NationalAssociationofConservationDistricts

October2010

ConservationBenefitsPuttingValueWhereitBelongs

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Acknowledgements:

ThisreportfromtheNationalAssociationofConservationDistricts(NADC)wasmadepossiblebyfundingassistancefromtheUSDANaturalResourcesConservationService.Theviewsandconclusionscontainedinthisdocumentare

thoseoftheauthorsandshouldnotbeinterpretedasrepresentingtheopinionsorpoliciesoftheU.S.government.MentionoftradenamesorcommercialproductsdoesnotconstitutetheirendorsementbytheU.S.governmentor

NACD.

Numerousindividualsprovidedinsightsandguidanceinthepreparationofthisreport.TheyincludeThomasChristensen,FrankClearfield,DennisFuchs,JayFuhrer,JimGulliford,TimGieseke,BillHorvath,JamesKlang,

PatriciaLeavenworth,Dr.StephenPolasky,GregRuarkandRobertToole.

ThereportwascompiledandwrittenbyBillBerry,StevensPoint,Wisconsin,withguidanceandoversightprovided

byNACDsenioradvisorRichDuesterhaus.CoverartbyScottPatton,NRCS.

Non‐Discrimination:

AllactivitiespursuanttothisagreementshallbeincompliancewiththerequirementsoftheExecutiveOrder11246;TitleVIoftheCivilRightsActof1964(78Stat.252;42U.S.C.200(d)etseq.);TitleV,Section504ofthe

RehabilitationActof1973(87Stat.394;29U.S.C.794),asamendedbytheAmericansWithDisabilitiesAct;theAgeDiscriminationActof1975(89Stat.728;42U.S.C.6101etseq.);andwithallotherfederallawsandregulations

prohibitingdiscriminationongroundsofrace,color,sexualorientation,nationalorigin,disability,religion,ageorsex.

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TABLEOFCONTENTS Page

Introduction………………………………………………………………………………………………………………………4 ExecutiveSummary……………………………………………………………………………………………………………4

Drawingamorecompletepictureofthevalueofconservation.TheCurrentLandscape……………………………………………………………………………………………………….6

NaturalResourcesInventoryfindings………………………………………………………………………….6ConservationEffectsAssessmentProjectfindings………………………………………………………7GettingtheFullPicture:Engagingabroadercross‐sectionofsociety………………………...8NewDirections:Takingstepstorecognize,defineandexplainvalue………………………….9

StreamsofValue:MakingtheCaseforWhatWeDo………………………………………………………….11EcosystemServices:SourceWater……………………………………………………………………………..12EcosystemServices:Wetlands…………………………………………………………………………………….14EcosystemServices:FloodMitigation/StormWaterManagement..…………………………..15EcosystemServices:GreenhouseGases………………………………………………………………………16EcosystemServices:ConservationPlantingSystems..…………………………………………………17EcosystemServices:FarmlandPreservation.………………………………………………………………18EcosystemServices:Forestry………………………………………………………………………………………18EcosystemServices:Pollination…………………………………………………………………………………..19EcosystemServices:Recreation..………………………………………………………………………………..20EcosystemServices:OntheWay,ButNotThere…………………………………………………………20LocalandStateImpactsofConservationSpending.……………………………………………………21ValueofConservationSpending:EQIPExamplefromMaine……………………………………..21ValueofConservationSpending:OklahomaStudy……………………………………………………..22ConservationSpending:TellingtheWholeStoryofWhatWeDo………………………………..23

CurrentChallenges,FutureStreams………………………………………………………………..………………….24 Buildingthecaseforvaluesusingnewtoolsandbettercommunication…………………….24 Bundlingvs.Stackinganissuetoberesolved………………………………………………………………25 DriversNeededtoBuildMarkets..……………………………………………………………………………….25 NewStreams:PrivateSectorDriversOfferPromise…………………………………………………....25 ChallengesandNewStreams:TheUpshot.………………………………………………………………………….26

Theconservationcommunitycandoabetterjob,andcan’taffordtowait.CaseStudies..………………………………………………………………………………………………………………………27

Kansas:UrbanandRuralPartnersinWaterQuality..……………………………………………………28OhioRiverBasinTradingProgramWillbeLargest….…………………………………………………….28ConservationMarketplaceofMinnesotaPartnerswithCropConsultants..…………………29NewYorkCityWatershedSettheStandard.…………………………………………………………………29EcosystemTradingOpportunitiesAdvanceinOregon..………………………………………………..30NorthDakotaDistrictSpellsOutCoverCropValues.…………………………………………………….30PilotingWaterQualityTradingonGreaterMiamiWatershedinOhio.………………………….31OklahomaPartnershipReducesEnvironmentalFootprint..………………………………………….31

LinkstoResourcesforMoreInformation.…………………………………………………………………………….32

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ConservationBenefits:PuttingValueWhereItBelongs“Wetalkaboutprotectingnature,conserving

nature…That’sthewronglanguage;Ithinkitshouldbeaboutinvestinginnature.Ithinkweshouldthinkaboutnatureasaninvestmentthatpaysoff.Andit’sasolid

investment…I’llputnatureupasaninvestmentagainstalotofotherinvestmentsoutthereforitsdurabilityandsustainabilityanditstangiblereality,andIthinkthat’sa

betterwaytoframeitthan‘protectandconserve.’Invest,andtheinvestmentwillpayoff.”

–Dr.PeterKareivaTheNatureConservancyi

Introduction

TheNationalAssociationofConservationDistricts,inanagreementwiththeNaturalResources

ConservationService,hasbeentaskedwithdevelopingasummaryofthestatusofeffortstoidentifyeconomicvaluesassociatedwithconservationpracticesandsystemsonprivatelandsinAmerica.Inthisreport,weprovideanoverviewonthecurrentlandscape,withattentiontoecosystemservicesand

otherstreamsofvalueassociatedwithconservationactivity.Itexploresprogressandimpedimentstolinkingecologicalandeconomicvaluesandprovidesexamplesofwhereeconomicvaluesofconservationeffortshavebeenidentified.Wealsoexplorestrategiesthatmightbetterapplyvalueto

conservationpracticesandsystemsinthefuture.Wealsoincludealistoflinkstoresourcesformoreinformation.

ExecutiveSummary

Whilethevalueofconservationtosocietyislong‐established,puttinganactualdollarvalueonservicessuchascleanairandwaterhasbeenelusive.Describingconservationbenefitsas“priceless”maybetruefromaqualitativestandpoint,buthardnumbersareneededifeconomicvaluesaretoberecognized.

Manyothereconomicbenefitsfromconservationhaveeithernotbeentalliedorhavebeendoneso

incompletely.

Oneclearfindingofthisreportisthattheconservationcommunitycandoabetterjobquantifyingandcommunicatingtoasfullanextentaspossibletheeconomicvalueofitswork.Itcannotbeassumedthatthepublicanddecision‐makersunderstandnuance.Theyneedtoseedirectstreamsofvalue.

Thereislittledoubtthatthearrayofpracticesandsystemsofferedthroughexistingconservation

programsofferawiderangeofecologicalvalues,referredtoasecosystemservices.NRCS’NaturalResourcesInventoryandthemulti‐agencyConservationEffectsAssessmentProjectbothprovideexamples,someofwhichwillbecitedinthispaper.

Inrecentyears,researchondeterminingeconomicvalueofconservationhasheightened,andthebody

ofknowledgeisbuilding.iiButweremainalongwayfromrobustsystemsthatestablishthefullvalueof

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conservationpractices.Tobesure,thereareexamplesofprogress,especiallyinareassuchassourcewaterprotectionandwetlandsmitigation.

Asimpledefinitionofecosystemservicesis“theprofitsandproductsprovidedbynaturalsystemsthat

sustainandfulfillhumanlives.”iiiTheseincludetwomajorcategoriesofservices.“Provisioningservices”arethefood,fiberandfuelproducedbyAmerica’scroplands.“Regulatingservices”providewaterquality,waterrechargeandmanyotherecologicalbenefits.

Historically,wehavedoneabetterjobofvaluingprovisioning

services.Theyattachmorereadilytomarketsystems,althoughavarietyofsuchservicesalsobenefitfromnonmarketgovernmentpayments.Effortstoplacemarket‐typevaluesonregulatingservices

haveheightenedinrecentyearsforavarietyofreasons.Successhasbeenspotty.

Onereasonforthisisthe“winnersvs.losers”dilemma.Sometimesintheprivatelandsconservationarena,oneperson’sbenefitis

another’scost.Aconservationpracticeonafarmthatimproveswaterqualityforusersdownstreamisoftenseendifferentlybythefarmertryingtomakealivingandthecitydwellerwhoneedscleanwater.

Thisissueof“winnersandlosers”isanongoingimpedimenttoachievinglandscape‐scalesuccesses.Reducingthenumberofeconomicloserswouldseemtobeacentralgoalofanyefforttoplace

valueonconservationpracticesandsystems.

Thispapercitesdevelopmentsthatmayachievethisgoal.Theyinclude:Growingattentiontodefiningandvaluingecosystemservices,moreemphasisontargetingconservationspendingwhereitwillachieve

thegreatestbenefitsandeffortstodevelopmarket‐basedsolutionstoconservationconcerns.

Inaddition,theconservationcommunitycanmorecompletelyaccountforandcommunicatethefullrangeofbenefitsproducedbyconservationwork.Theseincludebutarenotlimitedtofinancialbenefitsenjoyedbycustomersservedbyconservationworkers,theeconomicimpactoffederalandstate

conservationfundingonlocalcommunitiesandbusinesses,payrollsatlocalconservationdistrictsandtheirconservationpartnersandbroadrangeofotherbenefits.

Ourhistoryisinformedbyourpast,andtwoexamplesshedlightonthechallengeandpotentialofidentifyingvaluestreams.

NRCSthisyearcelebratesits75thanniversary,anoccasionmadepossiblebecauseofoneofournation’s

mostcompellingstoriesofconservationandeconomicvalue.TheGreatDustBowlof1930swasbroughtonbythecombinationofdroughtandunenlightenedfarmingpractices.Itdevastatedlocaleconomiesandcausedfinancialruintopeopleacrossawideswathofthecountry’smidsection.

Keypoints:

Conservation’secologicalvaluesareclear

Economicvaluesaren’tasclear

It’stimetobettercaptureanddescribeeconomicvalues

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TheDustBowlgavebirthtotheSoilConservationService,theforerunnerofNRCS.Italsoledtocreationofthelocalentitieschargedwiththetaskofimplementingconservationpracticesandsystemsonthe

landscape–America’sconservationdistricts.Thesoilconservationdistrictprogramrecognizedthatnewfarmingmethodsneededtobeacceptedandenforcedbythefarmersontheland–locallybasedconservation.Theextensiveworkofre‐plowingthelandintofurrows,plantingtreesinshelterbelts,and

otherconservationmethodsresultedinsignificantreductionsintheamountofblowingsoil.Whenthedroughtcametoanendin1939,theGreatPlainsonceagainbecameafertileagriculturalregion.

Decadeslater,inthe1970s,erosionwasagainidentifiedasaproblemasAmerica’sfarmerswereaskedtoproducemoretomeettheneedsofanexpandingworldpopulation.So‐called“ephemeralerosion”

wasamajorproblem,andreducingerosionwastargetedasanationalgoalinthe1979ResourceConservationAct.NACDandtheSCSundertookamajoreducationalefforttohighlighttheproblemscausedbyerosion.Thousandsofmeetingswereheldindistrictofficesacrossthecountrytodraw

attentiontotheproblem.iv

Thesemeetingsandotheractivitiesledtotheintroductionofmeasuressuchasreducedtillage.Conservationdistrictsandequipmentcompaniesmadeno‐tilldrillsavailabletofarmers.Terracesandotherpracticestoreduceerosionwereencouraged.NACDalsoundertookanefforttoinformCongress

erosionwasaseriousproblemonmanyofAmerica’sagriculturalacres.

