This Week In Water: Trickle-Up Economics

One could say that the Mexican Payment for Hydrological Services Program (PSAH, by its acronym in Spanish) model is like a 4×4 off-road vehicle. Years were spent working to improve the design and tailor it to the Mexican context. A lengthy trial-and-error process led to the vehicle’s current condition, modified to move efficiently in a geographically complex environment with unique land tenure conditions. The vehicle works well in the Mexican reality, which consists of diverse ecosystems, the existence of ejidos, variable means of production tied to the use of natural resources, the presence or absence of local institutions, and multiple levels of community organization.

As a result, the model itself is not necessarily replicable in other countries that, like Mexico, face challenges in maintaining environmental services. However it does possess certain components and processes that, if tailored to each country’s context, can provide solutions to the design and implementation of natural resource management and rural development public policy. One aspect of the Mexican model that we can offer to the world and that we consider the most replicable is the program’s prioritization of local and regional processes.

– Keep reading.

Chege Mwangi looks out over his small patch of farmland on this steep incline high in Kenya’s Abardares Hills and smiles. His cabbages are bursting, and his potatoes are ready to be harvested. Then he glances across the valley.

“Mine used to look like those,” he says, pointing to the dusty hills where farmers haven’t yet joined the Payments for Watershed Services (PWS) program that’s reshaping the landscape around him. “But since the [Napier grass] strips came in, my soil isn’t disappearing.” Embedded in each strip of Napier grass, Mwangi has three rosewood trees, which hold the soil and pull nitrogen from the air. They can even provide timber when he needs it. “See that stump?” he asks. “That’s from the one tree I had before, but I harvested that for KSh 5000 ($60) to pay school fees for my children. Soon, I’ll have plenty of trees.”

For two years now, flower growers along the shore of Kenya’s Lake Naivasha have been paying farmers in the hills 40 kilometers away to adopt sustainable agriculture practices. They’re doing it to save their lake, but it’s also helping farmers lift themselves out of poverty.

– Keep reading at Ecosystem Marketplace.

Unsustainable land management has caused chunks of the Earth three times the size of Switzerland to be lost each year to desertification. These lands are no longer able to produce food as they dry up and bodies of water and vegetation disappear – often from agricultural practices like overgrazing, deforestation or extracting too much groundwater from the aquifer.

During the United Nations Convention to Combat Desertification (UNCCD) 2nd Scientific Conference, presenters introduced a new study, The Economics of Desertification, Land Degradation and Drought: Methodologies and Analysis for Decision-Making, that examines the economic costs of desertification and land degradation. The study offers methods to incorporate sustainable land practices into policies which will, the UNCCD says, mitigate environmental damage and eradicate poverty.

– Read a summary at Ecosystem Marketplace.
– Access the document here.

ExxonMobil says it will clean up the streets and lawns of Mayflower, Arkansas after a pipe spewed 12,000 barrels of thick bitumen over the middle-class Little Rock suburb. The Arkansas Attorney General’s office is investigating the cause of the spill. Claims could include the profits lost by local businesses as well as damages to groundwater.

But the environmental damage in Arkansas may be nothing compared to what’s brewing in Alberta, where sludge-filled tailing ponds cover 20 square miles around the Athabasca oil sands project – a by-product of the extraction process that uses scalding-hot water to separate the oil from the sand. A recently released document from Natural Resources Canada found that groundwater in Alberta has been contaminated by tar sands waste. The study was designed to identify naturally occurring substances from mining related contaminants – research that is woefully scarce. Without research, there’s no data, and without data, there’s no way to really identify and fix the problem, let alone estimate the costs of doing so.

– Learn more.

“Government can only do two things,” said Anthony Turton, a trustee with the Water Stewardship Council of Southern Africa, at the Fifth Regional Consultation on Groundwater Governance held last month in the Hague, a contribution to the United Nations International Year of Water Cooperation and World Water Day. “It can regulate, and it can incentivize. It has a stick and a carrot.”

The private sector, he added, has everything else. “They have the capital, the technology, and the capacity to be either good or bad,” he said. “So the question is: how do you regulate and incentivize them to become good rather than bad?”

The consensus answer, according to participants from beverage makers like Nestlé and mining companies like Mintails Ltd, begins with clear rules uniformly enforced. Heineken water specialist Ron Bohlmeijer even said that governments needed to be stingier in granting licenses to operate.

“We want to be good actors, but it’s hard when others aren’t,” he said. “Only government can provide licenses to operate.”

– Keep reading.

