Why And How To Invest In Forested Landscapes

1 November 2013 | Natural ecosystems like forests and wetlands provide essential services to water utilities, businesses, and communities—from water flow regulation and flood control to water purification and water temperature regulation. To ensure these ecosystem functions and associated benefits continue, com- munities can strategically secure networks of natural lands, working landscapes, and other open spaces as “natural infrastructure.” While concrete-and-steel built infrastructure will continue to play a critical role in water storage and treatment, investing in natural infrastructure can reduce or avoid costs and enhance water services and security as part of an integrated system to cost-effectively deliver safe drinking water.

Now is a critical moment facing water resource managers and beneficiaries nationwide. Much of America’s aging built infrastructure for drinking water is nearing the end of its useful life, according to the American Society of Civil Engineers. Yet funds for investment in water infrastructure are drying up in an era of fiscal austerity. As utility rates for drinking water are increasing faster than inflation and household incomes (Harris 2012), the need is clear for lower cost, integrated solutions to meet water infrastructure demands of the 21st century.

Recognizing this critical moment, water resource managers are looking to invest in ecosystems to address emerging water issues. Promising efforts across the country have secured natural infrastructure for water management objectives through a variety of means—from land acquisition, zoning ordinances, and conservation easements to catastrophic wildfire risk mitigation and pay- ments to private landowners for best management practices. These efforts have yielded a number of valuable lessons and highlighted several challenges.

A number of barriers have impeded efforts to scale up the integration of natural infrastructure into water management nationwide. For example, many utilities, municipalities, and businesses face knowledge gaps among key constituents or even internal decision makers. These entities often lack the financial resources or technical guidance needed to champion natural infrastructure. Moreover, utilities have struggled to quantify the ecological and economic benefits of natural infrastructure, a task made more difficult by imperfect science.

Even where the case has been made, public utilities work with financial accounting standards that do not enable operations and maintenance spending on natural infrastructure as part of normal business practices, despite the clear benefits. Ultimately, however, the movement toward widespread, landscape-level investments in natural infrastructure nationwide can be successful if key decision makers in key institutions have the understanding, know-how, and tools needed to act.

In light of these challenges and opportunities, this guide is intended to be a foothold for those who can champion natural infrastructure in water utilities, local conservation groups, and private businesses, and who need a persuasive case, a road map of next steps, and overarching guidance to do so. It attempts to provide the resources, science and economics, illustrations, and guidance needed to foster meaningful dialogue with watershed decision makers and stakeholders around natural infrastructure options, to secure adoption and commitment, and to begin early design and implementation steps on solid footing. It is the most comprehensive publication of its kind to date, pulling together the perspectives of 56 authors spanning the stakeholder groups and experts who need to be involved for natural infrastructure efforts to be successful. As such, it is a go-to reference for their colleagues across the water resource management and conser- vation fields, agencies at all levels of government, and academia.

Together, these authors have threaded together the evolving “story” of the forest-based natural infrastructure approach to source water protection. These take-aways from the economics and underlying science, the opportunity for the approach across the country, and lessons for program design and implementation comprise the guidance and over- arching narrative of this guide.

Economcis

The economic benefits can be substantial. High source water quality and well-regulated flow can reduce the capital and water. Numerous studies have affirmed the intuitive: High source water quality can reduce treatment costs. And across the United States, we have seen utilities with high source water and even major capital investments, by bypassing elements of the conventional treatment process. Similarly, ecosystem-regulated water flow can have substantial economic benefits by avoiding flood-related damage and maintaining water supply through dry seasons.

The financial case can be made. The case for natural infrastructure investment has been made in several watersheds nationwide, and a methodology for “green-gray analysis” is available to compare the financial merits of integrated natural and built infrastructure alternatives.

Natural infrastructure investments are actionable despite uncertainty. Ultimately, the strength of natural infrastructure economic analyses depends on the robustness of the underlying science. Even where detailed scientific modeling has not been conducted, conservative assumptions and careful sensitivity analyses can produce actionable results. However, being overly conservative about costs and benefits can also lead to underestimation of the returns of natural infrastructure.