CongressestablishedtheConservationReservePrograminthe1985FarmBill,withtheintentofencouragingfarmerstoconverthighlyerodiblecroplandorotherenvironmentallysensitiveacreagetoresource‐conservingvegetativecover.The1985FarmBillalsoincludedconservationcompliance

provisions,whichservedasdisincentivestofarmersandrancherswhoproducedannuallytilledagriculturalcommoditycropsonhighlyerodiblecroplandwithoutadequateerosionprotection.

NeitherCRPnorconservationcompliancearewithoutcontroversytothisday.Butthebiggerstoryhere

isthatconcertedeffortstodrawattentiontoproblemswithbothecologicalandeconomicdimensionsaresometimesneededtounderscorethevalueandimportanceofworkaccomplishedbytheconservationcommunity.

Thatiswhatisneededtofullytellthestoryofwhatwerefertointhispaperas“valuestreams,”–the

economicbenefitsoftheworkoftheconservationpartnership.Webeginwithalookatthecurrentlandscape.

Thecurrentlandscape

Inmanyways,greatstrideshavebeenmadeinaddressingAmerica’smostpressingconservationneeds.

Butwiththeseaccomplishmentscomenewchallenges.Herewetaketimetoacknowledgesomekey

achievementsandalsonotetheneedtocompletethecircle,tyingconservationmorecompletelytovaluestreams.

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TworecentreportsunderscoretheprogressmadeonseveralfrontsandhighlightthefactthatAmerica’sconservationdeliverysystem–thefederal,stateandlocalpartnershipthatdeliversFarmBill

conservationprogramsandconservationtechnicalassistance–isinmanywaystheenvyoftheworld.WebrieflytouchonfindingsoftheNaturalResourcesInventoryandtheConservationEffectsAssessmentProject.

NRIFindings

NRCSreleasedits2007NationalResourcesInventoryinlate2009,anditsfindingsincludeencouraging

progressonsoilerosiononU.S.cropland.NRIisastatisticalsurveyoflanduseandnaturalresourceconditionsandtrendsonU.S.non‐Federallands.

Amongitsmajorfindings,thelatestreportestimatessoilerosiononcroplanddecreased43percentbetween1982and2007.Water(sheetandrill)erosiondeclined

from1.68billiontonsperyearto960milliontons,andwinderosiondecreasedfrom1.38billionto796milliontonsperyear.

Theecologicalbenefitsofreducederosionarewell‐documented,butisthereanaccompanyingeconomicvalue?Ifthecostofatonoferodedsoilisconsidered,the

answerisaqualifiedyes.Estimatesofthecostsoferodedsoilrangeashighas$11,butforourpurposes,weciteUSDAestimatesofbetween$6.10and$6.40perton

using2009values.vOff‐sitecostsinthisequationareestimatedtobeaboutthree‐quartersofthetotal.

Wechoosethemoreconservative$6.10figureandapplyittoNRIdataforsheetandrillerosioninthefollowingchart:

Annualdeclineinsheetandrillerosion,1982‐2007720milliontons@$6.10perton=$4.4billionincostsavoidedperyearOn‐site:$1.1billionOff‐site:$3.3billion

Thesenumbersmightnotholdupinaroomfulofeconomists,buttheydoprovidesomeinsightintothe

economicvalueofregulatingservices.Economistswarnagainstusingcostsavoidedtodescribeeconomicvalues.Inthiscase,thefarmerwhopreventserosionmaybenefiteconomically,butnooneishandinghimacheckthatrepresentsthecostsavoided.Still,theerosionfiguresdoprovideinsightinto

thehighvalueofconservationactivitiesthatpreventerosion.

NRIalsopointsoutanotherkeystatistic:4,080,300acresofactiveagriculturalland(crop,pasture,range,andlandformerlyenrolledintheConservationReserveProgram)wereconvertedtodevelopedusesbetween2002and2007.ThisrepresentsanarearoughlythesizeofMassachusetts.Overall,the

nationhaslost41,324,800acresofrurallandtodevelopmentbetween1982and2007—anareaaboutthesizeofIllinoisandNewJersey.Rurallandincludesactiveagriculturalland,plusforestlandandotherruralland.Fifty‐sixpercentoftherurallanddeveloped,or23,163,500acres,isidentifiedasactive

agriculturalland.

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Inaddition,therewasanationwide13,773,400‐acredeclineinprimefarmlandbetween1982and2007.

Primefarmlandsoilsarebestsuitedtoproducefoodandotheragriculturalcropswiththefewestinputsandtheleastamountofsoilerosion.

Doesthisconversionofrurallandtootherusescomeatacosttosociety?Toecosystemservices?GroupslikeAmericanFarmlandTrusthavelongsoughttomakethatlinkthroughvariousstudiesthat

compare,forinstance,thecostofprovidinglocalservicestodevelopedpropertyversusworkinglands.Morecarefulanalysismayalsoidentifyothercostsofconversion,includinglossoffloodcontrolandincreasedinfrastructurecostsforstormwaterabatement.

Laterinthispaper,wepresentinformationabouttheopportunitytomorefullyengagelocal

beneficiariesofecosystemservicesinprovidingincentivestofarmersandforestowners.Thismayshedfurtherlightonhowtobetterrecognizevaluestreamsandprovidecorrespondingeconomicincentives.Itmayalsoopenpathwaysforengagementbyconservationdistrictsandtheirpartnersatthelocallevel.

CEAPFindings

TheConservationEffectsAssessmentProjectisamulti‐

agencyfederalefforttoquantifytheenvironmentaleffectsofconservationpracticesandprogramsanddevelopthesciencebaseformanagingtheagriculturallandscapefor

environmentalquality.CEAP’sAssessmentoftheEffectsofConservationPracticesonCultivatedCroplandintheUpperMississippiRiverBasinwasreleasedinJune2010.

Itsfindingsincludedthefollowing:

• CroplandintheUpperMississippiBasinsequestersabout7.5milliontonsofcarbondioxideequivalents(CO2e)annually

• Erosioncontrolpracticescansignificantly

increasesequestrationratesbyreducinglossesoforganicmatterduetoerosion.

• Voluntary,incentive‐basedconservationworks.Reducedtillageisusedon95percentofcropland,andsedimentlossesarereducedby69percent.

• Nutrientmanagementisthegreatestneedinordertoproducesignificantreductionsinnitrogenandphosphorouslosses.

• Targetingcangreatlyenhanceprogrameffectiveness.Treatingthemostcriticalareas

canhavethreetofivetimesthebenefitoftreatingacreswithlessseriousproblems.

Keypoints:

NRI,CEAPshowresourceprogress

Newdirectionsexploredforvaluingecosystemservices

Publiceducationneeded

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• Suitesofpracticesthataddressmultipleresourceconcernsaremoreeffectivethansinglepractices.

Asnoted,CEAPconcentratesonquantifyingtheenvironmentaleffectsofconservationpracticesand

programs.Butthefindingshintateconomicbenefitsthatcanaccompanyconservationpractices.Reducedtillageleadstoon‐farmsavingsforfarmers,includingreducedinputsandsoilerosionabated.Targetingcriticalareashasthepotentialtoleadtowaterqualityimprovementsfordownstreamusers

andlendsitselftomoreeffectivemonitoring.Suitesofconservationpracticescouldfitintofutureeffortsto“stack”marketpayments.“Stacking”allowslandownerstoreceivemultiplepaymentsforecologicalservicessuchassource‐waterprotectionandcarbonsequestrationonthesameacres.

OnecouldenvisionfutureNRIandCEAPreportsaccompaniedbyinformationabouteconomicbenefits

ofconservationpracticesandprograms,includingwhobenefitsandinwhatways.

GettingtheFullPicture

Termssuchasecosystemservicesandmarket‐basedconservationarefamiliartothoseinconservation,academicandresearchcommunities.Butbeyondthosepodsofinterest,thetermsareoftennomorerecognizablethanthenamesoftheelementsintheperiodictable.

Nonetheless,somesegmentsofsocietyarebeginningtounderstandtheimportanceofmorecompletely

valuingconservation.Entitieschargedwithprotectingsourcewaterareoneexample.Forestcertification,wetlandshabitat,floodmitigationandcarboncreditingareexamplesofpaymentstreamsforecosystemservicesthathavegainedfootholdsinsociety,howevertenuousinsomecases.Some

values,suchasrecreationalbenefitsthatstemfromcleanwaterandwildlifehabitat,havebeensuccessfullycalculated.

Abroadercross‐sectionofsocietycanbeengaged.Thepublicandprivatesectorshavebeenslowto

embracetheconceptofestablishingorrecognizingdollarvaluesforconservationpracticesandsystems.Ecologicaleconomistshavemadestridesindevelopingsufficientmatricesthatconnectthedotsfromthebenefitsofsoundconservationtovaluestreams.Butthesegainshaveyettobesufficiently

transferredtopolicyandmarketsectors.Inpart,thisiscausedbythewinnersvs.losersdilemma.Otherforcesareatwork,too.

FloridaStateUniversityCollegeofLawProfessorofPropertyJ.B.Ruhldescribesthehistoricallandscape:“Fordecades,social,politicalandeconomicforceshavedrivenfarmstomanageecologicalresources

towardproductionoffood,fiber,andenergycommodities.Theyhavedonesowell,butattheexpenseofmaintainingthestockofnaturalcapitalnecessarytoprovideasustainableflowofecosystemservicesofmoregeneralbenefittosociety,suchasgroundwaterrecharge,waterpurification,andfloodcontrol.”

Headds:“Naturaldisastersandtheeffectsofclimatechangearefocusingsocietyonthevalueofthoseservices.”vi

Atpresent,weareleftwithagap.WemayknowintuitivelythattheregulatingservicesreferredtobyRuhlhavevalue,butwehaven’tturnedthecornertoestablishreliablevaluestreams.

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UniversityofMinnesotaenvironmental/ecologicaleconomistDr.StephenPolaskydescribesthecurrentlandscapethisway:“Themainpointhereisverystraightforward:Thereareanumberofenvironmental

benefitswegetfromcertainactionsorenvironmentalcostswegetfromcertainactivities.Wewanttofactorthataswedowithconventionalgoodsandservicesinmarkets.Theproblemis,wedon’thaveobservedmarketpricesforthesegoods.Soalargebodyofworkisnowtryingtofillthatgap.”vii

NewDirections

Earlierthisyear,AgricultureSecretaryTomVilsackannouncednewdetailsaboutthefunctionsand

objectivesofUSDA'sOfficeofEnvironmentalMarkets(OEM).Theoffice,partofUSDA'sNaturalResourcesandEnvironmentmissionarea,willworktocarryoutUSDA'sclimateandruralrevitalizationgoalsbysupportingthedevelopmentofemergingmarketsforcarbon,waterquality,wetlandsand

biodiversity.

The2008FarmBill'sConservationTitledirectedthesecretarytofacilitatethedevelopmentofenvironmentalmarketsandensuretheparticipationofAmerica'sfarmers,ranchers,andforestlandowners.OEMischargedwiththetaskofworkingacrossgovernmentandinconsultationwith

expertsandstakeholderstobuildamarket‐basedsystemforquantifying,registeringandverifyingenvironmentalbenefitsproducedbylandmanagementactivities.

Asthenextsectionofthisreportshows,ecosystemservicesmarketscontinuetoprovidepromiseforattachingeconomicvaluestoconservationsystemsandpractices,buttheirgrowthcontinuesataslow

pace.Ifthesemarketsaretoflourish,moreandbettersystemsthatidentifybuyersandsellersandestablishpricesareneeded.

Asrecentlyas2005,TheNationalResearchCouncilconcluded:“Ingeneral,estimatingtheprovisionofthecompleterangeofecosystemservicesfromanyparticularecosystemisbeyondourabilityat

present.”

Polaskyandotherseethegapgettingsmaller.Dr.PeterKareiva,quotedatthestartofthissection,believesnarrowingthatgapiscrucial:“Ecosystemservicesaretheonlywayconservationgoalswill

becomemainstream.”

Thefindingsofthisstudysupportthatconclusion.Mostofourpressingconservationchallengeshavesolutions.Wehavethescientificandtechnicalwherewithaltoaccomplishmajorgains.Thechallenge,itwouldseem,istodevelopthesocietalwilltoimplementthenecessarysteps.Wewillbestaccomplish

thatwhenwefindthemeanstolinkenvironmentalandeconomicvalues.