A new report authored by Trucost for the TEEB for Business Coalition takes a look at the unseen externalities that arise from everyday business operations – and puts them in terms business will appreciate. External environmental costs from greenhouse gas emissions, water use, land use, pollution and waste amount to $4.7 trillion every year, according to Natural Capital at Risk: The Top 100 Externalities of Business. Coal-fired power in Eastern Asia and North America is the biggest culprit, but impacts on water security and land from agriculture in various regions take the second, fourth and fifth spots. Water use overall accounts for a quarter of total costs of externalities. “The profits of high impact business sectors would be wiped out if the costs of environmental damage and unsustainable natural resource use are accounted for,” write the authors.

– Read more and download the report here.

Some of the biggest challenges faced by water providers today – and there are many, including aging infrastructure, climate change impacts on supplies, demand management and encouraging conservation – aren’t thoroughly covered in disclosure requirements to bond investors. A letter from major investors sent to the National Federation of Municipal Analysts in late March pushed for strengthening requirements for disclosure on risks like these. Right on cue, Ceres has released a new framework for disclosure to guide water providers covering these and other key areas. “The operating environment of water providers is changing, and investors need to be sure utilities whose debt they are holding are adapting, explains Sharlene Leurig, a water financing expert at Ceres.

– Read a press release from Ceres.

The Water Footprint Network and Best Foot Forward, a UK-based consultancy, have announced a new joint initiative to integrate water and carbon footprint management. Integrated management offers a path for understanding trade-offs and improving efficiencies. The two organizations will convene an industry stakeholder working group to synthesize best practices and identify case studies. ‘It’s vital for businesses to consider both carbon and water footprint together, but this isn’t an easy thing to do,” said Chris White of Best Foot Forward. “We’re asking business leaders to work with us to help come up with solutions.”

– Read a press release.

The city of Cali in Colombia just inked a deal with The Nature Conservancy (TNC) to create a new water fund protecting water supplies in the region. Cali’s Administrative Department of Environmental Management will contribute an initial investment of $1.6 million to seed the fund. The fund will channel money from major water users toward management and preservation of healthy ecosystems at critical source areas. Protection activities will likely include Los Farallones National Park in the Cauca Valley; further management studies will be carried out in July. TNC has partnered with the FEMSA Foundation, the Inter-American Development Bank and the Global Environment Facility on a $27 million mission to establish water funds across Latin America.

– Read more at Ooska News (subscription required).

Two new groups have signed on to use Bonneville Environmental Foundation (BEF)’s Water Restoration Certificates to offset water use in the US West. Ted’s Montana Grill, a national restaurant chain, will offset five million gallons of water over two years to the Colorado River Basin in order to balance its water footprint for three Colorado restaurants. And Southern Oregon University takes a step toward being the first water-neutral institute of higher education, with the announcement that the school will work with BEF to replenish the Klamath River Basin to the tune of 80 million gallons per year for five years. Water Restoration Certificates are generated via instream buybacks & leasing and restoration projects to restore flows to critically dewatered streams across the West.

The dead zone in the Gulf of Mexico – an oxygen-starved patch where marine life has perished – is, on bad days, the size of Massachusetts. It’s caused by nitrogen and phosphorus pollution that originates from farms, sewage treatment facilities, factories, and everyday stormwater runoff, and travels down to the Gulf via the Mississippi River basin.

A Gulf of Mexico Hypoxia Task Force met last week in Kentucky to discuss what can be done about the dead zone. One solution floated is a nutrient trading program in the Mississippi. A new study conducted by the World Resources Institute (WRI) found that trading could be cost effective and even profitable for the sewage treatment plants and farmers who might participate. WRI estimates that farmers could pull in $25-$60 per acre by generating nutrient credits, while treatment plants could save as much as $900 million in a regulatory scenario. Of course, no such regulations exist. Still, WRI says, trading could play a role in voluntary state nutrient reduction strategies.

– Read more at WRI.

In 2010, Kansas City, Missouri signed a consent decree with the US Environmental Protection Agency committing the city to invest $2.5 billion over 25 years to manage urban stormwater pollution. The decree allowed the city to use green infrastructure like permeable pavement, rain gardens, and green roofs – the first deal of its kind.

Three years later, the city has completed a pilot project in a neighborhood in the Middle Blue River Basin. A nearby unimproved neighborhood serves as a control to better understand how well the green changes are working. Planners expect green infrastructure will eliminate the need for 3 million-gallon stormwater storage tanks in the area while potentially increasing property values. Private property owners are also eligible for 75% off their stormwater fees if they make green infrastructure improvements on their own.

City authorities say they’ve learned some valuable lessons – whether on working with local residents resistant to the changes, maintaining plantings and garden beds, and thinking creatively about using larger areas like parks or vacant lots to gain green economies of scale. “You can never communicate enough,” said Lara Isch, Education & Outreach Coordinator for the KCMO Water Services Overflow Control Program. The City estimates it’s saved about $10 million already.

– Read more at WaterWorld.
– Get coverage at the Milwaukee Avenue Green Development Corridor Blog.

