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This study was carried out to design an incentive payment for an ecosystem services (IPES) scheme in the Baitadi Town Water Supply and Sanitation Project of Nepal. The main intention behind the designing of the scheme was to develop strategy for equitable use of water resources and involve communities, watershed and water user, in the sustainable management of water resources. We administered household survey in both the watershed community and water users to elicit their preferences regarding water source management and drinking water supply. A discrete choice experiment was employed in the case of water users which showed that, for them, water quality and quantity are the most important attributes. The estimated annual willingness-to-pay of water users for doubling water availability is NPR 482,076 (USD 4,505) and for doubling the water quantity and the supply of clean water that can be drunk directly from the tap is NPR 1.18 million (USD 10,988). The results of consultations with stakeholders indicate that the construction of public toilets, the regularization of grazing, off-season vegetable farming and drinking water distribution in the upstream area may contribute to maintaining the quality of water while keeping the watershed community satisfied with regard to water-sharing. These activities require NPR 1.17 million (USD 10,987) in the first year and NPR 425,640 (USD 3,978) annually from the second year on. The estimated willingness-to-pay and cost of the watershed activities indicate that implementing IPES in the Baitadi Town Water Supply Project is financially feasible and socially acceptable. Our study recommends the integration of the IPES design into the project design phase in future drinking water scheme, the best option being its integration into the initial environmental examination at the time of project design.

Heat wave impact on labor supply is less researched, though workers in exposed occupations have been seriously impacted in recent years, especially in developing economies. The paper identifies labor reallocation and coping strategies of poor urban workers on a heat wave day compared to a normal summer day by surveying informal sector workers who work in the open. The workers are found to forgo 1.19 h of work time and 0.46 h of family time and use these extra 1.65 h to rest more on heat wave days to adapt to heat stress. They resort to other adaptations like eating appropriate food with high water content, keeping their house cool by repeated wiping of floor using cooling ingredients, covering the roof of their living space with paddy straw, putting thick grass curtains, using fans for longer hours etc. These adaptations including the work time loss costs around INR 195 per heat wave day to a household, which is, on average, 2.7% of their monthly income. The paper approximates the private adaptation costs of informal sector workers to heat waves.