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StreamsofValue:MakingtheCaseforWhatWeDo

“Itcanbesaidthateverycountryhasthreekindsofwealth:material,cultural,andbiological.Thefirsttwo,thebasisofalmostallofourvisibleeconomicandpoliticallife,wethink

abouteveryday.Thethird,madeupofthefaunaandfloraandtheusestowhichnature’sdiversityisput,wetakealotless

seriously.Biologicalwealth,however,ismuchmorepotentfor

long‐termhumanwelfarethanisgenerallyappreciated…”–E.O.Wilsonviii

Addedtothemanytasksfortheconservationpartnershipasweedgeintotheseconddecadeofthe21stcenturyistheneedtoquantify,highlightandenhancetheeconomicvaluestreamsthatflowfromthe

workwedo.Theneedtodosoisofheightenedimportanceaswemakeacaseforourworkinadifficulteconomy.

Here,weprovideexamplesofwherevaluestreamshavebeenestablishedinareassuchaswaterandairquality,floodcontrolandstormwatermanagement,wetlandsmitigation,wildlifehabitatenhancement

andotherprocessesthatfallunderthegeneralheader“ecosystemservices.”Therearemanyothercategoriesworthhighlighting,too.Manyareinthecategoryof“costsavoided.”Asnoted,economistswarnagainstusing“costsavoided”todescribevalues,butwhererealnumbersexist,theycanbe

presented.“Costsavoided”beckonsmemoriesofWillRogers’lineaboutmakingmoney:“Thequickestwaytodoubleyourmoneyistofolditandputitbackinyourpocket.”

Tyingeconomicvaluestoecosystemservicesisimportant,buttotellthefullpicture,wecannotstopthere.Wecanalsoarticulatethefullrangeofvaluesthatourworkproduces,andusecommon,

understandableeconomictermstodoso.Ithasthepotentialtobeasimplebutcompellingmessage.

Examplesofattemptstoassessthevalueofconservationstretchbackdecades.U.S.DepartmentofAgricultureNaturalResourceConservationServicefilesincludepublicationssuchas“DollarsandSenseinConservation,”athoughtfulandthoroughcircularwrittenbyS.V.Ciriacy‐Wantrupanddistributedby

theCaliforniaAgriculturalExperimentStationin1951.Thecircularproclaimsitshows“ifneededconservationpracticesdonotpay,thereasonsareoftenman‐madeandcanbechanged,”andit“suggestspracticalstepstomakedollarsandsenseworkforconservation.Someofthesestepsareone

afarmercantakeincooperationwithhisneighbors,hisbanker,orhislandlord.Othersrequirepublicaction.”

Astheunderstandingofhowtovalueecosystemsystemgrows,conservationeffortsmarchon.Thatisdueinnosmallparttogovernmentprogramsthatprovideeconomicincentivesforeasements,

conservationpracticesandfarmingsystemsthatreduceimpactsonnature.Ineffect,thesearepaymentsforecosystemservices.FarmBillconservationspendinghasrisensteadilyandimpressivelyinthepastquarter‐century.ButgenerousFarmBillconservationallocationsandahostofotherstateand

localconservationincentivesoftenfallshortofdemandandneed.Producerwaitinglistsforsome

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programsisasanexampleofdemand.TheEnvironmentalProtectionAgency’sestimateof39,988

impaired waters in the U.S. is an example of need.

Insomecases,conservationprogramsdon’tmatchupwitheconomicdriversthataffectdecisionsmade

bythosewhoareaskedtoimplementpractices.The2008FarmBillseekstoaddressthatwithfundingforaloanprogramtoassistproducerswiththecostofinstallingconservationpractices.

Conservationvaluestreamsflowfromboththepublicandprivate

sectors.Wenowturnourattentiontosomeoftheseidentifiedvaluestreams.Thissamplingisnotcomprehensive,butservesasareminderthatmanystreamsofvaluealreadyexist.

EcosystemServices:SourceWater

Oneofthemostpromisingareasfordevelopingconservationvalue

streamsissourcewaterprotection.Takenastepfurther,thewholerangeofactionsunderthegeneralcategorywaterqualityand

quantityoffersomeofthebestopportunitiestoattachvaluetoconservation.

Downstreambeneficiariesofsourcewaterprotectionincludehomeowners,communities,waterutilities,businessesandother

entities.Valuestreamscanbeattachedtowaterqualityandothercloselyrelatedbenefits,suchasfloodmitigation,storm‐waterprotection,wildlifehabitatenhancementandbiodiversity.

Examplesofsuccessfulprogramsarebecomingmorecommon.Theoft‐citedNewYorkCityWatershed

programisoneexample.There,thecityavoidedcostlyconstructionandmaintenanceofawatertreatmentfacilitybytakingstepstoprotectsourcewaterup‐state.Strategiesincludedpurchaseoflandandpaymentstofarmersforconservationmeasures.Theprogramhasdrawninternationalattention.

ButNewYorkhascompanyinagrowinglistofsuccessstories.InOregon’sTualatinRiverbasin,for

instance,awaterresourcesagencyavoidedinvestingmorethan$60millionintechnologicalupgradesbyrestoring35milesof150‐foot‐widestreambuffersandpayingfarmerscompetitiveratesforusingtheirlandforrestoration.ix

Oneapproachtosource‐waterprotectiswaterqualitytrading.Tradingisbasedonthefactthatsources

inawatershedcanfacedifferentcoststocontrolthesamepollutant.Tradingprogramsallowfacilitiesfacinghigherpollutioncontrolcoststomeettheirregulatoryobligationsbypurchasingenvironmentallyequivalent(orsuperior)pollutionreductionsfromanothersourceatlowercost.Waterquality

improvementisachievedataloweroverallcost.Suchprogramsusuallyrelyonadriver,suchaswaterqualitystandards.

Keypoints:

Ecosystemservicemarketsstilldeveloping

Regulationdrivessomemarkets

The“business”ofconservationhasvalue

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Market‐basedwaterqualitytradingisgainingtractioninanumberofwatersheds.TheWorldResourceInstituteinMarch2009identified57waterqualitytradingprogramsworldwide.Ofthese,26areactive,

21areunderconsiderationordevelopment,and10areinactiveorarecompletedpilotswithnoplansforfuturetrades.ThemajoritywereintheUnitedStates;withonlysixelsewhere.

WRIassessmentofthesewaterqualitytradingprogramsidentifiedfivekeyfactorsstakeholdersbelievedwereimportantforthesuccessfulimplementationoftheirtradingprograms:x

• Strongregulatoryand/ornon‐regulatorydrivers,whichhelpedcreateademandforwater

qualitycredits;• Minimalpotentialliabilityriskstotheregulatedcommunityfrommeetingregulationsthrough

trades;

• Robust,consistent,andstandardizedestimationmethodologiesfornonpointsourceactions;• Standardizedtools,transparentprocesses,andonlineregistriestominimizetransactioncosts;• Buy‐infromlocalandstatestakeholders.

NRCSConservationInnovationgrantshavehelpedprovidestartupfundsforwater‐qualitytradingprogramsinanumberoflocations,includingtheGreaterMiamiRiverwatershedinOhio,three

watershedsinMinnesotaandtheWillametteBasininOregon.(Seecasestudies.)EPAalsooffersfundsforwaterqualitytradingprograms.

Itissafetosaythattheseprogramsareintheirinfantstagesandthatrobusttradingprogramsarestillinthefuture.Butprogressisnotedinseveralareas.Effortstoaddresswaterqualitythroughtrading

systemsinthelandscape‐scaleChesapeakeBayWaterInitiativeareadvancing,notesWRI’sMichellePerez.xiFarmerswillplayakeyrole,andeconomicsisacleardriver:“It’scheaperthanstormwaterand

wastewaterplants,”shesays.

Demandsourcesfortradingincludenewandexistingwastewaterplantsandstormwaterplants.“Stormwaterutilitieswillhavehighinterest,”shepredicts.Farmersapplyingbestmanagementpracticeswillhavetomeetbaselinerequirementsbeforegeneratingcredits.Perezpredictsthat

paymentscouldrivalthoseoffederalprogramsandrangefrom$58millionto$207millionperyear,dependingontheimpactofregulatorydrivers.Farmerswouldfacesomeout‐of‐pocketcostsaftercostsharingisapplied,buttradingbenefitswillprovidenetgainsthatfarexceedcosts,shesays.

There’salsopotentialforwaterqualitytradingintheMississippiRiverBasinInitiative,another

landscape‐scaleeffort,Perezsays.Tradingbetweensourceandnonpointsourcedischargersispossible.Citingthepotentialforsuchtrading,shenotesthatthecityofChicagowastetreatmentfacilityalonewillfacecostsof$1billiontomeetgoals.

TheChesapeakeandMississippiinitiativesbothhintatthepotentialforgeneratingmarket‐based

paymentsinassociatedwithlandscape‐scaleeffortstomeetwaterqualitygoals.

Capturingallthevalues:Agrowingbodyofinformationlinkscleanwatertoeconomicimpactsfromrecreationalactivities.Anexample:TheIowaStateUniversityIowaLearningFarmreportsthatforevery

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dollarspentonstreamrestoration,anadditional$24.50isreturnedtotheregionaleconomyeachyearthroughrecreationalactivities.

EcosystemServices:Wetlands

Wetlandsarerecognizedforavarietyofecosystemservices,includingfloodcontrol,waterquality,

wildlifehabitatandotherbenefits.Wetlandshaveemergedasaformofecosystemserviceswithclearvaluestreams.Inpart,thisresultsfromaregulatorydriver:TheCleanWaterActrequiresthatanyonewhodestroysregulatedwetlandsmustcompensateforthedestructionbyrestoringotherareasonthe

samesite,payinginlieufeestoaconservationorganizationorbuyingcreditsfromthirdpartieswhohaverestoredsiteselsewhereinthesameregion.Aregulatorypreferencehasemergedforthelatterapproach,knownasmitigationbanking.xii

WetlandandstreammitigationbankingisregulatedatthefederallevelbytheArmyCorpsofEngineers.

EcosystemMarketplace,asourceofnewsandotherinformationonmarketsandpaymentsforecosystemservices,estimatestherearemorethan400wetlandandstreammitigationbanksactivelysellingcreditsandnearly200morependingapprovaltodoso.Another88wetlandmitigationbanks

havealreadysoldoutofcredits.Estimatesofannualtransactionvalueofwetlandandstreammitigationcreditsrangeupto$1.3billion.Mitigationcreditsarenotcommodities.Rather,theyrepresenttheenvironmentalvalueofrestorationforaspecificecosysteminaspecificwatershed.Creditsvarywidely

inprice,dependingonanumberoffactors.Theycansellfor$3,000inArkansasand$400,000inCalifornia,wheretidalandvernalpoolimpactsdriveupprices.Theaveragepricepercreditisestimatedat$74,500.Whobuysthesecredits?Privateresidentialandcommercialdevelopers,publicsector

transportation,wateranddefenseagencies,extractivecompaniesandutilitiesarefrequentbuyers.

Thisformofmitigationisperhapsthemostsuccessfulexampleofanecosystemservicesmarketoperatingtoday.Asonesourceforthisreportnoted,mitigationbankersareinvestmentcapitalists.They

sellcreditstoothers,suchasdevelopers.Incontrast,manywaterqualityprojectsspearheadedbytheconservationpartnersseektofacilitatepracticesbutdon’thaveaprofitmotive.

Wetlandandstreammitigationsystemsalsotendto“bundle”payments.Asinglepaymentismadeforreplacingawetland,incorporatinganumberofecosystemservicesthataccruetothatwetland.Another

systemofpayment,called”stacking,”isfavoredbysomewhoseektovaluethevariedbenefitsofecosystemservices.Stackingallowsformultiplepaymentsfordifferentecosystemservices,suchaswaterqualityandcarbonsequestration.Seethefollowingexample,usingaforestsystem.

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Itshouldbenotedthatfederalagenciesdonotseeeye‐to‐eyeonbundlingandstacking.Thesedifferenceswilllikelyneedtoberesolvedasmarketsexpandandadvance.