Science

The scientific foundation is imperfect, but robust. The water-related functions of healthy forested landscapes are well- established; maintaining healthy, forested landscapes and implementing best practices in forestry management can be effective strate- gies for promoting source water quality and regulating flow. For example, forests help to anchor soil against erosion, promote infiltration and minimize overland flow, prevent nutrient delivery to streams, minimize the impact of rain-on-snow events, and maintain snow pack later into the spring. Best practices in forest management can help maintain these critical functions and mitigate the potentially negative impacts of activities such as timber harvest and road construction.

Inherent variability poses challenges for quantification. While the science is robust, there is inherent variability across and within watersheds in the magnitude of water resources impact of a given land cover change or management practice. Quantitative water- shed models can help to address part of this variability. These tools are advancing in reliability and usability, and can account for a portion of the variability in natural ecosystems. While there is a growing number of applications of these models, modeling remains relatively resource-intensive and results inevitably come with some level of uncertainty.

Risks and uncertainty can be managed. Despite residual scientific uncertainty, natural infrastructure options are actionable. Given robust but imperfect science and the need to prevent the perfect from being the enemy of the good—as in all things—the dominant approach to natural infrastructure investments has been to manage uncertainty and maximize cost-effectiveness by: a) prioritizing types of interventions (e.g., easements and best management practices) and the distribution of those interventions throughout the watershed, b) carefully monitoring the response of water resources throughout implementation, and c) managing investments adaptively to maximize outcomes.

Opportunity

The opportunity is widespread. Water- sheds across the United States have opportunities to integrate natural infrastructure alongside critical built infrastructure. The fundamental conditions needed for natural infrastructure to be a potentially viable solution to water needs are quite basic and found in diverse watersheds across the United States. Unfortunately, costly water management challenges are increasingly widespread in the United States. Where there is a clear connection between these challenges and ecological conditions on the landscape—for example, loss or degradation of natural ecosystems due to development, wildfire, invasive species, or unsustainable forestry—the natural infrastructure investment approach can play a role.

Local decision maker participation is critical for success. The success of the approach depends on the ability of natural infrastructure champions to make the case to local decision makers and stakeholders, and to articulate a vision of success. Early engagement efforts with decision makers should be careful to understand and take into account their priorities, preferences, and perceptions related to water delivery, source water management, and natural infrastructure.

Design and Implementation

Cultivating partnerships is an important first step toward success. In each of the successful attempts to build robust pro- grams for investment in natural infrastructure, essential components have been collaboration among a variety of stakeholders and experts, and the emergence of champions within stake- holder groups to push the program forward. The co-benefits associated with natural infra- structure—benefits such as carbon sequestration, wildlife, and recreation—can motivate a wide range of stakeholder groups to partner with water utilities and other beneficiaries. These partnerships can be critical to success as they expand available resources, increase capacity, and provide political capital.

Landowner participation is essential in privately owned watersheds. Landowners are highly independent, value their autonomy, and generally engage in agriculture or forestry because it is a way of life as well as an eco- nomic enterprise. In addition to the financial inducement being offered, landowners con- sider how the program is designed and admin- istered as part of their participation decision.

Investment must be large-scale and sus- tained. A long list of public, private, and hybrid public/private finance mechanisms is available to get dollars on the ground to restore, enhance, protect, and manage natural infrastructure for water resources. The primary challenge is to select a finance mechanism (or combination of mechanisms) that is capable of gaining the nec- essary political support for adoption, while also generating sufficient funds for meaningful and sustained investment in natural infrastructure.

While there are several challenges facing the natu- ral infrastructure approach, several forest-based water management efforts have been successfully implemented in watersheds across the United States to provide clean and abundant source water at reduced cost and with a suite of co-benefits for people and nature. These efforts and the lessons they produced are profiled in this guide.

From experience with the natural infrastructure approach, a set of “action items” are evident for both watershed stakeholders and the broader community of practitioners working to scale up the approach nationwide.

Action items for water managers, conservationists, and other stakeholders at the local watershed level

1. Assess the watershed for ecological condition and trends causing water-related issues tied to substantial current or projected costs;
2. Engage with key stakeholders and decision makers early and often to articulate a vision of success, expand capacity for program development and implementation through strategic partner- ships and consultation with experts, and build on the lessons of past successes and failures;
3. Conduct necessary economic analyses to determine if natural infrastructure is the best approach and to make the case for financial investment;
4. Assess a broad array of finance mechanisms with an eye toward securing large-scale “anchor funding” as well as a broader “funder quilt” to ensure meaningful and sustained investment over the long term;
5. Prioritize investments across parcels and interventions (i.e., reforestation or forest best management practices), monitor outcomes, and adapt investments accordingly.

