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Targeting Investments in Resource Conservation

with RIOS (Resource Investment Optimization System)

Adrian Vogl (avogl@stanford.edu) Heather Tallis, Stacie Wolny, Rich Sharp, James Douglass, Doug Denu,

Silvia Benitez, Fernando Veiga, Juan Sebastian Lozano, Paulo Petry, Jorge Leon, Joao Guimaraes, Eddie Game

Watersheds as Green Infrastructure

The Promise of Water Funds

Major opportunity to impact

- Land Management

- Freshwater Systems

- Engage diverse

stakeolders for mutual benefits

• Need to spend money efficiently

• Investments are complex

– What activities? Where?

– How much of each?

– How much do we need to spend to meet goals?

• Open enrollment or simple prioritization

The Problem for Water Funds

Can we do better by using a science-based

approach to investment design using

biophysical and social data?

Deep Dive Sites 30% to 600%

better estimated returns than

business as usual

Can We Do Better? YES!

8

• Use biophysical data with models to target where services are highest

• Scenario analyses of vulnerability or sensitivity to interventions

• Specific to context and available data

Model-based approaches

9

• Targeting current source or problem areas will not always give you best returns!

But…

• Identify places where benefits of activities are biggest (change models)

• An approach general enough to work everywhere in Latin America

• Easy with available data

• Give standard outputs

Resource Investment Optimization System

IPA Investment

Portfolio Advisor

PORTER Portfolio

Translator

BEER Benefits

Estimator

The RIOS Family

RIO

S M

OD

ULE

S O

UTP

UTS

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

•Erosion Control •Nitrogen Regulation •Phosphorus Regulation

•Flood Mitigation

25% Erosion Control

32% N Regulation

RIOS Structure

Portfolio Translator

Land Cover Scenarios

RIO

S M

OD

ULE

S

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

RIOS Outputs

Portfolio Translator

1 Investment Portfolio

RIO

S M

OD

ULE

S

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

RIOS Outputs

Portfolio Translator

Land Cover Scenarios

2

RIO

S M

OD

ULE

S

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

RIOS Outputs

Land Cover Scenarios

2

Portfolio Translator

Base

+ Activities

No Protection

Land Cover Scenarios

2

RIO

S M

OD

ULE

S

RIOS Outputs

Portfolio Translator

3 Return on Investment

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

•Erosion Control •Nitrogen Regulation •Phosphorus Regulation

•Flood Mitigation

+ 0.1%

- 15%

Rank cost-effectiveness of every possible investment for all

objectives

Pick highest ranks

Estimate absolute returns

Ranking Model – Diagnostic Screening

Ranking Model Optimization • Choose factors that are

most important for determining how effective an intervention will be

• Factors reflect physical and land management characteristics

• Reflect 4 major processes

Key Components

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

?

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

?

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factors for Transition Effectiveness

Keeping native vegetation

in place

Revegetation (assisted or unassisted)

Ditching Ag

vegetation mgmt

Pasture mgmt

Fertilizer mgmt

Factor Selection

• Factors determined

through literature review

• Compromise between process representation and data availability

• Determine effectiveness of transitions for meeting objectives, in a specific place

Walk-through IPA (James)

IPA Investment

Portfolio Advisor

RIOS Portfolio Translator

PORTER Portfolio

Translator

Investment Portfolio

Base land cover

Portfolio land cover

Benefit you get from your portfolio = Change in services

Portfolio land cover

Base land cover

Components of Benefit

Benefit of Protection

Benefit of Better Agricultural/Pasture

Management

Benefit of Restoration

Total Benefit of Portfolio

Portfolio land cover

Base land cover

Components of Benefit

Benefit of Protection

Benefit of Better Agricultural/Pasture

Management

Benefit of Restoration

Portfolio land cover

•What is the current land cover? •What are you

protecting from?

Base land cover

Components of Benefit

Benefit of Protection

Benefit of Better Agricultural/Pasture

Management

Benefit of Restoration

Portfolio land cover

•What is the current land management? •How much will you

improve?

Base land cover

Components of Benefit

Benefit of Protection

Benefit of Better Agricultural/Pasture

Management

Benefit of Restoration

Portfolio land cover

•What is the current land cover? •What will you

restore?