Capturingallthevalues:Avarietyofmethodsexistforvaluingwetlands,andtheyproducediffering

results.Whilethismakesitdifficultfordecision‐makerstoapplyvaluetowetlands,ithasnotinhibitedthedevelopmentofsomewetlandmitigationbanksandothervehiclesforachievingwetlandpreservationorrestoration.ThefederalWetlandsReserveProgrampaysanywherefrom$105to$639

peracreforeasements.Moneyspentonrestorationtoimproveecosystemfunctioningrangedfrom$89to$139.Similarly,responsestosurveysthataskhowmuchpeoplearewillingtopaytopreservewetlandsvarywidely–from$1,911incoastalLouisianato$6.31‐$12.67inKentucky.Whilethese

numbersseematodds,theylikelyreflectvalues,realorperceived,inthesevariedwetlands.

EcosystemServices:FloodMitigation/StormWaterManagement

Economicvaluesforvariousfloodmitigationstrategiesareemerging,ofteninvolvingpreservingorenhancingfarmandforestsystems.Anumberofstrategiesareemployedtoreducetheimpactoffloodwaters,rangingfrompreservingopenspacesandforestlandstowetlandsreconstructionand

conservationdevelopment.

ASouthernIllinoisUniversitystudyfocusedontheeconomicandhydrologicimpactsofconservationdevelopmentstrategiesthatpromotegreateron‐sitestorageofstormwaterrunoff.xiiiConservation

developmentseekstoclusterconventionalresidentialandcommercialdevelopment,permittingmorelandtobeusedforfunctionssuchasstormwatermanagement.Asnotedinthestudy,stormwatermanagementproducesanumberofdownstreambenefits,includingreducedfrequency,areaand

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impactofflooding;waterquality;lesscostlypublicdrainageinfrastructure;reducederosionandsedimentation;andanarrayofotherbenefits.

AppliedtoaspecificcasestudyinasuburbanChicagowatershed,simulationmodelswereusedto

comparealternativedevelopmentscenarios.Reduceddownstreamfloodingbyusingconservationdesignpracticesgeneratesfrom$1,795to$21,379peracreindownstreampropertyvaluebenefitsoverallaffectedareas,accordingtothestudy.Flood‐damageestimatesfora100‐yearfloodeventalone

produce$4,337to$11,732peracresavings.Infrastructuresavingsforroadculvertsaloneareestimatedat$3.3millionto$4.5millioninreducedcostsforreplacementsorupgrades.

Inadditiontostrategiessuchasconservationdevelopment,waterutilitiesandmunicipalitiesacrossthecountryarepurchasingorpreservingfarmlandandopenspacestohelpprovidenaturalfloodcontrol.

Protectingwaterqualityandreducingfloodwaterswillprovecostlyforyearstocome,butwatershedand/orlandscapescaleprogramsofferpromise.

Examplesofbenefitsinthisareaareplentiful.Forinstance,theFloodplainManagementAssociationestimatedthatreplacingthenaturalwaterqualityfunctionsofCongareeBottomlandHardwoodSwamp

outsideofColumbia,S.C.,withmanmadeinfrastructurewouldcost$6.7millionin2003dollars.TheMinnesotaDepartmentofNaturalResourcesestimatesreplacing1,200cubicmetersoffloodstoragecapacitynaturallyprovidedbyawetlandwithartificialcontrolscosts$370in2003dollars.

Capturingallthevalues:Reducinginfrastructurecoststhroughconservationpracticescansavebillionsof

dollars.Aginginfrastructureisamajorchallengeacrossthecountry.EPA's2002CleanWaterandDrinkingWaterInfrastructureGapAnalysisreportedthenation'smunicipalsewerauthorities'capitalneedstomeetcleanwaterrequirementsfrom2000to2019atfrom$331billionto$450billion.

EcosystemServices:GreenhouseGases

Carbonmarketstomitigateimpactsonclimatechangeareanexampleofsystemsintendedtogivemarketvaluetoconservationpracticesandsystems.Variousregulatoryschemeshavebeenproposedtoreducetheimpactsofcarbonandothergreenhousegasesonclimatechange.

WhileourfocusisprimarilyontheUnitedStates,itshouldbenotedthatothernationsmayprovide

replicableexamples.Europehasamature,thoughhardlyperfectcarbontradingmarketplace,thankstoacap‐and‐tradesystemthatrequirespolluterstopaytomitigatetheirimpactsontheenvironment.

ThecurrentpoliticalclimateintheU.S.makesitunlikelythataregulatorydriverwillbeinplaceforcarbonmarketsanytimesoon.RegionalmarketshavedevelopedinNorthAmerica.Intheabsenceof

drivers,carboncreditspaidontheChicagoClimateExchangehaveplungedtoaslowasfivecentspertoninlate2010.In2008,paymentswere$5.80perton.Inthatsameyear,paymentsintheEuropeanUnionwere$35perton.xiv

Oneareaofsuccessisinthelandpreservationarea,saysDavidMiller,directorofresearchand

commodityservices,IowaFarmBureauFederation,andchiefscienceofficer,AgraGateClimateCreditsCorp.xvTheConservationReserveProgramhasproduced4,000carboncontractholdersinFarmBureau’s

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Iowaprogram.Thatresultsfromthecertaintyprovidedby15‐yeareasements.Onworkinglands,variabilityinhibitsapplicability.Seventy‐twopercentofthefarmlandinIowaisrentedonaone‐year

basis,Millernotes.

Inthecurrentsetting,carbonmarketslacksufficientfundingfromtheprivatesector,andit’snotclearthatthedemandsidehasthestabilitytoinfusemorecapitalintothesystem,Millersays.“Whatdoesthemarketneed?Stabilityandpredictability.Thechallengeisthedemandside.Thesupplysideis

stronger,”hesays.

Thefutureofcarbonandrelatedmarketshingesonpoliticaldecisions.Shouldtheyberesolvedandmarketsstrengthened,U.S.farm,forest,rangelandsandwetlandshavegreatpotentialforsequesteringcarbon.Estimatesrangeupto270millionmetrictonsperyearforcropland,CRPland,rangeland,biofuel

productionoffsetsandreducedcarbonemissionsfromerodedsediment.

EcosystemServices:ConservationPlantingSystems

Reduced‐tillagesystemswereintroducedtoaddressAmerica’ssoilerosionproblemsfromagriculturallands.Asnotedearlier,thereducederosionresultingfromthesesystemsandotheragriculturalpracticeshascalculabledollarvaluesinreducedsoilloss.USDAestimatesplacedthecostoferodedsoil

atbetween$6.10and$6.40perton,using2009values.Off‐sitecostsaccountforaboutthree‐fourthsofthosevalues.

Reduced‐tillagesystemsalsoprovidequantifiablebenefitsexpressedintermsofcostsavoided,suchasequipment,fuel,timeandotherinputs.Onestudyidentifiedtheannualnetbenefitofno‐tillorstrip‐till

innorthwestIowaat$21and$40peracre,respectively,comparedtochiselplow.

A2006NRCSreportontheeconomicsofon‐siteconservationtillagenotesbothshort‐andlong‐termgains.

Thereportnotesthatintheshortterm:

• Operatingcostsgoabsolutelydown:Fewertillagetripsmeanlesslabor,fuel,andmachineryrepaircosts.

• Operatingcostsgorelativelydown:Relativepriceandproductivitychangescausesomefarmoperationstobecomelesscostlythanothers.Thecombinationofherbicide‐tolerantseed,glyphosateandno‐tillisamoreproductiveweedcontrolstrategythanmultipletillage,cultivation,andsprayoperations.Inaddition,fuel,laborandmachinerypriceshaveincreasedrelativetoglyphosateandherbicide‐tolerantseedprices.

• Expensiveresourceconstraintscanbelifted:Whenconservationtillageallowsaphysicalresourceconstraint,suchaswateravailability,tobelifted,yieldsandrevenuesgoup.Thelaborsavedbyconservationtillagecanbeinshortsupplyduringcriticalgrowingperiods.Liftingtheconstraintallowslabortobeusedinhigher‐valuealternatives.

Inthelongterm:

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• Long‐termimprovementsinresourcestocks(nutrients,soil,carbon,weeds,andwater)canbecapturedashigherreturnsoninvestment:Thereturnscomefromhigher,orsimilar,yieldsandfrominputsthatperformbetter,orcomplementbettersoilandwaterconditions.

• Investmentinmachinerygoesdownandmachineryallocatedoverheadcostsgodown.Thiscausestheinvestmentcostperfarmandthemachineryallocatedoverheadcostperacretogodown.Theeffectismagnifiedforlarger‐sizedfarmsbecauseofeconomiesofscale.

Thereportadvises:“Farmers,farmadvisors,conservationplanners,andagriculturalpolicymakers,shouldconsiderthesetypesofeconomicincentiveswhenpushingtheuseofconservationtillage.”

EcosystemServices:FarmlandPreservation

Farmlandpreservationhasvaluesthatarefairlywelldefined.Theseincludedirecteconomicbenefitsof

continuedproductionandenvironmentalbenefitssuchasfloodcontrolandwaterquality.Someofthesevaluescanbequantified,othersnotsowell.Somestudiesshowthatcostsavoidedfromconversiontootheruses,suchaspublicservicesforruraldevelopments,arequantifiable.Farmland

preservationmakesitpossibletocaptureandquantifymanyoftheecosystemservicesandotherbenefitsweseektocaptureindescribingvaluestreams.

EcosystemServices:Forestry

Welimitourattentionhereprimarilytoprivateforestsandthoseintheurbansetting,althoughimpressiveecosystembenefitsareattachedtopublicforests.Privateforestsconstitutenearly60

percentofthenation’stotalforestlandandprovidethemajorityofecosystemservicestothepublic.

Forestsprovideawiderangeofbenefits,includingprovisioningservicessuchasshade,timber,andwildlifehabitat.Therangeofregulatingservicesisbroad,includingstabilizinglandscapesbyprotectingsoilsandretainingmoisture.Theyaremajorsitesforcarbonstorage,areimportantfornutrientcycling,

andhelpmoderatelocalandregionalclimatethroughrainfall.Forestsalsohelpregulatethewatercyclewhentreerootssoakuprainfall;stems,trunksandrootsslowrunoff;andtreeleavesreleasewaterback

intotheatmosphere.Inaddition,plantandanimalbiodiversitydependsonintact,matureforests.Insomecases,evenhumanhealthmayrelyonthatbiodiversity.Manymedicineshavebeenisolatedfromplantcompounds.xvi

Thelargestfederalprograminthenationprovidingpaymentstolandownerswhoplanttreesorenhance

forestedlandsistheConservationReserveProgram.Perhapsamoretellingindicatorofforestvaluescomesfromthestates,whichhavelongrecognizedthevalueofprivateforests.AccordingtotheForestService,virtuallyeverystateintheunionhasapropertytaxreliefprogramforprivateforestland

owners.Inmanycases,multiplestate‐sponsoredprogramsexist.Anarrayofprivateprogramsalsoexists.

Whilemanyoftheseprogramswereoriginallyconceivedtohelpprovideareliablesourceoffiberforwoodproducts,themodern‐dayforestownerisaslikelytomanagehisorherwoodlotforwildlifeor

otheramenities.

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TheForestServiceandotherentitieshavedevotedextensiveresearchtodeterminingthevalueofecosystemservicesprovidedbyforests.Someofthemostimpressiveresearchhasfocusedonurban

settings,whereservicessuchasfloodwaterretention,savingsonheatingandcooling,andreductionsinairpollutionhavebeencalculated.Someofthesevaluesmaybetransferrabletoareaswherelandusechangeshaveledtopartialurbanizationofformerlyruralsettings.

