The Pirai watershed, a sub-watershed of the Rio Grande, has more than 2 million downstream residents. Most live in the city of Santa Cruz and are dependent on the river for their drinking water. SAGUAPAC, the city's largest water cooperative, estimates that at current rates of use, the city will have no water by 2020. The cooperative is therefore actively searching for new sources and improvements in the management of existing supplies. SEARPI has been managing the river for flood control since the 1960s (15, 21), but little investment has been made in managing for increase dry season flows or aquifer recharge. About half of the Pirai's discharge comes from the forests of Amboró National Park, with another 25% emerging from the unprotected flanks of the park in the municipalities of Porongo and El Torno. As a result of the diagnostic study and a presentation of its conclusions, officials from SAGUAPAC and the municipality of Santa Cruz requested a technical proposal on how incentive based management could help protect and improve water supplies. The new insight that the IIED-funded study brought to the discussion was to view watershed management through the lens of land use and land use change. This focus highlighted that a small proportion of the watershed was providing a disproportionate amount of the water. Protection of a relatively small area of Andean foothills thus suddenly became a logical management goal for the city of Santa Cruz.