Transcript The Trust for Public Land

USDA Forest Service
Northeastern Area, State and Private Forestry
Potential Markets for Watershed
Services
Ecosystem Service Market Opportunities & Partnerships Workshop
August 20, 2008 – Ft. Collins, Colorado
Jay Jensen, Western Forestry Leadership Coalition
Prepared by / Adapted from:
Albert H. Todd, NA Watershed Program Leader
USDA Forest Service
Northeastern Area, State and Private Forestry
Nature is humanity’s landlord….
and we have been getting a great deal on
rent and utilities!
R. Bruce Hull
USDA Forest Service
Northeastern Area, State and Private Forestry
Goals of Presentation
• Describe markets and issues
• Examples
USDA Forest Service
Northeastern Area, State and Private Forestry
Valuing Ecosystem Services
• Global Environmental Services are
over US $ 33 trillion annually
(Costanza, 2005)
• Chesapeake Bay – over $30 billion
annually from trees alone - more
than seafood industry. *does not
include water or recreation benefits)
(TCF & Forest Service, 2006)
USDA Forest Service
Northeastern Area, State and Private Forestry
Putting a value on water
•
•
•
•
•
Water is currently free!
Take services for granted
No consequences for loss
Undervaluing leads to overuse
Concern: commoditizing water as a forest
ecosystem service may devalue or ignore
other benefits (intrinsic)
USDA Forest Service
Northeastern Area, State and Private Forestry
Forest functions
What are the hydrologic
services of forest lands?
• slow the rate of runoff
• reduce soil erosion and
sedimentation in waterways
• filter contaminants that influence water chemistry
• provide stable annual water flow in a watershed
• increase or decrease groundwater recharge
• sustain aquatic system productivity – temp, habitat
USDA Forest Service
Northeastern Area, State and Private Forestry
Key influences in the development of
markets for watershed services?
•
•
•
•
Urgency/scarcity is now real (of supply or quality)
Climate change effects first felt in the water cycle
Location matters – carbon is global, water is local
Complexity – a ton of carbon is a ton of carbon –
water services are tougher to define
• Water is a property right
• Many types of users
• Many types of solutions
USDA Forest Service
Northeastern Area, State and Private Forestry
Potential watershed service buyers…
•
•
•
•
•
•
•
•
Agriculture
Drinking water providers
Sewage treatment plants
Big box retailers
Water using industries
State and local governments
Large residential and commercial developers
Industrial point source polluters and energy
companies
USDA Forest Service
Northeastern Area, State and Private Forestry
Potentially eligible practices
• Tree planting/forest expansion
• Riparian buffers/meadow/wetland restoration
• Management to enhance water or nitrogen
storage or prevent fire
• Avoided deforestation (targeted)
• Erosion control
• Urban tree canopy
• Others…
USDA Forest Service
Northeastern Area, State and Private Forestry
Types of Water Markets
• 1) Self organized private deals
• 1 to 1 deals
• Usually in the absence of regulation
• 2) Trading Schemes
• Regulatory standards or pollution caps
• Driven primarily by cost
• 3) Public Payment Schemes
• Most prominent world-wide
• Traditional incentives and new outcome-based incentives
USDA Forest Service
Northeastern Area, State and Private Forestry
1) Self organized private deals
• Perrier- world’s largest bottler of
water.
• Coor’s Beer – Pure Water 2000
• Nutrient Net – World Resources
Institute
Nutrient Net
Online marketplace for water quality trading
USDA Forest Service
Northeastern Area, State and Private Forestry
Sierra Nevada Meadow Restoration
• Plumas National Forest
• Private ranchers
• Reduce sediment to PG&E
hydropower plants
• Feather River - 30% of CA
drinking water supply
• Groundwater storage for
downstream uses
• Non-consumptive
use/change of timing
• New water rights?
USDA Forest Service
Northeastern Area, State and Private Forestry
Coca Cola Company
• 190 plants in 20 countries
• Largest single consumer of water in the world.
• Policy to offset production volumes through
environmental flow replenishment
• Risk to future supplies is motivation
• “The price of water must rise”
Joe Rozza, CC Dir of Sustainability)
USDA Forest Service
Northeastern Area, State and Private Forestry
2) Trading Schemes
• Water quality
• BMPs that improve WQ (quantified benefit) create
tradable credits (scarcity creates demand)
• Non-point land practice vs point source structural
• Aspects of the trading market
• Allocation of caps (scarcity creates demand)
• Trading ratios – reflect uncertainty
• Nutrient reduction calculations – science
• Establishment of the baseline – regulated vs trends
• Market structure – institutional and private intermediaries
• Trading activity – experience
• Credit Insurance
USDA Forest Service
Northeastern Area, State and Private Forestry
USDA Forest Service
Chesapeake Bay
• Voluntary cap
(TMDL) for nutrients
• Point sources exceed
or are projected to
exceed Tributary
limits
• EPA Model
efficiencies for BMPs
• Cheaper compliance
Northeastern Area, State and Private Forestry
Forest buffers
PA: 40-70% of edge of field N and P
load based on physiographic provinces
+ conversion of land use.