TheForestService’sPacificNorthwestResearchStationidentifiedkeyneedsforForestServiceresearch

onmakingthecaseforecosystemservicesfromforestedland.xvii

Theyinclude:

• Developingmethodstodescribeecosystemservicesandtheirvaluestosocietytoensurethatforestbenefitsareincludedinforestpolicyandmanagementdecision‐making;

• CommunicatingthevalueofecosystemservicesandtheForestService’sroleinsustainingthem

iscriticalforjustifyingpublicexpendituresonForestServiceprograms;• TheForestServicecanplayanimportantroleinsustainingecosystemservicesacrosslandscapes

byofferingexpertise,resources,information,andprogramstoitsneighborsandpartners.One

areaofparticularinterestispromotingmarket‐basedconservationofecosystemservicesonprivateland.

ConservationdistrictsacrossAmericaareheavilyengagedinforestryactivities.The2001NACDConservationDistrictForestryActivitySurveyestablishedthatthemajorityofdistrictswereinvolvedin

forestryactivity,someasamajorpartoftheirworkplans.Theactivitiesrangedfromtreesalesandequipmentrentaltoeducationandtechnicalassistance.

Fragmentationanddevelopmentaremajorthreatstoprivateforestsacrossthecountry.Inthewesternstates,theWesternForestryLeadershipCoalition’srecommendationsforactionsincluderewarding

landownersfortheirstewardshipofecosystemservices.Thegrouprecommendsthatmultiplepartnersworkto“giveprivateforestlandownerstheeconomicmeanstocontinuemanagingtheirforestsover

thelong‐termforpublicandprivatebenefits.”

EcosystemServices:Pollination

Conservationvaluescomeinbigandsmallpackages.Someareeasilymissed.Forinstance,wildliferangingfrombatsandbeestobutterfliesandbirdsprovidesanestimatedvalueoffrom$4billionto$6

billioninpollinationservicesannuallyintheUnitedStates.

Increasedemphasisontheroleofnativepollinatorshasariseninrecentyearsduetodeclinesinpopulationsofhoneybees.The2008FarmBillauthorizesthesecretaryofagriculturetoencourage“thedevelopmentofhabitatfornativeandmanagedpollinators;andtheuseofconservationpracticesthat

encouragenativeandmanagedpollinators”duringadministrationofconservationprograms.

EcosystemServices:Recreation

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Perhapsoneoftheareasmoststudiedinrelationtopublicbenefitsfromecosystemservicesisthatofoutdoorrecreationsuchashunting,fishing,birdwatching,hikingandnumerousotheractivities.Inturn,

theseactivitiesdrivetouristeconomiesinanumberofstates.

NRCScapturesmanyofthesevaluesinaContingentValue/RecreationalValuewebpage.Itincludesnumerousnational,regionalandlocalstudiesandreports.Aswithotherpublicvalues,thewinnersvs.losersdilemmaneedstobeconsidered.Conservationpracticesonprivatelandscanresultin

opportunitycoststolandowners.Butinadditiontoon‐sitecosts,landownerswhoseconservationactivitiesprovideecologicalservicescanreapbenefits.AFarmServiceAgencysurveyofCRPparticipants,forinstance,foundthat5percentofCRPenrolleesindicatedtheyreceivedincomefrom

recreationaluseoftheirCRPacreages.Mostoften,thiscomesintheformofleasinglandforhunting.Nationally,CRPresultedinlandownersreceiving$21.3millionmorefromrecreationalactivitiesontheirlandsthantheywouldhavewithoutenrollinginCRP.xviii

Recreationalactivitieshavemajorimpactsonbothpublicandprivatesectors.Injustoneexample,the

GeorgiaDepartmentofWildlifeestimatesthatmorethan1millionstateresidentsspendalmost$500millionyearlyonfishing,generatingmorethan14,000jobsand$900millioninoveralleconomicimpact.

Statesoftenapplyproceedsfromsalesofhuntingandfishinglicensestoabroadarrayofnaturalresourceprotectioneffortsthathavenothingtodowithstalkingdeerortrophyfish.

Expertsnotethattherearestrengthsandweaknesseswithvaluingserviceslikethesepublicgoods,but

itishardtoignoretheireconomicimpacts.

EcosystemServices:OntheWay,ButNotThere

It’sobviousthatwe’realongwayfromtyingtheknotthatwouldfullybindecosystemservicestovaluestreams.Governmentprogramsthatpayprivatelandownersforconservationhaveleduspartofthe

way.Certainmarketsystems,suchaswaterqualitytrading,showpromise.Drivenbyregulation,wetlandmitigationbankinghasmovedforward,Othermarkets,suchascarbon,havefailedtogainsufficienttraction.

Withincreasedemphasisacrossseveralplatforms,broaderrecognitionofthevalueofecosystem

servicesisboundtogrow.Weareintheearliestphasesofadoption.Wehaveyettodevelopsystemsthatfullyvaluethepublicgoodsandservicesthatecosystemsprovide.Butinthemeantime,wecanandshouldtalkaboutthefullvalueoftheworktheconservationpartnershipaccomplisheseveryday.We

explorethatnext.

LocalandStateImpactsofConservationSpending

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Nowweturnattentiontoconservationeconomicvaluesthatresultfromtheinfluxofconservationspendingtostatesandlocalcommunitiesandfromtherangeofactivitiesassociatedwiththe“business”

ofconservation.Thesearevaluesthataren’talwaysconsideredwhentheconservationpartnershipmakesacaseforitself,buttheyaresignificantandimportant.Manytimestheysupportlocalbusinesses,helppaylocaltaxesandprovideawiderangeofothereconomicbenefits.

Spendingonconservation,includingimplementationofpractices,directpaymentstofarmersand

administrativecosts,resultsinaninjectionofdollarsintostateandlocaleconomies.Thisinfusionofdollarsleadstoamultipliereffectatthelocalandregionallevelasthemoneyre‐circulatesintheeconomy.

Localconservationdistrictsandtheirpartnersprovideanarrayofservicesoutsidetherealmoffederal

andstateprogramdollars.Theseoftenproduceeconomicbenefitstocommunitiesandthecooperatorswhoareassisted.Helpingaproducerbecomemoreefficientcanresultinbottom‐linegainthatcanbecalculated.Helpingafarmerconverttono‐tillcanresultindirectsavingson‐siteandpublicbenefitsoff

site.

Theexamplesprovidedherearemeanttostimulateabroaderefforttofullyaccountforthesevalues.Articulatingthesevaluescanbeanimportantcomponentoftheworkplanforlocal,stateandnationaloffices.

ValueofConservationSpending:EQIPExample

ThemethodologynowexistswithinNRCStocalculatethevalueofEQIPdollarstoregionaleconomies.

Asanexample,NRCSEconomistJohnLongassessedtheimpactofEnvironmentalQualityIncentivesProgramspendingfrom2002‐2007inseveralcountiesintheKennebecRegionofMaine.HefoundthatEQIPexpendituresof$2,644,900intheseven‐countyregionhadanadditionalvalueof$2,028,300,

includingwages,profitsandindirectbusinesstaxesgenerated.TheEQIPexpenditurescreatedorsupported85jobsandproducedatotaloutputof$4,349,800.UsingtheIMPLANeconomicoutput

model,hecalculatedthetotalmultiplierimpactoftheEQIPdollarsat1.65.Forevery$1,000ofcost‐sharedollarsspentonthefinalgoodsproduced,$650ofeconomicactivitywasgeneratedintheregionthroughrepeatedcirculationofthemoneyspent.“Forinstance,whenafarmsupplycompanyispaidfor

suppliesusedinimplementingaconservationpractice,thatcompanypaysapercentageoftheoriginalcost‐sharemoneytoitsemployeesintheformofwages,”hesays.Belowishisexampleofhowthefundscirculateinalocaleconomy.

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Citinghowthemultipliereffectworks,henotes:“Conservationactivitiesimpactlocaleconomieswithchangesinproduction,recreation,jobs,taxesandspending.Theseimpactsdonotoccurjustonce,buthaveamultipliereffect.Forexample,payingacontractortoinstallastockwaterpipelinehelpspay

employeesalariesandotheroperatingcostsandprovidesaprofitforthecontractor.Thecontractorandemployeeswillthenspendtheirearningsatotherlocalbusinesses.”

Longnotesthatthebenefitsheaccountsfordonotincludeothereconomicimpacts,suchasimprovednaturalresourcesleadingtoincreasedtourism,boating,fishing,reducedwatertreatmentandincreased

propertyvalues.Theyaresignificantinmanycases.

Conservationdistrictsareparticularlywell‐suitedtopositivelyimpactlocaleconomiesandbusinesses.Oftentheyarenotboundbyfederalrulesonhowcontractsareawarded,affordingflexibilitytochooselocaloptions.

ValueofConservationSpending:OklahomaStudy

A2009studyconductedfortheOklahomaConservationCommissionandtheOklahomaAssociationof

ConservationDistrictsfoundthatfederalandstateconservationspendingof$76millioninthestatehad

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atotalimpactof$117.4million.DavidShideler,assistantprofessorandExtensioneconomistfortheOklahomaCooperativeExtensionServiceatOklahomaStateUniversity,conductedtheresearch.

“Becausethesedollarsrepresentinjectionsintoregionaleconomiesacrossthestate,theywillgenerate

additionallocaleconomicactivity,”henotes.Project‐basedgrantsgeneratedanestimated$13.5millioninadditionaleconomicactivityacrossthestate,hefound.Inaddition,direct‐paymentprogramsgeneratedabout$18millionandadministrativeexpensesnearly$10.4millionofadditionaleconomic

activitylocally.

“Thoughtheresultsdonotrepresentabenefit‐costanalysis,theycanbeviewedasafirststeptowardunderstandinghowconservationandtheeconomyareconnected,”Shidelernotes.“Suchlinkagesareimportanttounderstandifcommunitieswanttoseriouslyaddresssustainability,ofboththe

environmentandeconomyinlocalplaces.”

Inconnectionwiththeproject,Shidelerplanstodevelopaworksheettoaidlocalconservationdistrictstogeneratepractice‐specificimpactnumbersforfundsexpendedundertheirjurisdiction.FormoreinformationcontactShideleratDave.shideler@okstate.edu.

ConservationSpending:TellingtheWholeStoryofWhatWeDo

Theaboveexamplesarebuttwoofmanywaysthe“businessofconservation”impactslocaleconomies.

Theconservationpartnershiphasthousandsofexamplesofsucheconomicimpactsacrossthecountry.

Oneunder‐toldstoryattheagencylevelistheEmergencyWatershedProtectionProgramadministeredbyNRCS.Theprogramprovideson‐the‐groundassistancetocommunitiesinemergencysituationsrangingfromfloodstofires.Asnotedinanearlierreport,“NRCSfrequentlyplaysacrucialroleandisthe

firstfederalagencyonthescenetorepairresourcedamageandpreventfurtherproblemsbutdoesn’tgetmuchcreditwhenthecamerasroll.”xixInsomecases,theprogramhelpscommunitiessavemillions

ofdollarsindisaster‐relatedexpensesbyprotectingsourcewater,preventingfloodsandmitigatingtheimpactsofnaturaldisasters.Capturingandsharingthesestoriesisimportant,especiallysincekeyportionsoftheprogramrelyoncongressionalappropriationsonacase‐by‐casebasis.

Similarly,localstoriesabouttheeconomicimpactsofourworkcanbecollectedandshared.Many

customersserveddailybyconservationdistrictsandNRCSreapeconomicbenefitsfromtheassistance.Theexamplesareasvariedasthelocallyledconservationworkaccomplisheddailyacrossthecountry.

Conservationdistrictfundingsourcesarevaried,dependingonthestate.Oftentimes,districtsusethatfundingtoleverageotherincomesourcesfortheirwide‐rangingoperations.Manydistrictsseekand

earngrantsfromfoundations,private‐sectorbusinessesandothersources.Thesearenewdollarsintroducedintolocaleconomiesandhavetheirownmultipliereffects.

Conservationdistrictsareinsomewaystheequivalentofsmallbusinesses,providinganarrayofproductsandservices,fromtreesalestoequipmentrentals.Abetteraccountingofthefullvalueof

thesegoodsandservicescanhelpdistrictstelltheirstories.Theconservationpartnershipgeneratesmultiplestreamsofvalue.Highlightingthosevaluestothegeneralpublicandthosewhomakedecisions

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abouthowtoallocatelimitedgovernmentresourcesmakesapractical,real‐worldcasefortheworkweaccomplish.

