Today, watershed protection in India is receiving tremendous support for its multiple benefits not only in improving the livelihoods of the rural poor in much of dryland India, but also for the services that accrue to larger downstream beneficiaries, in the form of municipal water supplies, regular water flows, flood mitigation and reduction in sediment flow for hydro-power generation.

In this context, Winrock International India (WII) undertook a scoping study on "Developing Markets for Watershed Protection Services and Improved Livelihoods in India" as part of a larger international study being carried out by the International Institute for Environment and Development (IIED), London. This study took a preliminary look at the potential and desirability of using market-based approaches to provide watershed protection services in India from the points of view of making benefit-sharing more equitable and improving livelihoods. The two states of Himachal Pradesh and Madhya Pradesh were the focus of this study.

The study did not aim in any way to promote the development of markets for watershed protection services. It intended to explore the potential and limits of a market-based approach, particularly in the context of other existing approaches such as regulation and collective action. The study also tried to identify areas where adoption of such an approach can benefit poor people.