Action items for the broader community of practitioners

1. Actively participate in the community of experts, facilitators, consultants, and “mobilizers” seeking to scale up integration of natural infrastructure into water management strategies, in order to leverage others’ efforts;
2. Assist in securing large-scale natural infra- structure funds such as bonds by ballot mea- sure and natural infrastructure “set-asides” like the 20 percent green infrastructure require- ment in the State Revolving Funds (SRS);
3. Expand research to quantify forest-to-water connections and improve the reliability and accessibility of watershed models;
4. Improve accounting standards to enable opera- tions and maintenance spending on natural infrastructure by public entities as part of normal business practices;
5. Build awareness among the water resource management industry, the urban planning field, ratepayers, and taxpayers of the impor- tance of natural infrastructure as a cost-effec- tive and beneficial element of an integrated solution to emerging water issues.

Perhaps the two most important lessons learned from natural infrastructure efforts to date are the power of individuals and the importance of partner- ships. Ultimately, the most effective messengers to decision makers and stakeholders affecting natural infrastructure decisions at the local level are influential individuals within their own institutions. Behind successful natural infrastructure programs are consistently the often-unsung source water coordinators, conservation staff, and sustainability officers creating real change.

These champions can be those in positions of power, but they need not be. A source water coordinator or manager in a public utility, a risk manager in a private business, or a water program manager in a state environmental agency can have immense impact within their respective institutions—many have been creating that impact for decades. These champions lead and inspire by offering fresh ideas and creativity where precedent might otherwise win the day—and by coming to the table with the evidence base to support those ideas. They identify likely challenges within their institutions and seek external support where appropriate to overcome those challenges.

In the source water context, these champions may need to help decision makers step outside the bounds of their primary roles and grow their competencies through various learning processes. Water utilities and municipalities that have been able to innovate in the face of the internal and external challenges they face recognize that bringing the natural infrastructure approach to scale will require institutional change in combination with a concerted effort to provide external cover by raising public awareness.

At the same time, successful cases have illustrated the importance of leveraging the resources, capacity, and political capital of a wide set of partners—including those who have not traditionally partnered with water utilities. The wide range of benefits offered by natural infrastructure—not just for water but also wildlife, recreation, climate, and rural economic development—offers a salient opportunity to build new coalitions across utilities, rural landowners, conservation groups, and private businesses.
But the task is not easy. As one utility staffer put it, if this were so, we’d have been doing it at scale a long time ago. This guide can be a resource for these individual champions and their partners as they work to gain traction for investment in natural infrastructure in their watersheds.

A Background on Natural Infrastructure

In the late 1990s, in the face of growing development pressures in its largely privately- owned Catskill and Delaware watersheds, New York City initiated a plan to protect its source water and avoid the cost of an $8–$10 billion filtration plant. Strategic investments in its 2,000-square-mile watershed were estimated to cost $1.5 billion. This watershed program staved off the need to build a filtration plant and provided an annual $100 million injection to the rural economy in the upper reaches of the watershed. The program provides financial incentives to forestland owners to keep forest intact and to farmers to fence off livestock, as well as payments to local contractors to install septic tanks and stormwater protection measures.

The fundamental premise of this highly cited example, and the “natural infrastructure” approach more generally, is that healthy natural ecosystems provide essential services to water utilities, governments, and businesses—from water flow regulation and flood control to water purification and water temperature regulation. Investments in natural infrastructure can complement essential concrete-and-steel built infrastructure components as part of an integrated system for water treatment and storage. This integrated approach is commonly referred to by the U.S. Environmental Protection Agency (EPA) and the industry as the “multi-barrier approach.”

Todd Gartner is a Senior Associate in WRI’s Forest, Food and Water Program. He can be reached at [email protected]. James Mulligan is Executive Director of Green Community Ventures. Rowan Schmidt is a Research Analyst at Earth Economics. John Gunn is the Executive Director of the Spatial Informatics Group-Natural Assets Laboratory.