CurrentChallenges,FutureStreams

BuildingtheCase

Clearly,thetaskofattachingeconomicvaluestoconservationisanevolvingprocess.Someorganizationsaremovingquickly.TheNatureConservancy,withbothnationalandinternational

programming,isamongthem.ChiefScientistPeterKareivapredicts“Withinonetotwoyears,ecosystemserviceswillbeembeddedinallofourprograms.”xx

TheNatureConservancyisapartnerintheNaturalCapitalProject,ajointventurewithStanfordUniversityandtheWorldWildlifeFund.

Thepartnersaredevelopingtoolsforquantifyingthevaluesofnaturalcapitalinclear,credible,and

practicalways.Thisisakeytomovingforwardwithecosystemservicesmarkets.Asthepartnerssay,“Inpromisingareturnofsocietalbenefitsoninvestmentsinnature,thescientificcommunityneedstodeliverknowledgeandtoolstoquantifyandforecastthisreturn.“

ThetoolsincludeInVEST,afamilyofsoftware‐basedtoolsforIntegratedValuationofEcosystem

ServicesandTradeoffs.InVESTenablesdecision‐makerstoquantifytheimportanceofnaturalcapital,toassessthetradeoffsassociatedwithalternativechoicesandtointegrateconservationandhumandevelopment.

CarlLucero,deputydirectoroftheUSDAOfficeofEnvironmentalManagement,saysUSDA’sOfficeof

EcosystemServicesisfocusingonstrengtheningmarketsbyimprovingthetechnicalabilitytomeasureandverifyservices.WorkisalsounderwayonanNRCSnutrienttradingtool.

Buttoolstaketheargumentonlysofar.Acompellingcaseforecosystemservicesmustbemadetogettheattentionofthepublicandpolicymakers.Onekeyiscommunication.“We’vedoneaterriblejobof

this.Ourcommunityhastoinvestinprofessionalstoframethemessagetoappealtopeople,”saysKareiva.

Insomecases,framingthemessagewillbetellingthestoryofhowecosystemservicesaffectpeople’swell‐being.

Coastalwetlands,forinstance,reducestormsurge.Kareivacitesthecaseofa2008cyclonethatkilled

about10,000peopleinIndia.Withoutcoastalmangrovestoreducethesurge,thedeathtollwouldhavekilled30,000people,hesays,addingthatsoliddatashowsmangrovessavedliveswheretheyhadbeenpreserved.“We’rebuildingupthisincrediblesetofdata,notvaguearguments,securityandeconomic

arguments,thatlinkenvironmentandenvironmentalprotectiontohumanwell‐being,”hesays.

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Interestingly,themulti‐agencyCEAPreport“EffectsofConservationPracticesonCultivatedCroplandintheUpperMississippiRiverBasin,”issuedin2010,makeslinksbetweenconservationpracticesand

humanhealth.CEAPreportsthatbykeepingpesticidesfromwaterways(onaverage,only1to2percentofpesticidesappliedareleavingfields),conservationpracticeshavereducedthepesticidethreatstohumanhealthby48percent.

Engagingtheprivatesectorinecosystemservicesmarkets

remainsachallenge.Akeyquestion,posedbyDavidMiller,directorofresearchandcommodityservices,IowaFarmBureauFederation,isthis:“Muchofthegoodsinecosystemservicesare

publicgoods.Howdoyougetfundingfromtheprivatesector?

Somestudiesindicatethatecosystemserviceswillaccruemorevalueinanenergy‐scarcefuture.

EconomicChallenges

Analystsnotethatthecurrenteconomicdownturnmayservetodampeninterestinecosystemservicesmarkets.Conservation

organizationsthatmightserveasaggregatorsandfacilitatorslinkingbuyersandsellersinecosystemservicemarketshavestaffingissues.Inbettereconomictimes,buyerswithcorporate

socialresponsibilitystandardshadmorefundingforecosystemservicesprograms.

Bundlingvs.Stacking

Thisreporttakesnoteofdifferencesamongfederalagenciesandotherentitiesovervaluingecosystem

services.Someagenciesfavor“bundling,”inwhichonepaymentismadeforallservices.Otherentitiesfavor“stacking,”wherebyanumberofpaymentsmightstreamfromanecosystemservicesuchasawetland.Somebelievethatstackingismorebeneficialtotheseller,whomightreceivepaymentsfor

reducingphosphorus,improvingwildlifehabitatandperhapssequesteringcarbon.“Itisahugedebate,”saysoneobserver,adding:“TheonlywayIcanseeitworkingisifyoudefinetherulesupfrontandeverybodyabidesbytherules.Forinstance,inthisprogram,you’reallowingstackingforseveral

purposes–carbon,waterqualitytradingonphosphorousandpossiblysourcewaterprotectionforbacteriaorwellheadprotectionfornitrates.Therealquestionis,‘Wouldthefarmerhaveimplementedwithoutallthree?’“

DriversNeeded

Theultimatesuccessofmanyecosystemservicesmarketsdependsondrivers–actionsandpoliciesthat

lendvaluetopractices.

Oneformofdriverisregulation.Wetlandsmitigation,forinstance,isdrivenbyfederallawsthatrequiremitigationwhenawetlandisimpacted.Totalmaximumdailyloadsforimpairedwaterwaysareseenas

Keypoints:

Progressontoolsfordeterminingvalues

Driversneededtocreatebuyers

Private‐sectorofferspromise

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driversforsourcewaterprotectionmarkets.ObserverssayTMDLshavebeenrollingoutslowly,andsomethathaveemergeddon’taddressnonpointpollution.Butregulationisn’ttheonlymarketdriver.

Theprivatesectormayplayanimportantrole.

NewStreams:PrivateSectorPromise

Developmentsintheprivatesectorofferpromisethatcorporateresponsibilitywillmeldwithecosystemservicemarkets.

Wal‐Martin2009announcedplanstodevelopaworldwidesustainableproductindex.Theindexwillestablishasinglesourceofdataforevaluatingthesustainabilityofproducts.“Customerswantproducts

thataremoreefficient,thatlastlongerandperformbetter,”saidMikeDuke,Wal‐Mart’spresidentandCEOinannouncingtheindex.“Andincreasinglytheywantinformationabouttheentirelifecycleofaproductsotheycanfeelgoodaboutbuyingit.Theywanttoknowthatthematerialsintheproductare

safe,thatitwasmadewellandthatitwasproducedinaresponsibleway.Wedonotseethisasatrendthatwillfade.Highercustomerexpectationsareapermanentpartofthefuture.AtWal‐Mart,we’reworkingtomakesustainabilitysustainable,sothatit’sapriorityingoodtimesandinthetoughtimes.

Animportantpartofthatisdevelopingthetoolstohelpenablesustainableconsumption.”

Thecompanyissurveyingmorethan100,000suppliersaroundtheworld.Thesurveyincludes15questionsthatserveasatoolforWal‐Mart’ssupplierstoevaluatetheirownsustainabilityefforts.Thequestionsfocusonfourareas:energyandclimate;materialefficiency;naturalresources,and;people

andcommunity.U.S.supplierswereaskedtocompletethesurveybyOct.1,2009.

Asasecondstep,thecompanyishelpingcreateaconsortiumofuniversitiesthatwillcollaboratewithsuppliers,retailers,NGOsandgovernmentstodevelopaglobaldatabaseofinformationonthelifecycleofproducts–fromrawmaterialstodisposal.Thecompanywillalsopartnerwithoneormoreleading

technologycompaniestocreateanopenplatformthatwillpowertheindex.Thefinalstepindevelopingtheindexwillbetotranslatetheproductinformationintoasimpleratingforconsumersaboutthe

sustainabilityofproducts.

Private‐sectorinitiativessuchasWal‐Mart’shavethepotentialtoimpactecosystemservicesmarkets.TheCoca‐ColaCompanyhasasimilarsustainabilityprogramlinkedtowaterqualityandquantity.Theeffortincludeswatershedprotectionandcommunitywatershedprojectsaroundtheworld.Other

water‐reliantcompaniesaretakingsimilarsteps.It’ssmartbusiness:A2009reportcommissionedbyseveralcompaniesestimatesthatby2030,globaldemandforwaterwilloutstripsupplyby40percent.xxi

ChallengesandNewStreams:TheUpshot

Whenitcomestoidentifyingandattachingeconomicvaluetoconservationpracticesandsystems,the

listofchallengesislong.Someareobvious,somesubtle.Weconcludeherewithabriefreview:

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Theconservationcommunityhasnotdoneasufficientjobconvincingthegeneralpublicandpolicymakersthattheneedtoprotectnaturalresourcesistightlystitchedtoidentifiableeconomic

rewards.

Incaseswhereeconomicvalueshavebeenclearlyestablished,therewardsareoftentonon‐localpopulations,suchasdownstreamwaterusersordownwindairbreathers.Thoseaskedtomakechangesthatprovidevaluestothesepopulationsaresometimesaskedtoforgolocalrewards,suchasmaximum

cropyields.Conservationprogramsthatmitigatetheimpactoftheselostopportunitycostsareemerging,butspeakingaboutFarmBillconservationprograms,oneobservernotes:“TheconservationtitleoftheFarmBillisaplacetostealfromsinceitsinception.”xxiiThisinstabilityisseenbysomeasan

impedimenttoeffortstoplacevalueonconservationservices.

Recenteffortstoattacheconomicvaluestoconservationpracticesandsystemshaveledtogainsinunderstanding,butarestillevolving.EnvironmentaleconomistStephenPolaskyassessesthecurrentlandscapethisway:“Therecentfocusonecosystemservicesgrewoutofefforts,ledprimarilyby

ecologists,tohighlighttheimportanceofecosystemsandthenaturalworldtohumanwelfare.”xxiiiAssessingprogressonseveralfrontsintheseefforts,Polaskyadds:“Manyoftheseeffortsarebeingledbynaturalscientistsandthereisacompellingneedforgreatereconomicinput.Economistshavemuch

tocontributetoresearchonecosystemservices.”xxiv

AsPolaskynotes,whilesomeecosystemservicesresultinoutputsofmarketablecommodities,suchasagriculturalcropsortimber,mostare“publicgoodsthatarenottradedinmarkets….Forsuchecosystemservices,nonmarketvaluationmethodsareneeded.”xxv

Evenwhereeconomicvaluesareidentified,theconservationcommunityhasbeenunableto

consistentlyidentifyandcommunicatethesevaluestothepublicanddecision‐makers.Itfollows,then,thatidentifyingthefullrangeofeconomicvaluesforconservationserviceswillbenefitalllevelsinthe

conservationcommunity.

Mostobserversbelievethatdevelopingmarketsforcertainpracticeswillrequireatleastsomegovernmentintervention.Inthecaseofcarbonmarkets,forinstance,paymentshavelaggedintheUnitedStates,wherevoluntaryactivityhasnotsufficientlyattachedvaluetotheactofsequestering

carbon.

Inmanyothercases,numericalvaluesformanyecosystemservicesarenotfullydeveloped,andmonitoringcostsarehigh.Thequestioniswhethertheseneedtobemorefullydevelopedorwhethertheyaresufficienttodaytomoveusforward.KareivathescientistandPolaskytheeconomistboth

believewepossesssufficientknowledgetotakethelattercourse.

CaseStudiesHereweprovideasetofcasestudiesthatillustratesomeofthetopicsdiscussedinthispaper.Thecasestudiesillustratethatwhileecosystemservicesandothervaluestreamshavebeenidentified,theworkhasinmanycasesjustbegun.