Base land cover

RIO

S M

OD

ULE

S O

UTP

UTS

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

•Erosion Control •Nitrogen Regulation •Phosphorus Regulation

•Flood Mitigation

25% Erosion Control

32% N Regulation

Enter the Portfolio Translator

Land Cover Scenarios

Portfolio Translator

LULC base Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Grassland 0.5 0.75 1.0

Urban 0.9 0.01 0.05

Portfolio

Base LULC base - new Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Urban 0.9 0.01 0.05

Pasture – forest (assisted)

0.5 0.45 0.96

Pasture – paramo (un-assisted)

0.7 0.4 0.95

LULC base Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Grassland 0.5 0.75 1.0

Urban 0.9 0.01 0.05

Portfolio

Base LULC base - new Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Urban 0.9 0.01 0.05

Pasture – forest (assisted)

0.5 0.45 0.96

Pasture – paramo (un-assisted)

0.7 0.4 0.95

Biophysical information

LULC base Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Grassland 0.5 0.75 1.0

Urban 0.9 0.01 0.05

Portfolio

Base LULC base - new Exp Ret etk

Pasture 0.8 0.3 0.95

Forest 0.2 0.9 0.97

Urban 0.9 0.01 0.05

Pasture – forest (assisted)

0.5 0.45 0.96

Pasture – paramo (un-assisted)

0.7 0.4 0.95

Biophysical information

+ 0.1%

- 15%

RIOS

USER

RIOS

Restoration

Base land cover

Ex: pasture

Target or “Reference” land cover

Ex: native grassland

How far do you get there?

Restoration

USER

RIOS

Improved agricultural/pasture mgmt

Base land cover

Ex: pasture

Target or “Reference” land cover

Ex: native grassland

How far do you get there?

Ag management

USER

RIOS

Protection

Base land cover

Ex: pasture

What would happen without

protection?

Ex: cropland

How far do you get there?

Protection

Base

+ Activities

No Protection

PORTER Outputs

LULC_desc lucode usle_c usle_p sedret_eff load_n eff_n etk root_ depth

alfalfa 1 0.19 1 0.84 0.12 0.802 1 1

bare soil 2 1 0.97 0.26 0.127 0.116 0.04 1

mixed forest, agriculture 11 0.097 1 0.795 0.221 0.863 0.8 1

mixed forest, agriculture, pasture 12 0.111 1 0.81 0.057 0.73 0.8 1

temperate grassland 33 0.003 1 0.83 0.057 0.588 1 1

temperate mixed agriculture 34 0.19 1 0.84 0.177 0.802 1 1

temperate mixed forest 35 0.003 1 0.73 0.038 0.924 0.63 1

temperate pasture 36 0.14 0.977 0.84 0.241 0.464 0.79 1

temperate urban 37 0.1 0.975 0.2 0.103 0.494 0.03 1

bare soil,increase_native_vegetation_ assisted,shrub/scrub 203026 0.75 0.985 0.3825 0.0665 0.3155 0.27 1

pasture,increase_native_vegetation_assisted,woody riparian vegetation 3703049 0.0515 0.9875 0.535 0.1045 0.747 0.59 1

PORTER Outputs

RIOS Benefits Estimator

BEER Benefits

Estimator

RIO

S M

OD

ULE

S O

UTP

UTS

Portfolio Builder

•Erosion Control (Hydro, Drinking Water)

•Nitrogen Regulation •Phosphorus Regulation •Groundwater Recharge

•Flood Mitigation •Dry Season Baseflow

•Biodiversity •“Other”

Benefits

Estimator

•Erosion Control •Nitrogen Regulation •Phosphorus Regulation

•Flood Mitigation

25% Erosion Control

32% N Regulation

RIOS Structure

Land Cover Scenarios

Portfolio Translator

Estimate Returns

Models

DIFFERENCE

RIO

S M

OD

ULE

S Portfolio Builder

•Relative Benefit Models

•Social and Economic Data

•Cost Effectiveness Maximization

Investment Portfolio

Base land cover

Portfolio land cover

RIOS TOOL 2 Objectives: Erosion Control for Drinking Water Quality Erosion Control for Reservoir Maintenance Phosphorus Retention for Water Quality Nitrogen Retention for Water Quality Flood Mitigation

