Journal of Sustainable Development; Vol. 6, No. 6; 2013 ISSN 1913-9063 E-ISSN 1913-9071 Published by Canadian Center of Science and Education 73 Using the Soil and Water Assessment Tool (SWAT) to Assess Material Transfer in the Layawan Watershed, Mindanao, Philippines and Its Implications on Payment for Ecosystem Services Leo Kris M. Palao 1 , Moises M. Dorado 2 , Kharmina Paola A. Anit 1 & Rodel D. Lasco 1,2,3 1 International Centre for Research in Agroforestry, Los Baños, Laguna, Philippines 2 University of the Philippines Los Baños, Laguna, Philippines 3 National Academy of Science and Technology (NAST), Philippines Correspondence: Rodel D. Lasco, International Centre for Research in Agroforestry, Los Baños, Laguna 4031, Philippines. Tel: 49-536-2701 ext 2675. E-mail: R.Lasco@CGIAR.org Received: February 28, 2013 Accepted: April 30, 2013 Online Published: May 27, 2013 doi:10.5539/jsd.v6n6p73 URL: http://dx.doi.org/10.5539/jsd.v6n6p73 Abstract Soil and water are the most important resources in the watershed. The alterations on the quantity and quality of these resources do not only have on-site impacts, but are experienced by off-site communities as well. To assess the material transfer and identify critical sub-basins in the Layawan Watershed, Mindanao, Philippines; the Soil and Water Assessment Tool (SWAT) Model was used. The model was also used to investigate changes in land use. Results show that a 4% reduction in sediment concentration and sediment yield in the critical sub-basins will be achieved if the community-based watershed management plan is implemented. On the other hand, there will be a 106% increase in sediment concentration and sediment yield if forests are cleared for utilization, primarily for agriculture, in the critical sub-basins. Modeling sediment yield and sediment concentration is important to help policy makers, environmental managers, and development agencies predict the impact of activities on soil and water quality, as well as guide them in the implementation of payments for ecosystem services (PES) schemes. The quantification of ecosystem services has been a major challenge surrounding the success of PES. In the Layawan Watershed, it is shown that land change use will not likely affect water quantity, it will, however, heavily impact water quality. Modeling provides an avenue to manage watersheds effectively and efficiently. SWAT running on open source GIS could help budget-constrained government units and development agencies to better predict the impact of programs and projects on watersheds. Keywords: SWAT, modeling, soil erosion, sedimentation, watershed, Layawan Watershed, Payments for Ecosystem Services (PES), land use change 1. Introduction Soil and water are critical resources in the watershed that should be managed properly for continued supply of ecosystem services, such as good water quality and quantity, to support a wide and diverse range of utilization - such as irrigation, agricultural production, domestic and industrial uses, or combination thereof. However, many of the watersheds in developing countries are in a state of degradation as a result of overexploitation and mismanagement of land resources. Excessive soil erosion is one of the manifestations of land degradation. Many issues, such as sedimentation, ecological degradation, and pollution, are also associated with soil erosion, and may affect aquatic and coastal ecosystems as well (George & Leon, 2007). Land mismanagement can often be attributed to the lack of understanding of the impact of human activities on soil and water resources since watershed stakeholders do not have a tool to investigate the impact of proposed activities. Understanding the mechanism that drives the hydrologic processes is complex, and models are often used to simplify these processes into a more comprehendible manner. Modeling is a tool used to assess the current condition of the watershed, and to investigate the consequences of actions and interventions on soil and water resources. Through modeling, the consequences of various actions and interventions in a watershed can be quantified; hence it is a vital tool in watershed management.