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Developing markets for watershed protection services and improved livelihoods: a diagnostic for South Africa Conclusions The following general comments can be made relating to the water sector and land-use practices in South Africa: No fully working markets for watershed protection services currently exist in South Africa; There are however some good examples of where markets could be established or taken over by catchment management agencies; It is recommended for this research initiative that greater focus is given to the feasibility and viability of watershed protection services markets, rather than the actual establishment of fully functioning watershed protection services markets; In terms of the provision of water services there are critical questions around who pays for: o Making water available where needed, o Improving water quality and hence reducing the costs of water quality mitigation to the user, o Ecosystem functioning and services in catchments, for example, maintenance of the Kruger National Park system, o Ensuring access by rural users and facilitating the generation of income in those areas through water productivity, potential links to poverty relief, A clearer understanding of the nature and mechanisms of potential markets needs to be established, including the associated transaction costs.