This Week in Water: Feds Stepping up Support For Water Quality Markets

Ecosystem markets have helped bring the value of nature’s services into our economy, but is it a good idea to put all our eggs in the ‘market’ basket? It’s a recurring question at the the ‘Soapbox’ online forum at Ecosystem Commons, which is fast becoming one of the more provocative – and enlightening – forums in the ecosystem services sector. Heavyweights in the field like University of Oregon pioneer Robert Costanza and former Office of Ecosystem Services and Markets (OEM) boss Sally Collins have made use of the space to ask whether we need to explore new mechanisms; a typical recent discussion asked, “Are Public Ballot Measures a Better Mechanism for Conservation than Markets?” Last Friday Collins took to the Soapbox to suggest that at her old job at OEM, a focus on markets “came at the expense of fostering a broader understanding of ecosystem service values.”

– Read the latest discussion and add your two cents.

US Department of Agriculture Secretary Tom Vilsack released a Final Programmatic Environmental Impact Statement (PEIS) on January 26th that supports a proposed new planning rule for the country’s 193-million acre National Forest System. A new final rule would update land management planning procedures that have been in place since 1982. The new PEIS suggests a focus on multiple services and multiple uses for forests and grasslands; among the proposed changes are requirements to maintain or restore watersheds, water quality, and riparian habitats. Plans would also have to provide for multiple uses, including outdoor recreation, range, timber, watershed, wildlife and fish.

– Get the full story at Ecosystem Marketplace.

Paying land managers for all the services generated by an ecosystem – instead of just one, like carbon or water quality – should in theory encourage more ecologically valuable conservation projects. It’s an alluring concept that’s proven elusive in practice, but nearly three-quarters of ecosystem market participants expected that to change, according to a new survey published last month.

The Electric Power Research Institute (EPRI) recently surveyed more than 300 ecosystem market policy-makers, researchers, and credit sellers, and published the results in a new report that has some surprising results.

– Read on at Ecosystem Marketplace.

The US Environmental Protection Agency has long responded to violations of the Clean Water Act by issuing administrative compliance orders, which can’t be challenged in court until the EPA initiates enforcement actions. An Idaho couple says that’s not fair, and their challenge has gone all the way to the Supreme Court. Sackett v. EPA will likely have ramifications for wetlands protection across the United States. At issue isn’t whether the Sackett’s property is or is not a wetland, but how the EPA responds to what it percieves as damage to wetlands – and at press time, the unofficial consensus seems to be that EPA’s not going to win this one.

– Read more at Ecosystem Marketplace.
– Get analysis from Lexology.

The US Department of Agriculture just announced that up to $10 million will be available in Conservation Innovation Grants to support the development of water quality markets. Half of that is earmarked specifically for Chesapeake Bay-area trading programs. “For the first time USDA has offered funding specifically for water quality trading,” said Secretary of Agriculture Tom Vilsack. “Our goal is to demonstrate that markets are a cost-effective way to improve water quality in places like the Chesapeake Bay watershed, and agricultural producers are critical to the function of these markets.” The deadline for project proposals is March 2nd.

– Read the press release.

For every goal scored in the 2011-2012 season, the National Hockey League Foundation has committed to restoring a thousand gallons of water to the Deschutes River through the purchase of Water Restoration Certificates from the Bonneville Environmental Foundation. Sales of certificates fund restoration projects to enhance streamflows and improve water quality. To date, “Gallons For Goals” will deliver more than three million gallons of water back to the river, and the season’s not over yet. Last year, the NHL fully offset water use for the Stanley Cup through the same mechanism.

– Read more about “Gallons for Goals.”
– Learn about Water Restoration Certificates.

Groundwater mitigation banking in Kittitas County, Washington is flourishing, with three new banks serving the Lake Kachess, Teanaway Basin, and Fowler Creek areas due to open early 2012. Groundwater resources in the Yakima Basin are already over-allocated, so the State Department of Ecology requires that any new groundwater withdrawals are offset by the purchase of existing senior water rights. Mitigation banks have sprung up to meet that need; so far 1,400 new homes and 73 acres worth of new water use have been offset.

– Read a press release from the WA Department of Ecology.

PENNVEST – the Pennsylvania Infrastructure Investment Authority – recently announced a March 21st forward auction on the Markit platform for nitrogen and phosphorus credits in the Susquenna and Potomac nutrient trading markets. This will be the fourth auction PENNVEST has hosted and the first of four planned for 2012. At a spot auction in November 2011 20,859 nitrogen credits were sold at $3.10 per pound of reduction while 700 phosphorus credits went for $4.73 each.

– Learn more about PENNVEST’s nutrient auctions.
– Visit Markit’s PA nutrient auction page.

Last January, Dow Chemical and The Nature Conservancy (TNC) announced a five year, $10 million partnership to develop and field-test approaches for business to manage ecosystem services and biodiversity. A year in, the partnership has chosen its first pilot site: at Dow’s Texas Operations complex in Freeport. A recent progress report discusses an issue that’s critical at the Texas site: freshwater availability. TNC and Dow plan to use Texas Operations as a ‘living laboratory’ to develop scientific, economic, and technical tools from the private-sector perspective to assess future projected flows in the Brazos River Basin and demand-side management strategies. Stay tuned for future updates.