VA: buffer width X ave. perimeter of
buffer in feet/43,560 ft =acre for land
conversion. N in # applied X acreage =
credits of reduction.
USDA Forest Service
Tualatin Watershed (OR)
• Sewage Treatment Plant
• Temperature TMDL
• Tree planting for
riparian shading
• Reconnect floodplains
to cool base flow
• $6 million committed by
water utility in lieu of $35
million refrigeration cost
Northeastern Area, State and Private Forestry
USDA Forest Service
Northeastern Area, State and Private Forestry
Australia :
Murray Darling Basin
• New South Wales
• Coastal flooding and salinization due to land
clearing and loss of transpiration
• Irrigation farmers purchase transpiration credits
from State forests or private landowners who
plant trees upstream.
• Market success may lead to government
establishment of forest cover targets
USDA Forest Service
Northeastern Area, State and Private Forestry
Issues related to WQ Trading
•
•
•
•
Success limited to date
Time scales
Death by a thousand discounts
Reliance on cost discourages
accounting for multiple benefits
• Lack of strong demand drivers
• Limited experience
USDA Forest Service
Northeastern Area, State and Private Forestry
3) Public Payment Schemes:
NYC Watershed
• Drinking water supply
for >6 million people
• Protection and
management of forests
and agricultural lands
• Invest $30-50 million per
year in conservation vs.
$7+ billion in capital &
$300 million/year in
operating costs.
USDA Forest Service
Northeastern Area, State and Private Forestry
Denver Water Company
• Over 80% of the water supply for
over 1.5 million people in the
Denver metro area
• Fire and flood events degraded
water quality and damaged water
treatment and storage facilities
• City funds fuels treatment, road
rehabilitation, prescribed
burning, fire protection measures
in nearby private subdivisions.
• Public education
USDA Forest Service
Vermont
Stormwater Offsets
• 1264a. Interim stormwater
permitting authority
• Offset trading policy
• No net increase in sediments or
flow in impaired waters
• Developers offset discharge
through BMPs or pay for
impervious removal projects or
forest protection ($30K/acre )
Northeastern Area, State and Private Forestry
USDA Forest Service
Northeastern Area, State and Private Forestry
Equador (Ecodecision)
• Watershed Protection user fees go into a trust fund
managed by an investment company - farmers
• Watershed tariff (1 cent /m3 )on goods that use water
• Drinking water consumers,
• Beer/bottled water Co
• Electric utilities
• Farm production
• 6% of hydroelectric power generation sales returned to
municipalities, environmental groups and landowners.
• Similar schemes in Columbia and Brazil.
USDA Forest Service
Northeastern Area, State and Private Forestry
Costa Rica
• Forest protection subsidies - $ from 3.5%
national gas tax returned to private
landowners ($400 million/year) to protect
forests in headwaters of water supplies and
rivers of high ecological value
From: the social impacts of payments for environmental services in Costa Rica
Miranda, Porras, and Moreno, 2003
USDA Forest Service
Northeastern Area, State and Private Forestry
Other market techniques for traditional
incentives…
• Reverse auctions – landowners or other benefit
providers bid for public funding (NRCS)
• Watershed service payment model –“Farmers
for clean water” – WV- watershed scale
enrollment - monthly payments for clean
water volume (CIG funding)
USDA Forest Service
Northeastern Area, State and Private Forestry
Developing
Hybrid Markets:
the “Bay Bank ”
TM
•
•
•
•
•
•
for Chesapeake
forests
Multi-state
Multi-market
Privately led (NGO)
Spatial land registry
Matchmaker.com
USDA Forest Service
Northeastern Area, State and Private Forestry
Willamette Partnership (OR)
• NGO led
• Salmon protection
• Bundling multiple
markets, (wetlands,
T&E)
• Conservation Registry
• Credit Protocols
USDA Forest Service
Northeastern Area, State and Private Forestry
Developing water markets
• Identify water-related ecosystem services
• Define geographic parameters
• Determine what can be measured and monitored
and how (third party certification of water)
• Identify who supplies & who receives the benefit?
• Determine the rights, responsibilities, and rules?
• Build coalitions to link downstream and upstream
• Link multiple service markets – stormwater, wq,
aquatic health, etc.
• Provide political support tougher standards
USDA Forest Service
Northeastern Area, State and Private Forestry
Forestry Agency Role
• Convene partners and connect efforts
• Create a framework supporting
credits & trading ecosystem services
• Verifiers / Aggregators
• Provide technical data & information
• Learn, test, pilot, & promote project
examples
USDA Forest Service
Northeastern Area, State and Private Forestry
Contact information:
Albert H. Todd
Watershed Program Leader
Northeastern Area S&PF
410-267-5705
[email protected]
Jay Jensen
Executive Director
Western Forestry Leadership Coalition
303-445-4366
[email protected]
www.wflcweb.org - www.na.fs.fed.us/watershed