

Yellow lines/colors indicate money flowing

Red lines/colors indicate proposed action/institutions


This “heart” graphic represents that what we seek to build is to mirror the circle of clean water coming out of the forests of the indigenous territories of the Babagon Catchment with a corresponding circle of reverse flow in funding from those who take advantage of that environmental service. 


Putting all this in place is the focus of the next several years of the PES project.

Where were we and where we are now

Covid-19 Pandemic

The COVID-19 pandemic has been deeply challenging to the communities of Babagon Catchment, around the intersection of the livelihoods under the MCO-SOPs with the historical legacy of the dam construction and associated marginalization (for example displacement from their paddy lands means increased their vulnerability to COVID-19 related food shocks).  Overall, these communities depend on traveling to formal and informal jobs in town and on selling produce and forest crafts at nearby tamu markets around KK city, markets now limited for public health reasons, and this cripples their sources of livelihood.   Meanwhile aspects of their ICCA/territorial management approach did enhance their livelihood resilience, especially the substantial fish stocks they had available in their “tagal” managed rivers, which were used to feed people when they lost access to external sources of protein. During the lock-down phases of the 2020 COVID pandemic, the project was able to source and efficiently distribute relief food and other assistance to catchment residents, but this is not a long-term solution.


Due to decreased mobility under COVID the internet now plays a huge role in maintaining social networks and connecting to the outside world for every social and economic purpose.  It has also become essential for community project activities and governance. Meanwhile when schools closed children depended on internet access for education.  However, internet network connection is very difficult in the mountainous Babagon Catchment, as it is only available in a few spots, typically in high land above the villages, where there are no facilities to sit and work on-line. This has made it hard for the communities to adapt to changing means of communication.

Key Platforms and Successes

Mirani Momogompi Tadon Waig (MMTW)

Mirani Momogompi Tadon Waig (MMTW) comprising well-trained community members who are able to monitor water quality using both biochemical and biological indicators (dragonflies and fish species), have established tree nurseries and are ready to implement environmental restoration projects.

Capacities of implementing teams on ground

  • Strengthened their own village governance (majlis) structures which are now equipped to represent the community on the NRO-Led Committee that oversees the Payment for Ecosystem Services program

  • Signed Memorandums of Understanding around catchment co-management with the Sabah Forestry Department, Department of Fisheries, and the Drainage and Irrigation Department and hosted the Deputy Chief Minister and associated dignitaries on the 2019 World Biodiversity Day​

  • Established their all-women ecotourism teams with basic ecotourism packages in local cuisines and adventure tourism.

  • Mapped their territories in substantial detail and collaboration with Forever Sabah spatial scientists are able to show multiple layers of data for their territories (e.g. carbon)

  • Restored their “tagal” (taboo-based fishery management system)

  • Developed their own Village Development and Watershed Management plans, and established nurseries and begun their own riparian forest restoration program

  • Undertaken study visits to share learning and develop networks with Kg. Tiku for a micro-hydro renewable energy training program, and to Kg. Batu Putih and Kg. Kiau Nulu to explore ecotourism, restoration economies and related other issues.  They also joined representatives of dozens of other community development initiatives at the Heart of Sabah Kampung Conference in Telupid in 2019.

Collaborative Governance

During the Readiness Stage it was apparent that there was very little mutual understanding and not a little distrust between communities, government and the various other stakeholders in the Babagon Catchment water system.  Yet PES systems can only be built on collaborative governance and trust.  The first stage in enabling such collaborative governance had to be building community capacity to engage on a more equal basis so that relationships would be genuine.  This had to go along side by side with assisting government officials to interact in new kinds of ways with village communities, including facilitating encounters and business meetings in ways that were less hierarchical and circumscribed so that listening and creative problem solving could become possible.

The NRO-led Platform
  • NRO-Led Committee – has been operating effectively with all stakeholders, and genuinely warm relationships between the community leaders and government officers seeking to make PES a reality

  • Communities have earned the respect of other stakeholders through the quality of their technical work and their commitment to conserving the catchment against diverse threats

  • MoUs have been signed by communities with the Dept of Irrigation and Drainage, Dept of Fisheries and Dept of Forestry around co-management and restoration of the catchment

  • World Biodiversity Day – Deputy Chief Minister celebrated this event in Kolosunan in June 2019, included attention by many Govt Departments, UMS and Sabah Parks to the Crocker Range Biosphere Reserve

  • Jetama Sdn Bhd, the Water Supply concessionaire, has engaged with the three communities including committing to upgrade their water supplies (three decades after their catchment became the principal source of water to the state capital the villages in the catchment still did not themselves receive water supplies).


In the media by us, partners and public

News and publications

"About 57% of Kota Kinabalu’s water comes from the steep forests above the Babagon Dam. With the support of Yayasan Hasanah, the state government decided to pilot Payment for Ecosystem Services (PES) here in 2016."

"After four years of hard work the communities of Kg Tampasak, Kg Babagon Toki and Kg Kolosunan in the Babagon Dam catchment now feel ready to launch Sabah’s pioneering Payment for Ecosystem Services (PES) program."

"Menteri Pelancongan, Kebudayaan dan Alam Sekitar, Datuk Christina Liew berkata ia adalah satu platform di mana pihak-pihak berkepentingan yang mendapat perkhidmatan ekosistem daripada sumber biodiversiti menyumbang dana bagi pemuliharaan kawasan itu."


"Ecotourism activity and PES project could be a justification to expedite settlement of any land issues from relevant authorities."

"The resettlement of the Kadazandusun indigenous community of Kampung Tampasak in Penampang, Sabah, to construct the Babagon dam has altered the lives of the community. Women, men, and children in the resettled community have begun to experience increased social, economic, cultural, and psychological stresses, which are accentuated by the compulsory acquisition of their ancestral lands and resources. Resettlement has resulted in a restructuring of gender relations, livelihoods, value systems, and culture. The study shows that the burden of change is far greater for women who have even less access to the benefits of ’development’ than do men. There is need for greater involvement of indigenous communities in resettlement efforts supported by more adequate state and community resources."


The IPSI-7 Summary Report and Presentation Abstracts is available for download here.

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