– Read TNC’s progress report (pdf).

The Environmental Protection Agency (EPA) just released draft stormwater and wastewater management guidance for municipalities that emphasizes using green infrastructure and water quality trading to meet Clean Water Act standards in a cost-effective way. The guidance supports an integrated planning framework wherein NPDES permit holders could ultimately meet both wastewater and stormwater discharge requirements under the same permit. EPA will host five workshops in cities across the country seeking feedback before finalizing the document.

– Read more at Lexology.
– Download the Draft Guidance (pdf).

The January 2012 issue of the Solutions Journal dealt with issues at the intersection of economics and the environment, and one piece in particular caught our eye: a case for water utilities’ using natural capital accounting. Investing in natural water infrastructure like watershed protection is a no-brainer from an ecological standpoint, the article’s authors note. But from an accounting standpoint, it’s less straightforward: water utilities can’t list the services provided by a healthy watershed – arguably their biggest asset – on their financial books. Seven utilities from the US and Canada have formed a working group to propose amendments to General Accounting Standards Board (GASB) rules to let utilities include natural capital as assets, and thus be able to justify watershed investment or borrowing against those assets.

– Read more at the Solutions Journal.

In January, the Obama administration’s National Ocean Council released a draft implementation plan for a National Ocean Policy. Its very first recommendation is that the federal government adopt an ecosystem-based management approach for the ocean, coastlines, and Great Lakes system – a significant shift in policy from focusing on single species or single use, which has proven inadequate at stopping coastal and marine degradation.

The Council calls on federal agencies to cooperate on developing a EBM-based framework and pilot projects around the US to test the approach and develop best practices. The report also backs the ‘ridges-to-reefs’ concept, stressing that protecting ocean water quality means supporting sustainable management practices on land. A public comment period is open through February 27, 2012.

– Download the report and submit comments.

As a recent Sacramento Bee op-ed notes, California Senator Dianne Feinstein has added a provision to the 2012 budget that relaxes restrictions for agricultural producers to sell their water rights to private buyers. When flows in the Sacramento and San Joaquin rivers are high, water can be diverted and sold on the private market – though those flows are sorely needed by the Sacramento-San Joaquin Delta ecosystem, the largest and arguably most important estuary on the Pacific Coast, which is in serious decline in large part thanks to freshwater diversions. Growers currently pay a highly subsidized $20 per acre-foot, and can sell that water for a few thousand dollars per acre-foot to urban buyers. Taxpayers will continue to foot the bill for public investment in water transfer and storage infrastructure, and society as a whole gets stuck with a degraded Delta.

– Read the op-ed at the Sacramento Bee.

Many a project developer will tell you that a watershed payment mechanism’s success ultimately comes down to community buy-in. In Cuenca, Ecuador, the utility ETAPA wanted to build public support for a ‘reciprocal arrangement’ wherein land managers would halt deforestation and change grazing practices, and downstream water users would pay for the hydrologic benefits via an increase in water fees. Through a partnership with RARE Conservation, ETAPA launched a successful social marketing campaign. Armed with folk songs, festivals, water saving contests, murals and other fun, the ‘Pride Campaign’ secured support for a reciprocal arrangement downstream. Meanwhile, upstream land managers received technical advice, training and supplies to implement conservation projects that also improved livelihoods.

– Learn more at RARE (in Spanish).

An independent group of scientists has come out strongly against the Australian government’s draft plan for managing water resources in the Murray-Darling Basin. The Wentworth Group of Concerned Scientists is calling for authorities to go back to the drawing board, and say that the current plan “manipulates science in an attempt to engineer a pre-determined political outcome.”

A main point of contention is the 2,750 gigalitres worth of water rights the government aims to buy and set aside to protect instream flows: the Wentworth Group argues that that figure came from politicians, not scientists, and that no one really knows whether it will be adequate to restore health to the basin’s rivers. What’s more, the draft plan would allow groundwater withdrawals to increase by 2,600 gigalitres at the same time. The government may not see groundwater and surface water as connected, the scientists say, but nature does. It’s also unclear how salinity issues will be managed, nor is climate change considered in the plan’s models.

– Get the full story.

The Sasumua reservoir, which supplies a fifth of Nairobi’s water, is under threat from heavy sediment loads that run off intensively cultivated agricultural parcels. Pro-poor Rewards for Environmental Services in Africa (PRESA) is developing a payment for watershed services (PWS) mechanism to compensate upland farmers for soil and water conservation activities. But institutional barriers exist for both potential buyers like the Nairobi Water Company and financial intermediaries like the national Water Services Trust Fund. PRESA’s new policy brief outlines these challenges, and makes recommendations for reforming Kenya’s policy and institutional framework to clear the way for PWS to be deployed widely, rather than just on an ad hoc basis.

– Learn more and download the policy brief here.

