1 / 30

Potential Markets for Watershed Services

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.

anne
Download Presentation

Potential Markets for Watershed Services

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. 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

  2. Nature is humanity’s landlord…. and we have been getting a great deal on rent and utilities! R. Bruce Hull

  3. Goals of Presentation • Describe markets and issues • Examples

  4. 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. *doesnot include water or recreation benefits) (TCF & Forest Service, 2006)

  5. 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)

  6. 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

  7. 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

  8. 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

  9. 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…

  10. 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

  11. 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

  12. 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?

  13. 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)

  14. 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

  15. 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. Chesapeake Bay • Voluntary cap (TMDL) for nutrients • Point sources exceed or are projected to exceed Tributary limits • EPA Model efficiencies for BMPs • Cheaper compliance

  16. 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

  17. 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

  18. 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

  19. 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.

  20. 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

  21. 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 )

  22. 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.

  23. 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

  24. 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)

  25. Developing Hybrid Markets:the “Bay BankTM” • for Chesapeake forests • Multi-state • Multi-market • Privately led (NGO) • Spatial land registry • Matchmaker.com

  26. Willamette Partnership (OR) • NGO led • Salmon protection • Bundling multiple markets, (wetlands, T&E) • Conservation Registry • Credit Protocols

  27. 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

  28. 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

  29. Contact information:Albert H. ToddWatershed Program LeaderNortheastern Area S&PF410-267-5705atodd@fs.fed.usJay JensenExecutive DirectorWestern Forestry Leadership Coalition303-445-4366jay.jensen@colostate.eduwww.wflcweb.org - www.na.fs.fed.us/watershed

More Related