DISCUSSED Groundwater Recharge Bacteria Retention for Drinking Water Quality

Outputs - Estimation of Returns

CHANGE IN SEDIMENT EXPORT

+ 0.5%

- 11.0%

500 tons (+ 0.5%)

- 8,000 tons (- $11%)

NO

CA

LIB

RA

TIO

N

WIT

H C

ALI

BR

ATI

ON

CHANGE IN VALUE – AVOIDED TREATMENT COST

+ 0.1%

- 15%

$0.2 mil (+ 0.1%)

- $4.3 mil (- 15%)

Outputs - Estimation of Returns N

O C

ALI

BR

ATI

ON

W

ITH

CA

LIB

RA

TIO

N

Sediment Exp Value (change in treatment cost)

Bene-ficiaries

Sub-basin Δ % Δ Δ % Δ TTL

1 0.5 % 0.1 % 5,341

2 - 17 % - 14.5 % 10,700

3 - 5 % - 6.2 % 12,550

ALL - 9 % - 11 % 240,300

Sediment Exp Value (change in treatment cost)

Bene-ficiaries

Sub-basin Δ % Δ Δ % Δ TTL

1 495 0.5 % $0.2 mil 0.1 % 5,341

2 -7,998 - 17 % - $4.3 mil - 14.5 % 10,700

3 -2,123 - 5 % - $0.9 mil - 6.2 % 12,550

ALL -1,375 - 9 % - $13 mil - 11 % 240,300

BASE

Pasture

Forest

Agriculture crops

Sc1 Portfolio + Protection

Sc2 Portfolio, No Protection

Sediment export = 100

Sediment export = 90 Sediment export = 95

Base – Sc1 = 10 Sc2 – Sc1 = 5 Total benefit = 15

CALCULATE RETURNS:

Hands-on With RIOS

How much $$ do you need? • Find how much you need to invest to get a

10 % reduction in total sediment export

• Produce graph of sediment export reduction by budget level

• Fastest team wins!

Default Factor Weights

• Target = 10 % reduction in sediment export

• Use GW beneficiaries (to constrain to ws boundary)

• ALL activity costs = 100

• Floating budget only, no activity budgets

• PORTER options – Avoided transition for protection = “mixed urban”

– All transitions have 0.5% effectiveness

• BEER options – Threshold flow accum = 4000

– Slope threshold = 5

Assumptions

Ex 5: How much $$ do you need?

• Find out how much you need to invest to address 3 objectives AND get a 10 % reduction in sediment export

• Produce graph of sediment export reduction by budget level for both single- and multi-objective portfolios and compare

Using RIOS for PES design

Using RIOS for PES design

Drinking water intake

Crops

Forest

Cities

Where will afforestation have greatest impact?

What is the objective? What service(s)?

- Erosion control

What are important factors to consider?

Important Factors – Erosion Control

• Current erosion

• Distance to stream

• Erosion source upslope

• How many people benefit?

• Are practices to retain sediment in place?

Crops

Current Erosion

Drinking water intake

Forest

Cities

Improvement = 50% reduction in sediment

Cost of afforestation program = $100 million

Distance to Stream

Drinking water intake

Crops

Forest

Cities Cost of afforestation program = $2 million

Improvement = 2% reduction in sediment

Erosion Upstream

Drinking water intake

Crops

Forest

Cities Cost of afforestation program = $5 million

Improvement = 10% reduction in sediment

How Many People Benefit?

Drinking water intake

Crops

Forest

Cities

Population = 1 million

Population = 250,000

How Many People Benefit?

Drinking water intake

Crops

Forest

Cities Cost of afforestation program = $2.5 million

Improvement = 3% reduction in sediment

Beneficiaries = 1 million

Beneficiaries = 1,250,000

Integrated Targeting

Drinking water intake

Crops

Forest

Cities Cost of afforestation program = $6 million

Improvement = 12% reduction in sediment

How might this targeting change if you consider multiple objectives?

What is the objective? What service(s)?

- Erosion control - Water Yield - Agricultural Production

+ High Agricultural Production

Drinking water intake

Crops

Forest

Cities

High-Value Crops

Afforestation Portfolio

Drinking water intake

Crops

Forest

Cities

High-Value Crops