The Nature Conservancy, Mexico

The Conservation Business Specialist works closely with Mexico ´s Comision Nacional de Areas Naturales Protegidas – CONANP, the German Organization for International Cooperation (GIZ) and with GITEC Consult GmbH, under the auspice of a contract for services that was recently executed with TNC. This five year long project, funded by the German Government, consists in the creation of an ecological corridor to be implemented in the Sierra Madre Oriental. The project focuses on i) creating the governance structure that is needed to create the corridor. and ii) the implementation and modification (or “greening”) of economic instruments for nature conservation. GITEC and TNC will be working in the second component. Hence, the Conservation Business Specialist will be seated at GIZ ´s offices and will work directly with GITEC ´s and GIZ ´s staff. Summing up, the Conservation Business Specialist will analyze both public and private existing financial and market based instruments, propose alternative ways to make them more efficient under a vision of sustainability for the region. Also, the Conservation Business Specialist will propose new market based instruments to achieve this vision of sustainable development for the corridor.

– Learn more.

Groundwater is a resource to be protected. It ignores political boundaries, transports contaminants, floods mine and construction sites, spins communities into an uproar, and can’t be found when you need it. Model, explore, characterize, bank, inject, extract, treat, and predict all your subsurface needs with everything groundwater at the 2013 NGWA ® Summit. 28 April – 2 May, 2013. San Antonio TX, USA.

– Learn more.

The only national conference that brings together key players in this industry, and offers quality hands-on sessions and important regulatory updates. Learn from & network with the 400+ attendees the conference draws, offering perspectives from bankers, regulators, and users. 7-10 May, 2013. New Orleans LA, USA.

– Learn more here.

Ecosystems contribute to the needs and demands of modern societies in multiple ways including cultural, economic, environmental, institutional and social aspects. The nature of ecosystems demands for special arrangement of institutions and markets, including property rights, global and local governance, public involvement and information provision and access. The conference aims to capture a broad and integrated analysis of the issues related to ecosystem services. The Major themes are but not limited to: valuation of ecosystem services, market mechanisms for ecosystem services, institutional arrangement for ecosystem services, land tenure reform and supply of ecosystem services, and the role of ecosystem services in a green economy. 13-15 May 2013. Zhejiang, China.

– Learn more here.

Continuing the tradition of 17 previous international Katoomba meetings, Forests, Water, and People will gather leading experts, practitioners, policymakers, and investors from China and abroad to advance nature-based solutions to the water crisis for an urbanizing world.

Forest Trends has tracked steady growth in investments in watershed services over recent years, with nature-based solutions to urban water insecurity, like the source water protection programs demonstrated in New York City and Beijing, an important part of this trend. China has been a leader in the field, accounting for over $7.4 billion in watershed investments in 2011. The potential for scale in investments in watershed services is great, but can only be achieved through innovation in policy, business, and program design. Katoomba XVIII will bring together actors from all sectors to galvanize learning, share experiences, and catalyze innovation for forests, water, and people. 16 May 2013. Beijing, China.

– Learn more here.

All around North America, cities are shifting from ‘grey to green’ approaches to developing and renewing their infrastructure. Green infrastructure involves the use of living systems such as green roofs and walls, urban forests, wetlands, porous paving systems and raingardens as well as supportive technologies such as engineered soils and water storage and transportation systems. Extreme weather events like Hurricane Sandy are creating multibillion dollar opportunities to invest in green infrastructure solutions. The conference will attract designers, engineers, utility managers, planners, developers and local, regional, provincial/state and national government policy makers. Unlike many ‘talking head’ conferences, this event will focus on engaging participants. It will provide a unique learning environment to facilitate information sharing on best practices, creative solution making, networking and joint ventures. It will engage participants in new ways of thinking about project design, utility regulation and infrastructure capital and maintenance expenditures. It will provide opportunities for ample discussion and engagement, engagement, engagement! 21-22 May 2013. Toronto, Canada.

– Learn more here.

The World Economic Forum report Global Risks 2013 concludes that “water supply crises” is one of the top 5 most likely risks facing the world in the next decade and, furthermore, is the second most serious in terms of potential impact. More than two-thirds of companies already view water as a substantial risk to their business according to the CDP 2012 survey and some bank analysts predict that water may become scarcer than oil. As a result, investment in water and sanitation is set to soar, presenting a range of new opportunities to industry and the financial sector. Investors: Attend to understand the opportunities and risks facing companies in your portfolio. Identify the exciting new areas to invest in. Companies: Attend to find out how to measure, manage and disclose your exposure to water-related risks and the potential costs and benefits. Identify the key opportunities to save money so that you can give a boost to your bottom line. 30 May 2013. London, UK.

– Learn more here.