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Urban‐RuralPartnersforWaterQualityInCheneyLakeWatershed,KansasTheCheneyLakeWatershedisapartnershipofrural/urbanstakeholders.BecausethecityofWichitarecognizedthevalueofcorrectingpollutionproblemspriortowaterenteringthereservoir,thecityagreedtoprovidepartialreimbursementtofarmersforimplementingstructuralpracticesandincentivesforimprovedmanagement.Thesewaterqualityimprovementsarenotoftenincomegeneratingassetsforthefarm.Farmersagreedtomaintainthepracticesforthelong‐term.Voluntaryimplementationofwaterprotectionpracticeshasbeeninitiatedsuccessfullythroughone‐on‐onecontactswithneighborsoftheCLWboardmembersadministeringtheproject.Small,informalmeetingsareheldthroughoutthewintermonthsinmachinesheds,kitchens,communitybuildingsandcoffeeshops.Boardmemberspersonallyinviteandencourageotherfarmerstoattend.Anidealmeetingsizeisfewerthan15people.Thewatershedstaffworkswitheachfarmertodevelopsolutionstowaterqualityconcernsontheirfarmandtoseekcostsharefundingtoimplementthepractices.Mostpracticesareeligibleforexistingstateandfederalcost‐shareprogramsatarateof50to70percentofthecountyaveragecostofimplementingthatpractice.Thecityreimbursesthefarmersforanadditional30percentofthecountyaveragecost.Wichitaalsoreimbursesfarmersfor50percentofthecostofuptotwomilesofpermanentperimeterfenceforgrasslandsthatwereestablishedundertheConservationReserveProgram.WhenaCRPcontractexpires,thefencingprogramprovidesanincentivetokeepthegrassforgrazinginsteadofreturningtheacrestocropproduction.Source:CheneyLakeWatershedInc.:www.cheneylakewatershed.org

OhioRiverBasinTradingProgramWillbeLargestEverEstablished

TheOhioRiverBasinTradingProjectisafirst‐of‐a‐kindinterstatenutrienttradingprogram,acomprehensiveapproachtodesigninganddevelopingcreditmarketsfornitrogenandphosphorusdischarges.Partsofeightstatesmakeupthebasin,includingIllinois,Indiana,Kentucky,Maryland,Ohio,

Pennsylvania,TennesseeandWestVirginia.TheOhioRiverprojectwillbethelargestinterstatetradingprogrameverestablished,accordingtotheElectricPowerResearchInstitute.Itsintentistoallowexchangesofwaterqualitycreditsfornitrogenandphosphorusaimedatprotectingandimproving

watershedsatloweroverallcostsintheOhioRiverBasin.TheprogrammayalsobenefitreceivingwaterbodiesasfarawayastheGulfofMexico.TheElectricPowerResearchInstituteiscoordinatingtheprojectwithsupportfrompowercompanies;wastewatertreatmentfacilities;federal,state,andlocal

agencies;andotherindustryorganizations.ImpactsonwaterqualityintheOhioRiverBasincomefrommanysourcesincludingpowerplants,wastewatertreatmentplants,urbanstormwater,agricultureandfromsourcesoutsidethebasin.Improvingwaterqualitywillrequirecollaborationamongnationaland

stateagencies,powerplants,wastewatertreatmentplants,farmers,environmentalgroups,andothers.Inaddition,coordinatedeffortsamongstate,regionalandfederalregulatoryagenciesarecriticaltoaddresshowinterstatetradingwilloccur.EPRIanticipateshavinganestablishedprogramand

functioningcredittradingmarketinthreetofiveyearswithearlytradesbeginningsooner.Source:ElectricPowerResearchInstitute:www.epri.com/ohiorivertrading

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ConservationMarketplaceofMinnesotaPutsCropConsultantstoWork

CertifiedcropconsultantsarehelpingtheStearnsCountySoilandWaterConservationDistrictinMinnesotaconnectwithfarmerstoprotectgroundwaterinanearbycity.TheSaukRiverWatershedDistrictandStearnsCountySWCDarecollaboratingwithAmericanFarmlandTrustandKieser&

AssociatesandotherpartnerstodeveloptheConservationMarketplaceofMinnesota.Theprogramwillutilizepublicandprivatemarket‐basedincentiveopportunitiesthatprovidefarmerswithvalueaddedpaymentsforBMPs.SupportandfundingisprovidedbytheBushFoundationandanNRCSConservation

InnovationGrant.Theprojectisusingfundstonetworkwithexistingpublicandprivateentitiesestablishedwiththeagriculturalcommunitytoleveragetheirnetworksinmarketingandcertifyingtheprogram.TheStearnsDistrictisworkingwiththecityofColdSpringstoreducenitrogenleachingto

groundwater,thesourceofthecity’spotablewater.Thecityhassixmunicipalwells,threeofwhichareclosetoexceedingtheallowablelimitfornitrates.DennisFuchs,districtadministrator,sayscertifiedcropconsultantsarehelpingidentifyfarmerswhoagreetousenitrogeninhibitorspaidforbythecity.

Theinhibitorsslowthereleaseofnitratesfromammoniumfertilizersuntillaterinthegrowingseasonbydelayingtheconversionofammoniumnitrogenintonitratenitrogen,whichissusceptibletoleaching.N‐inhibitorscanalsobeusedwithmanureandotherformsoforganicnitrogenfertilizer.Fifteenpriority

parcelsarebeingtargetedfortheventure.Fuchssayscropconsultantsaretrustedsourcesofinformationforfarmers.“Ifyouhavetherightconsultants,thenyouhaveaninwiththefarmers,"hesays.“Oneoftheproject’sgoalsistolearnwhatadoptionbarriersexistforfarmersandproducersand

worktoovercomethemthroughacceptableinteractions.”WhiletheStearnsdistrictworksintheSaukRiverWatershed,theConservationMarketplaceofMinnesotaalsoworksintwoothers.Goalsalso

includeprovidingefficientmethodsforadministeringenvironmentalmarketsandstackingpaymentstofarmersformultipleenvironmentalbenefits.

NewYorkCityWatershedSetStandardforOthersPerhapsthemostfrequentlycitedmodelofwater‐qualitytradingistheNewYorkCityWatershed.Since

theearly1990s,thecityhasavoidedcostlywaterfiltrationtechnologiestoassuresafedrinkingwaterfor9millionpeoplebyfocusingonwatershedmanagement,includingBMPsonagricultureandforestrylands.Thecityhasprovidedfundingfortheseandotheractivities.Severalconservationdistrictsand

NRCSstaffhaveprovidedtechnicalassistanceandotherservicesforanarrayofservices,includingwhole‐farmplanning,developingcomprehensivenutrientmanagementplansandconductingannualreviewsofconservationplans.Privatecontractorsareengagedtoinstallconservationpractices.The

degreeofadoptionbylandmanagershasbeenimpressive:IntheCatskill/DelawareWatershed,wheredistrictsareamongpartners,247farms,or95percentofallfarmsinthewatershed,participate.xxviPaymentstheyreceiveforestablishingBMPsareanexampleofgreenpayments,whichrewardland

managersforwisestewardshipthatachievesmeasurableconservationgains.

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EcosystemTradingOpportunitiesAdvanceinOregonPartnership

TheFreshwaterTrustandothermembersofTheWillamettePartnershipareworkingtoactivateenvironmentalmarketsinOregon,launchingnewandself‐sustainingrevenuestreamsforfarmersanddemonstratingamodelformarketsthatcanfosterthrivingruralcommunitiesnationwide.Thefocusis

onwaterqualityimprovements,wetlandrestoration,habitatconservationandcarbonsequestration.Oregon’sconservationdistrictsandtheOregonAssociationofConservationDistrictsareamongpartners.Otherpartnersincludecity,business,farm,andscienceleadersintheWillametteRiverbasin,

allworkingtoshiftthewaypeoplethinkabouthowtovalue,manage,andregulatetheenvironment.ThePartnershipalsoincludesrepresentativesofCleanWaterServices,thewastewatermanagementservicefortheTualatinRiverBasin.Theirgoalisecologicalresiliency,andtheybelievenaturally

functioningecosystemsformthecornerstoneoflivablecommunitiesandahealthy,sustainableeconomy.Amongactionsthepartnershipispursuingare:

• Integratedandstrategicinvestmentinecosystems• Afairandtransparentsystemforpeopletobuyandsellenvironmentalrestorationbenefits

• Businessmodelstomovebeyondcompliance‐basedprojectstostewardship

A2007NRCSConservationInnovationGranthasallowedthepartnershiptobuildthetoolslandmanagersandregulatorsneedtoevaluateandparticipateinemergingmarkets.Thefundamentalrules,toolsandpartnershipsneededtolaunchthefirstregulator‐approved,multi‐creditecosystemservices

marketinthecountryhavebeenassembled.Additionalworkisrequiredtoattractwillingbuyersandspurmarketactivity.Foradditionalinformation,seehttp://www.thefreshwatertrust.org/.

InNorthDakota,No‐Till,

CoverCropsSpellGainsThevalueofconservationcanbecalculatedinanynumberofways.InnovativecroprotationsandcattlegrazingpracticesinBurleighCounty,NorthDakota,areprovingthat.Soilhealthisanunderpinningof

programsattheBurleighCountySoilConservationDistrict.NRCSDistrictConservationistJayFuhrerandthedistrictboardnotonlyadvocateforpracticesthatpromotesoilhealth,butcarefullycalculatetheireconomicimpacts.Thecounty’ssemi‐aridclimateisachallenge.Fuhrerandproducersinthecounty

havefoundsuccesscombiningno‐tillcroppingwithcovercropcombinationsthatincludesudangrass,millet,sunflower,turnip,radish,soybeansandcowpea.Goalsincludebuildingsoilhealth,lockingupmoisturetoenhanceplantandanimalhealthandkeepingsoiltemperaturescoolinthehotsummers.

Citingoneexample,afarminthesouthernpartofthecounty,thecovercropwasaddedimmediatelyafterpeaswereharvested.Whenthecovercropwasready,141calvesgrazedthere.Calveswereweighedpriortobeingmovedandagainafter17days.Averagegainsof52poundspercalfwere

recorded.Whenallcostsweretotaled,thefarmerachievedanetgainof$66peracreinaddedpoundagegainswhilebuildingsoilhealthandreducingrecoverytimeforrangeland.Thegainscontinuedinthenextyear,whenno‐tillcornwasplanted.Inoneofthedriestspringsonrecord,testsshowedthat

thecover‐cropfieldshadhighermoisturecontentthancontrolfields,andasthecorncropgrew,onelessherbicideapplicationwasneededbecauseofsoilhealthimprovements.Intheend,costswerereducedforthecover‐cropfield,eventhoughcropyieldswereabitlower.“Therewerefewerinputs

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andlessfossilfuelused,”Fuhrersaid.Inthefall,testsalsoshowedthecovercropshadfixedhighamountsofnitrogen.Anumberofotherapplicationsarebeingusedforcovercrops,includingwater

quality.Thesuccesseshaven’tgoneunnoticed.“FarmCreditServicesisamajoraglenderinNorthDakota,andoneoftheirloanpeoplemadeacommenttooneofourboardmembersthattheycanseesoilhealthinthebottomlineofBurleighCountyproducers,”Fuhrersays.Allfiveoftheboardmembers

