Healthy forests act as natural infrastructure by filtering water and buffering against the impacts of floods and droughts. Although these benefits are widely known, they have rarely been presented in a way that is actionable for decision-makers – such as utilities, water agencies, and companies – to prioritize investing in natural infrastructure for water. This report evaluates the potential role that forest restoration can play in the Cantareira Water Supply System, São Paulo's primary water source, using a replicable approach so that similar research can be done in different geographies.

The study finds that restoring 4,000 hectares of native forest in the Cantareira can reduce soil erosion by roughly 36 percent, reducing sediment management costs to yield a 28 percent return on investment for the water company. In addition, restoration of this scale would increase dry season water flow and may even increase annual water supply. The report makes this research actionable by supplying recommendations for program design to facilitate investment in natural infrastructure in São Paulo.

Executive Summary

Incorporating natural infrastructure into water management plans can cost-effectively improve infrastructure system performance and resilience. However, decision-makers often lack the tools and data necessary to identify and assess natural infrastructure strategies alongside traditional water management approaches.

This report addresses these needs by evaluating how restoring forests as natural infrastructure can complement and safeguard the Cantareira Water Supply System, São Paulo's primary water source. In so doing, the report demonstrates a replicable analytic approach and pinpoints data needs for such an assessment. The report also makes recommendations for program design to facilitate local investment in natural infrastructure.

  • Using the World Resources Institute’s Green-Gray Assessment, this report evaluates natural infrastructure investment opportunities to help achieve two water management objectives in São Paulo’s largest water supply system: reduce sediment management costs and secure water flows.

  • Targeted restoration of 4,000 hectares of native forest would require an investment of about US$37 million and generate avoided costs of $106 million for a net benefit of $69 million over 30 years.

  • Natural infrastructure reduces soil erosion by roughly 36 percent, avoiding sediment pollution costs for a 28 percent return on investment. In general, this return is on a par with the Brazilian water sector’s financial performance.

  • Reforesting two percent of the watershed for sediment control is only one component of a broader natural infrastructure plan for the Cantareira. Additional natural infrastructure could increase water flow, mitigate flood risk, and enhance rural vitality.

  • Local water managers should integrate natural infrastructure into planning to capture these benefits and to contribute to Brazil’s growing restoration movement.

  • Natural infrastructure programs in the region need additional funding to become fully operational. This report proposes strategies to improve program performance and attract investment.

  • For those interested in replicating this approach, the appendices provide the methods and data sources.