Underlying many payments for watershed services (PWS) schemes in tropical montane forest contexts is the assumption of a direct positive relationship between forest cover and dry season stream flow. We developed a low cost research program to assess the forest cover-stream flow relationship in the Los Negros watershed in eastern Bolivia. We asked three questions: (1) can watersheds that are similar enough to undertake paired catchment studies be identified using only simple parameters such as size, aspect and geographic proximity; (2) can a functioning locally based hydrological monitoring system be set up for less than $10 000 by training local farmers to collect hydrological data, and (3) can such data be used to improve the functioning of a PWS initiative? A land use map of the upper Los Negros valley was created from a 2005 Landsat image and a digital elevation model used to calculate physical and hydrological properties of 10 sub-watersheds. Farmers measured stream flow rates in these sub-watersheds from 2005 to 2008 and maintained 10 automatic rain gauges. We found no relationship between forest cover and stream flow. This may indicate that no such relationship exists, but could also reflect the short period of the study, the low quality of the data, and the fact that the sub-watersheds had relatively similar forest coverage (54–76%). We conclude that (1) watersheds can be identified as “similar-enough-for-analysis” using the criteria of size, aspect and proximity without undertaking further research, (2) a useful hydrological monitoring system can be developed for <$10,000 and (3) although our local farmers did not collect sufficiently high quality data to fully explore the forest/water relationship in Los Negros, with improvements in methodologies, low cost, locally based monitoring has the potential to be an important component of future PWS initiatives. We recommend that stream discharge should be calculated directly; only the most locally relevant hydrological criteria, rather than scientifically complete criteria, should be monitored; locally based monitoring must be institutionalized to reduce staff turnover and hydrological monitoring must be embedded within a context that makes it socially acceptable.
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