onthedistrictboardoperateno‐tillandcovercropgrazingsystems.WaterQualityTradingPilotedonGreaterMiamiTheGreaterMiamiRiverWatershedWaterQualityCreditTradingprograminOhioprovidesfundsforreducingpollutantrunoffintoriversandstreams.Thisnewprogramcouldsavecommunitiesmorethan$300millionoverthenext20yearswhilesignificantlyimprovingwaterquality.Soilandwaterconservationdistrict(SWCD)staff–workingwithlocalfarmerswhoagreetovoluntarilychangetheirfarmingpractices–willsubmitprojectsthatreducephosphorusandnitrogenrunoff.Thesepollutantscomefromfertilizerandmanureandcanrunoffthelandintoourriversandstreams.Theprojectswillgenerate“credits”thatwastewatertreatmentplantscanusetomeetregulatoryrequirements.FundingfortheprojectswillcomefromthewastewatertreatmentplantscombinedwithagrantfromtheUSDANaturalResourcesConversationService–providingmorethan$1millionforagriculturalprojectsduringtheprogram’sfirstthreeyears.About40percentofOhio’sriversandstreamsdonotmeetstateguidelinesforfishingandswimmingandotherdesignateduses.Asaresult,newregulationswillrequirewastewatertreatmentplantstoreduceevenmorepollutantsattheplant.Theplantshavemadegreatstridesinreducingpollutants,andevenaslightpercentreductioncancostmillionsofadditionaldollars.Ontheotherhand,anagriculturalprojectupstreamoftheplantcangenerateafargreaterreductionatasignificantlylowercost–savingtheplantanditscustomersmoney.Projectswillbereviewedandselectedbyanadvisorycommittee.ProjectpartnersincludetheMiamiConservancyDistrict,countysoilandwaterconservationdistricts;OhioFarmBureauFederationInc.;OhioDepartmentofNaturalResourcesDivisionofSoilandWaterConservation;OhioEnvironmentalProtectionAgencyDivisionofSurfaceWater;thecitiesofDayton,Englewood,andUnion;ButlerCountyDepartmentofEnvironmentalServices;andTri‐CitiesNorthRegionalWastewaterAuthority.Source:MiamiConservancyDistrict.Formoreinformation,contactDustyHall,(937)223‐1278ext.3210. OklahomaPartnershipReducesEnvironmentalFootprintAnewinitiativefromtheOklahomaAssociationofConservationDistricts(OACD)andtheOklahomaTourismandRecreationDepartmentplanstohelpoffsettheenvironmentalfootprintofvisitorstoOklahomawhilerewardinggoodstewardshipundertakenbyfarmers,ranchersandotherlandowners.Theinitiativewillhelpvisitorsoffsettheircarbonemissionsandothernegativeenvironmentalimpactsoftravelbyofferingthemcreditsgeneratedbyconservationpracticesthatsequestercarbonandprotectthestate’ssoil,water,airandwildlifehabitats.Thestate’sTourismandRecreationDepartmentwillsellcreditsonlinein$5,$15and$30intervals.Pricescorrespondwithdifferentconservationpractices,suchasno‐tillandstrip‐tillfarming,grassplantings,treeplantingsandimprovedpasturemanagement.LandownerswhoundertakethesepracticeshavetheabilitytosellthesecarboncreditsthroughtheOACDOklahomaCarbonInitiativewithverificationprovidebytheOklahomaConservationCommissionCarbonProgram.Source:OklahomaConservationCommission.

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LinksforMoreInformation

Thereport’smainbodyincludesanumberoflinksthaton‐linereaderscanuse.Herearesomekeyresourcesthatwillguidethoseseekingmoreinformation.

“AssessingtheEconomicValueofEcosystemConservation”isareportofTheWorldBankEnvironmentDepartmentincollaborationwiththeNatureConservancyandtheWorldConservationUnion.The2004

report,internationalinscope,providesanexcellentframeworkfordeterminingwinnersandlosersintheestablishmentofconservation.Itlooksatfourdistinctaspectsofvalueofecosystems.Thefourapproachesarelinkedandbuildoneachother.Theyprovidefourwaystolookatsimilardata:total

valueorcontributiontosociety,thechangeinthisvalueifaconservationactionisundertaken,howthischangeaffectsdifferentstakeholders(winnersandlosers)andhowtheycouldbemadetopayforservicestheyreceivetoensurethattheecosystemisconservedanditsservicesaresustained.

BayBankistheChesapeakeBay’sconservationmarketplace,linkinglandownerswithresourcesto

improveandprotecttheregion’snaturalresourcesandworkinglands.BayBankofferstoolstoenableeasyaccesstolocal,regional,andnationalecosystemmarketsandconservationprograms.ManagedbythePinchotInstituteforConservationandSustainableSolutions,BayBankisbeginninglandownerpilot

projectsin2010inMarylandandDelawareandwillexpandtotherestoftheChesapeakestatesandaddfunctionalityin2011.

ConservationEffectsAssessmentProject(CEAP)isamulti‐agencyefforttoquantifytheenvironmentaleffectsofconservationanddevelopthesciencebaseformanagingtheagriculturallandscapefor

environmentalquality.

"Conservation Practices in Iowa: Historical Investments, Water Quality and Gaps" takes a detailed look at the cumulative costs and environmental benefits of conservation practices on Iowa farms. The 2007 report was compiled by the Center for Agriculture and Rural Development, Iowa State University.

ConservationValue,Inc.isaboutiqueconsultingfirmspecializinginsustainablelanduseandbusinesssolutions.Itsprojectsincludeglobalclimatemitigationandadaptation,ecologicalrestoration,ecosystemservicesandincentive‐basedconservationprojects.

ConservationValueInstituteisanon‐profitresearchandcommunicationthinktankthatseekstoraise

publicunderstandingofhowenvironmentalsolutionsbenefitoureconomy,health,securityandqualityoflife.Itsprogramareasincludeadvancingthegreeneconomyandsustainablelanduse.

EcologicalSocietyofAmerica provides materials that serve as primers on ecosystem services and

possible values, now and in the future.

“EcologyinTimesofScarcity,”a2009reportinBioScienceMagazine,saysecologicalserviceswill

increaseinvaluesasresourcesbecomescarce.

33

EcosystemValuationisawebsitethatdescribeshoweconomistsvaluethebeneficialwaysecosystemsaffectpeople.OriginallyfundedbyanNRCSgrant,itisdesignedfornon‐economistswhoneedanswers

toquestionsaboutthebenefitsofecosystemconservation,preservationorrestoration.

EnvironmentalTradingNetworkbeganin1998tosupporttheKalamazooRiver(Michigan)WaterQualityTradingDemonstrationProject.Inthepastfiveyears,theNetworkhasgrowntoincludeinternationalrepresentation.ETNisanorganizationdedicatedtothedevelopmentandimplementationofsuccessful

waterqualitytradingprogramsandothermarket‐basedstrategiesforachievinghealthy,sustainableecosystems.Itisanationalclearinghouseforkeypolicyandregulatoryissues,andtransferablewaterqualitytradingprogramdesignelements.

FarmServiceAgencyEconomicandPolicyAnalysiswebpagesprovideanumberofreportsandstudiesrelatingtonaturalresourceeconomicandpolicyissues.

ImpactsofWetlandLossinManitoba,apublicationofDucksUnlimitedCanada,assesseseconomic

lossescausedbywetlandsdestructionintheprovinceofManitoba.

“MitigationandConservationBankingintheUnitedStates:Anemergingbiodiversity‐basedassetclass”isapublicationofNewForests, a firm that managesprivateequity‐stylecommingledfundsandseparateaccountsfortimberlandandecoproductsinvestments,suchascarboncredits,biodiversitycredits,

mitigationbanksandwaterqualityimprovements.ThereportprovidesareviewofexistingmitigationandconservationbankingsystemsintheU.S.,withparticularattentiontowetlandandstreammitigation.

NACDMarketBasedConservationInitiativesWhitePaper,2008looksatemergingmarket‐based

conservationsystemsacrosstheU.S.

NaturalCapitalProjectisajointventureamongStanfordUniversity,TheNatureConservancy,andWorldWildlifeFund.Thepartnersseektomeldworld‐classresearchanddevelopmentwithinfluential

on‐the‐groundconservationprograms.Ithasdevelopedtoolsforquantifyingthevaluesofnaturalcapital.Clickhereformoreonthegroup'stoolbox.

NaturalResourcesInventoryisastatisticalsurveyoflanduseandnaturalresourceconditionsandtrendsonU.S.non‐FederallandscompiledbyNRCS.

NRCSTechnicalNoteswebpagesprovideanarrayofreportsonthevalueofecosystemservicesanda

varietyofotherconservationvaluationtopics.

“ProtectingOurNaturalHeritage,TheValueofLandConservationinGeorgia,”publishedbytheEnvironmentGeorgiaResearchandPolicyCenter,2006,assessesthevalueofwetlands,forestsandothersystemsinGeorgia.

USDAForestServiceValuingEcosystemServicescapturesForestServiceeffortstoaddressthistopicin

theforestedsetting.Anindexprovidesseveralexamples.

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USDAEconomicResearchServiceReport,“Conservation‐CompatiblePracticesandPrograms:WhoParticipates?”,notesthatconservationprogramsappealtodifferenttypesoffarmersanddiscusses

implications.Itfindsthatflexibleincentivestructuresthatcanaccommodateotherfarmoperatorgoals,suchastimesavingandeaseofuse,havetheirownvaluestreams,andthatpoliciesotherthandirectsubsidiescanprovidesubstantialenvironmentalbenefits.Thesecouldincludeconservation‐compliance

regulations,technicalassistanceandresearchtoimprovestandardfarmingpractices,suchascroprotations.

WaterQualityTradingPrograms:AnInternationalOverviewisaWorldResourceInstituteReport.WorldResourceInstituteisanenvironmentalthinktankthatseekstogobeyondresearchtofindpractical

waystoprotecttheearthandimprovepeople’slives.

WaterQualityTradingToolkitforPermitWriters,EPA,2007.ThisisEPA’sfirst“how‐to”manualondesigningandimplementingwaterqualitytradingprograms.TheToolkithelpsNationalPollutantDischargeEliminationSystem(NPDES)permittingauthoritiesincorporatetradingprovisionsinto

permits.Itsgoalistohelpimprovethequalityandconsistencyoftradingprogramsacrossthenation.

Endnotes:

iFromKareiva’saddresstotheannualmeetingoftheSoilandWaterConservationSocietyinSaintLouis,MO.,July19,2010.HeischiefscientistwithTheNatureConservancy.iiInterviewwithStephenPolasky,professorofecological/environmentaleconomics,UniversityofMinnesota.Greatstrideshavebeenmadeinthepasthalf‐decade,accordingtoPolasky.Researchhasidentifiedvaluestreamsinanumberofareas.iiiDr.PeterKareiva’sremarkstotheSoilandWaterConservationSociety,July19,2010.ivInterviewswithBillHorvath,retiredNACDpolicydirectorandregionalrepresentative,andRichDuesterhaus,NACDseniorpolicyv“WaterQualityandConservationPractices,”IowaLearningFarm,June2009viRuhl,J.B,“FarmsandEcosystemServices,”Choices,theAmericanAgriculturalEconomicsAssociation,2nd

Quarter,2008viiPolaskyinterviewviiiWilson’sessay,“Biodiversity,ProsperityandValue,”appearedin“Ecology,Economics,Ethics:TheBrokenCircle,”editedbyF.HerbertBormannandStephenR.Kellert,YaleUniversityPress,1991.Thebookprovidesanexcellentseriesofessaysonlinkingeconomicvaluestoecologicalservices.ixWillamettePartnership,http://willamettepartnership.org/about‐marketsxAsreportedonWRI’sWaterQualityTradingwebpagexiRemarksattheSoilandWaterConservationSociety2010annualconference,SaintLouis,MO.xii“MarketOutlook,”NewForestscompany,2010(http://www.newforests.com.au/about/about.php)xiiiJohnson,Douglas,etal,“TheDownstreamEconomicBenefitsfromStormWaterManagement:AcomparisonofConservationandConventionalDevelopment,”SouthernIllinoisUniversityCarbondale,2004.xivNACDMarket‐BasedConservationInitiativesWhitePaper,December2008.xvMiller’scommentscameattheSoilandWaterConservationSociety2010annualmeetinginSaintLouis,MO.xviRandCorp.xvii“CountingAllThatMatters:RecognizingtheValueofEcosystemServices,”PacificNorthwestResearchStation

ScienceUpdateIssue16,Spring2008.

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xviii“RecreationalUse&EconomicsofConservationReserveAcreage:ANationalSurveyofLandowners,”preparedforUSDAFarmServiceAgencybySouthwickAssociatesInc.andD.J.Case&Associates,January2008.xixNACD’sConservationRecipesforthe21stCentury,2009.xxiThecompaniesincludeSABMiller,NestleandCoca‐Cola.xxiiKareiva,addressingtheannualmeetingoftheSoilandWaterConservationSocietyinSaintLouis,MO.,July19,2010.xxiii“What’sNatureDoneforYouLately:MeasuringtheValueofEcosystemServices,”Choicesmagazine,2ndQuarter,2008.xxivIbid.xxvIbid.xxviDewing,Dale,“BalancingAgViabilityandWaterQualityintheNewYorkCityWatershed.”DewingisnutrientmanagementteamleaderforCornellCooperativeExtensionofDelawareCounty.