In the Philippine’s Cordillera watershed, large-scale land clearing upstream has meant downstream water quality issues that current watershed management strategies can’t address. Now, the Department of Agriculture Regional Executive Director Marilyn Sta. Catalina says she’d like to see a payment for watershed services mechanism tested in the Cordillera, as a way to finance protecting of remaining forest areas in the watershed.

– Read more.

The Great Lakes, a massive freshwater system spanning the border between US and Canada, have been in decline for years. A movement to legally recognize the Great Lakes as a shared commons, protected by the public trust doctrine, is steadily gaining traction. In practice, that means moving from a “‘look before you leap’ approach – consistent with current water and environmental statutes – to an updated “look and only leap if it’s safe” concept for managing shared resources and public health,” Circle of Blue writes.

– Read the full article at Circle of Blue.

Stated preference methods, wherein people are asked how much they’re willing to pay for some good or service, are foundational in the non-market valuation arsenal. With twenty years of valuation studies showing that rural communities in developing countries are willing to pay significantly less for improvements in water delivery or quality than urban users, researchers have concluded that other financing sources will have to be found to shoulder the costs of rural water improvements, since communities themselves appear to be unwilling to pay.

But, a recent study asked, what if we consider that rural economies often rely heavily on exchanges that don’t involve cash, but rather labor or in-kind payments? What if we ask how much communities are willing to contribute toward water improvements in a currency other than cash? A study carried out in Zambia suggests that actual demand isn’t fully being captured by the dominant methodology, and that cost recovery for rural water improvement projects may be more feasible than previously thought.

– Read more from the Global Water Forum.

(Washington, DC) The Office of the Chief Economist is seeking a motivated and highly-qualified candidate for an exciting full-time permanent position located in the Office of Environmental Markets (OEM) located in Washington, DC. The OEM mission is to provide the central coordination for the Department in developing technical guidelines and science based methods for quantifying the environmental benefits from conservation and land management activities; conduct analysis and perform long range planning to develop response strategies relating to environmental markets; provide information on scientific developments and policy issues relating to the effects of environmental markets on agriculture and forestry, including broader issues that affect the impact of environmental markets on the farms and forests of the United States; and to provide the Secretary with recommendations on alternative courses of action.

– Learn more here.

Willamette Partnership, Oregon Department of State Lands, U.S. Army Corps of Engineers Portland District, and the Environmental Protection Agency Region 10 are working jointly to develop a function-based stream mitigation framework for Oregon in order to effectively implement stream mitigation policy in Oregon under the Federal Compensatory Mitigation Rule (USEPA/USACE, 2008). The rule stresses mitigation of impacts in a watershed context. This project will develop a stream functions assessment methodology for statewide application in Oregon to assess the site/reach scale impact of proposed and permitted actions to functions, as well as the replacement (predicted and actual) of unavoidable impacts and compensatory mitigation. Proposals are due February 17, 2012, 4:00 p.m. PST.

– Learn more here.

The Willamette Partnership’s Counting on the Environment’s Ecosystem Credit Accounting System was designed to assist practitioners who are participating in or interested in ecosystem markets. The associated training program is open to individuals or groups and the modules can be taken individually or as a program ranging from one to six days. Training modules will cover foundations of payments for ecosystem services, ‘Markets 101’, and functional credit calculation methods for wetlands, streams, and upland ecosystems. Follow the link for more information on the training calendar and costs. 9 March – 8 June 2012. Portland, OR and online.

– Learn more here.

The 2012 Sustainable Water Management Conference will be a true sustainability conference focused on water resources integration. This conference seeks to combine technical presentations with in-depth discussions on legal, regulatory, and legislative matters facing water utilities today. The conference will address a wide range of topics concerning sustainable water management, including managing water resources and the environment, water conservation, sustainable utilities and infrastructure, urban planning and design, and community sustainability. 18-21 March 2012. Portland, OR.

– Learn more here.

We are living through a remarkable period of advancement in information technology — in just a few years we have learned to take for granted the massive computing resources for geospatial searches provided by the major internet search engines. Every type of work in Water Resources is impacted by these new developments as new sources of data and new tools come online; but, standards for data quality, statistical reliability (uncertainty), and metadata standards are still trying to catch up. We look forward to sharing experiences in New Orleans; meeting others who deal with the same challenges at every level of detail on the wide array of information and technologies that will help us meet the water resources challenges of the new century. 26-28 March 2012. New Orleans, LA.

– Learn more here.

Building on a comprehensive update of knowledge of the Earth system and the pressure it is under, the Planet Under Pressure conference will present and debate new insights into potential opportunities and constraints for innovative development pathways based on novel partnerships. 26-29 March 2012. London, UK.

– Learn more here.

Water rights trading and water resource development are emerging markets that are creating abundant business opportunities. However, these new markets are not always easily understood. WestWater Research and American Water Intelligence are coming together to provide information and direction to water trading and development opportunities through a series of thought-provoking, regional conferences. 12-13 April 2012. Santa Barbara, CA.

– Learn more here.