Andrew ManaleAPM Assoc./EPA retired

Decline in federal funding

Climate Change

Population Growth and Increased Pressure to Produce More with Existing Resources

→Drivers of change in the context in which conservation must function

Too few agricultural acres are adequately treated—many legacy problems

Stressed soil resources Nutrient enrichment Declining biological diversity and wildlife

habitat Poorly functioning wetlands Insufficient storage of flood runoff

→ Nothing new. Well documented

Inefficient Management of Soil/land Resources from Society’s Perspective. In other words,

Overproduce those ecosystem services that respond to distorted market prices distorted by government policy◦ Commodity crops◦ Geographically concentrated production of livestock

Underproduce ecosystem services that reflect public goods◦ Wildlife habitat◦ Nutrient recycling◦ Temporary water storage for flood mitigation◦ Carbon and nitrogen storage in soils

Traditional interventions not enough

Voluntary “walk-in” measures have not worked

Greater federal support not likely in near term Federal regulation not likely

2002 Farm Bill

Big question—how much money do we need?

The result was CEAP—the Conservation Effects Assessment Project What works? What needs to be done? How much is needed?

Single practice approach vs by multiple practices and systems approach

Longer term maintenance

Entire cropping system and land/practice interface is important for services, ◦ ie. What is grown where is as important as how it is grown

Tracking system for what and where

Need more $

“Problemshed” problems need problemshedmanagement

Institutional governance driven by problemshed institutional needs

SWCS has made the case for a new paradigm

Recently published Federal Principles and Standards for Federal Investments in Water Resources states it in policy terms:

The distillation of the messages is this:◦ Systems approach vs traditional single field/farm interventions, ◦ Elucidation of potential trajectories and their tradeoffs and

consequences◦ Adaptive Management—treat interventions as management

experiments for which feedback is necessary◦ Accountability—each level of decision-making knows what it is

responsible for and provides timely evidence of performance

Fragmented governance NEPA implementation only as good as

interagency commitment USDA’s Office of Environmental Markets lacks

regulatory or oversight

→ A top down approach makes good political sense, not necessarily economic or scientific

◦ Let prices lead to better allocation—i.e. ringmaster◦

◦ Key is to establish prices for ecosystem services that are not traditionally traded in private markets

Prices help bring demand in sync with supply

Requires markets or contractual arrangements for ecosystem service◦ Many services are unquantified or unmonetizable◦ Must be buyer and seller

Many ongoing attempts to overcome these problems◦ Limited success to date

◦⇨ What can make a difference now?

Tracking/accounting system for changes—more than a commodity market exchange◦ Attempt at creating system in 2009 farm bill under auspices of Office of

Environmental Markets, not yet borne out

Clear or reasonable definition of what is traded and standards for trades—necessary to improve the quality of the trade to ensure that the public benefits, not just participants in trades—Richard Sandor and wheat commodity futures markets, ie. Role of government to bless tool for measuring what it is that is traded

Clarity, from a legal perspective, on property rights—not so simple in current world where most agricultural land is absentee owned

These problems are ongoing and will take time to resolve. Very complex problems More potential money is involved, ie change hands, the quicker the resolution of these

issues

Valuation generally requires assessments at significant spatial scale that may involve multiple land owners and operators.

Uncertainty regarding larger framework conditions and what others are doing that could affect success.

Market (variation in prices) and policy uncertainty Uncertainty regarding measurement tools spatially and

temporally/accounting/longer term compliance with contracts—surety bonds

Uncertainty regarding transfer rights of credit or service and what happens if nonperformance

Uncertainty regarding what are accepted practices and tools of measurement \--How do we know we have a real credit? Need for government blessing. Example from wheat futures market.

A new Farm Bill

WRDA and new standards for all federal investments in water resources/flood and drought risk mitigation

◦⇒ Opens up new sources of money and leveraging possibilities

Consolidated easement programs◦ More flexibility ◦ Greater focus on targeting and restoring

functionality of ecosystems◦ Emphasis on multiple producers

Regional conservation partnerships ◦ Regional and watershed ◦ $100 million seed money

Flood Mitigation new focus focus.

Under WRDA, federal government funds water resource projects

New Principles and Standards◦ Governs guidelines on decision- making regarding

investments◦ Apply to all federal agencies with investments in

water resources, incl EPA, USDA, BLM, Corps, etc.

Healthy and resilient ecosystems Sustainable economic development Avoiding unwise use of floodplains Public safety, including recognition that nonstructural

approaches should be considered along with structural approaches

Environmental justice which means an active effort to identify where an action could disproportionately affect on disadvantaged populations and to engage their input from the start

Watershed approach that requires a broader examination of both causes and solutions to water resource issues, including cumulative effects of past actions

Makes project planning more consistent with planning and evaluation under the National Environmental Protection Act (NEPA) and brings objectives more in line with intent of NEPA, that is the restoring and protecting of Ecosystems

Establishes that the evaluative framework be an ecosystem services approach to capture all effects◦ ECONOMIC ENVIROMental and social◦ It explicitly calls for consideration of nonquantifiable and nonmonetizable effects in overall calculus

Best available science

Emphasis on collaboration among federal and other agencies

Acknowledges risk and uncertainty, especially with climate change and injects Adaptive Management into the design of the response to risk and uncertainty

Water use and reuse, recognizing that the issue of water quantity includes its reuse and recycling

Nonstructural approaches become equal partners with structural approaches

International concerns Design of alternatives that considers the legal or policy intervention that may lead to the problem to be

addressed Transparency in decisionmaking Plan selection—the benefits compared to costs must justify action. Final decision should

take into account the relative importance of both monetizable and nonmonetizable effects

Draft Guidelines reflecting new P&S await final release

Current Guidelines in place since 1983

Coordination or stacking of pots of money Use of federal funds to leverage these pots

for focused efforts New efforts to allow prices to allocate

resources

◦→ These new policies lead to new opportunities to address challenges

Production AgricultureAgricultural Conservation

The Invisible Hand of Prices

We Thank You

The End