Meeting Water Needs through Investing in Nature

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1 Meeting Water Needs through Investing in Nature

2 Water & the Future Key Challenges Aging and vulnerable infrastructure Degraded water quality Drought Growing demands for water Increased frequency of extreme events 2

3 Can Nature Help? Nature s Services and Water Management A Brief Sampling 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 3

4 Tapping Nature s Bounty for Clean & Secure Water Supplies Selected Example Source Water Protection 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) 4

5 Tapping Nature s Bounty for Clean and Secure Water Supplies Selected Example Water Temperature Standards 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 5

6 Tapping Nature s Bounty for Clean and Secure Water Supplies Selected Example Water Temperature Standards 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 6

7 Tapping Nature s Bounty for Clean and Secure Water Supplies Selected Example Reservoir Protection 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 7

8 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 Other Examples Landowner incentive payments for forest management practices Purchases conservation easements Southern Company investment in watershed protection for its hydropower facilities 8

9 Investing in Nature s Services Key Issues and Challenges 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 9

10 Investing in Nature s Services Key Issues and Challenges 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 10

11 Investing in Nature s Services Key Issues and Challenges 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? 11

12 Investing in Nature s Services Key Issues and Challenges 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 12

13 Investing in Nature s Services Issues and Challenges Implications for Action 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 13

14 Investing in Nature s Services Moving from Idea to Action The Case of FRESP Florida Ranchland Ecosystem Services Project The following example reports on the work of: Leonard Shabman, RFF Sarah Lynch, WWF 14

15 FRESP: Participants Participating Florida Ranchers

16 Where: The Northern Everglades Kissimmee Region Lake Okeechobee Region Caloosahatchee Region St Lucie Region

17 Ditch networks Key Question Pumps Culverts & riser boards Impoundments Would ranchers be willing and able to provide water management services as an additional ranch enterprise, if it offered another income opportunity?

18 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.

19 Open landscapes Ranching as a businesses Multiple income sources

20 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? 1 st solicitation chose 8 contracts from 14 proposals Obligation of $7M over 10 years 2 nd solicitation Awards expected summer of 2013

21 FRESP Process $ 8 million 6 years 10,000 acres 8 Pilot Ranches Technical feasibility Contract terms Payments Cost effective verification Regulatory compliance

22 Agree on Feasibility: Pilots

23 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

24 Agree on verifying contract compliance Annual Payment

25 Agree on Regulatory Processes Streamlined permitting (CWA, Sec 404, GP and Federalstate 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)

26 Investing in Nature s Services Moving from Idea to Action Key Lessons 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 26

27 Thank You! Questions? 27

28 RFF Research Operating Plans and Preparedness Oil Spill Containment The Arctic Context Enhancing Preparedness and Emergency Response Scenario testing of Rapid Response ADD--Molly 28

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