Meeting Water Needs through Investing in Nature

Water & the Future—Key Challenges

• Aging and vulnerable infrastructure• Degraded water quality• Drought• Growing demands for water• Increased frequency of extreme events

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Can Nature Help?

• Wetlands purify and “store” water• Forests can enhance water collection and filtration• Forests can reduce run off and associated

sedimentation of water supplies• Wetlands, grasslands, & forests can sequester

carbon• Biodiverse systems host species that pollinate

crops

Nature’s Services and Water Management—A Brief Sampling

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Tapping Nature’s Bounty for Clean & Secure Water Supplies

Salt Lake City• Melting snow in the Wasatch range provides water for the

city• Key challenges--Degradation of loss of forested lands• Public Utility Water Rights & Watershed Protection Fund

– Water bill surcharge of $1.50

– Used for buying watershed lands or conservation easements

• Agreement with US Forest Service to do fuels treatments to protect lands outside city limits (in place since 1981)

Selected Example—Source Water Protection

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Tapping Nature’s Bounty for Clean and Secure Water Supplies

Tualatin Basin, Oregon• Clean Water Services—12-city water resources

utility• Water temperature in river from wastewater

discharge & other causes exceeded standards• Challenge—$60 million price tag for energy-

intensive cooling system• Alternative—Pay farmers to plant shade trees

Selected Example—Water Temperature Standards

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Tapping Nature’s Bounty for Clean and Secure Water Supplies

Tualatin Basin, Oregon• Decision—Spent $6 million in payments to farmers

along 36 miles of rural and urban stream corridors• Farmers entered into 20-year leases to remove

invasive species & plant thousands of native trees and shrubs

• Some farmers have changed 20-year agreements to permanent enrollment

Selected Example—Water Temperature Standards

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Tapping Nature’s Bounty for Clean and Secure Water Supplies

Denver• Strontia Springs Reservoir supplies water for 1.3 million people• Major 2002 fire resulted in erosion and sedimentation in reservoir• Clean up costs of $40 million for water utility• Response: “Forests to Faucets” agreement with US Forest Service• $33 million for 5-years of forest fuels reduction in key watersheds

on 40,000 acres• 50/50 cost-share between Denver utility and USFS

Selected Example—Reservoir Protection

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Tapping Nature’s Bounty for Clean and Secure Water Supplies

• Santa Fe ratepayer-funded watershed protection • Eugene, Oregon Water and Electric Board payments to

farmers to enhance best-practices, resulting in reduced water treatment costs

• Delaware Common Water Fund– Landowner incentive payments for forest management practices – Purchases conservation easements

• Southern Company investment in watershed protection for its hydropower facilities

Other Examples

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Investing in Nature’s Services

• Complexity

– Ecosystems, their components, functions, and services involve multiple interacting variables and nonlinear relationships

• E.g., purifying capacity of a wetland depends on size of the wetland, soil type, vegetative composition, seasonal variations, etc.

– The “value” of the services will depend on proximity to human settlements, current levels of water quality, demand (or preference) for cleaner water, and other considerations

– Bottom line: no single “water purification value” of a generic wetland or other natural system

Key Issues and Challenges

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Investing in Nature’s Services

• Dynamism

– Ecosystem services are subject to dynamic interactions among system components & between natural systems and human actions

• E.g., capacity of a forest to provide source water protection can change in the wake of catastrophic forest fires or disease infestation

– Demand for services changes as demographic and

development trends change across the watershed

Key Issues and Challenges

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Investing in Nature’s Services

• Interconnectivity

– Ecosystem functions often cannot be localized and clearly delineated in geographic space

– But linkages may be both nested and evident at different scales

– Question: “how big is big enough” to provide meaningful results from Nature’s services?

Key Issues and Challenges

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Investing in Nature’s Services

• Uncertainty

– Complexities, dynamism, and interconnectivities at different scales result in uncertainties about the extent of services both at a single point in time and over time

Key Issues and Challenges

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Investing in Nature’s Services

• No “silver bullet” in design of markets or programs to invest in Nature’s services

• Measurement and metrics challenges

• Like all markets, success depends on willing buyers and sellers

Issues and Challenges—Implications for Action

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Investing in Nature’s Services

Florida Ranchland Ecosystem Services Project

• The following example reports on the work of:

– Leonard Shabman, RFF (shabman@rff.org)

– Sarah Lynch, WWF (sarah.lynch@wwfus.org)

Moving from Idea to Action—The Case of FRESP

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FRESP: Participants

Participating Florida Ranchers

Where: The Northern Everglades

Kissimmee Region

Caloosahatchee Region St Lucie

Region

Lake Okeechobee

Region

Key Question Pumps Culverts & riser boards

Ditch networks

Impoundments

Would ranchers be willing and able to provide water management services as an additional ranch enterprise, if it offered another income opportunity?

Market Design Concept: Northern Everglades Payment for Ecosystem

Services Program

• Extensive working ranch landscapes• Relying on modification to existing water management

structures and strategies

• Enter into fixed term contracts to provide documented water related environmental services, above and beyond regulatory requirement

• Thus, creating a new profit center for ranch enterprises.

Open landscapes

Ranching as a businesses

Multiple income sources

The Program• What Environmental Service?

– Water retention & associated phosphorous load reduced

• Who? Contracts between buyer and seller – SFWMD is the agency- buyer of the service– Rancher-sellers paid when document they have retained

water

• Results? 1st solicitation chose 8 contracts from 14 proposals – Obligation of $7M over 10 years – 2nd solicitation – Awards expected summer of 2013

Technical feasibility Contract terms Payments Cost effective

verification Regulatory

compliance

FRESP Process

$ 8 million6 years10,000 acres 8 Pilot Ranches

Agree on Feasibility: Pilots

Agree on Contract Terms • Agency-Buyer is acquiring an option

– Agrees to pay rancher-seller a fixed amount per year for option to retain water

– Payment based on estimated average annual water retention offered by the rancher seller

Agree on verifying contract compliance

Annual Payment

Agree on Regulatory Processes • Streamlined permitting (CWA, Sec 404, GP and

Federal-state MOU)– T&E avoidance (FWS –USDA consultation matrix)– Section 404 –Expedited approvals– State permits

• End of Contract– T&E protections through Section 404 – Wetlands footprint (state and federal)

Investing in Nature’s Services

• Devil is in the Details

• Importance of Collaborative Engagement with Potential Sellers in Program Design

• Need to Balance Implementation Feasibility with Accountability for Real Results

Moving from Idea to Action—Key Lessons

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Thank You!

Questions?

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RFF Research—Operating Plans and Preparedness

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Enhancing Preparedness and Emergency Response

• Scenario “testing” of Rapid Response• ADD--Molly

Oil Spill Containment—The Arctic Context