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PRESERVING MORE WITH LESSKent D. Messer

Unidel Howard Cosgrove Chair for the EnvironmentUniversity of Delaware

American Farmland Trust, May 12, 2014

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Yosemite, California751,266 acres (1890)

1st National Park

• 59 National Parks in 27 states• 51.9 million acres

• More than 32 ‘Delawares’

AMERICA’S BEST IDEA EXPANDSNational Wilderness areas (756 total, ~110 million acres)

National Monuments (108 total)

First State Nat’l Monument, Delaware – March 25, 2013

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AMERICA’S BEST IDEA EXPANDSUNESCO World Heritage Sites (981 worldwide)

Great Smoky Mountains North Carolina, Tennessee – 521,490 acres (1934)

Most visited – more than 9 million visitors annually

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Wrangell-St. Elias, Alaska8,323,148 acres (1980)

Larger than 8 states

Hot Springs, Arkansas5,550 acres (1921)

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Acadia, Maine – 47,390 acres (1919)

Zion, Utah – 146,598 acres (1919)

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Hawaii Volcanoes, Hawaii323,431 acres (1916)

Yellowstone Wyoming, Montana, Idaho

2,219,791 acres (1872)

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Grand Canyon, Arizona 1,217,403 acres (1919)

Rocky Mountain, Colorado 265,828 acres (1915)

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Everglades, Florida1,508,538 acres (1934)

Biscayne, Florida 172,924 acres (1980)

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U.S. Virgin Islands 14,689 acres (1956)

HERITAGE OF AMERICA’S BEST IDEA

1. Inspiring Landscapes

2. Preservation of Magnificent Flora and Fauna

3. Promotion of a selection system that ignores opportunity costs.

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National Park Service - Federal Land AcquisitionFY2012 National Priority List

34 projects, ~93,000 acres, ~$110 million(Thank you to Will Allen and The Conservation Fund for pointing out example)

Big Cypress National Preserve, Florida (43,000 acres, $5,500,000)

Everglades, National Park, Florida (477 acres, $25,000,000)

$52,370 per acre

National Park Service Federal Land Acquisition

FY2012 National Priority List

Big Cypress National Preserve, Florida (43,000 acres, $5,500,000)

What projects could have been funded for

that $25,000,000?

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What projects could have been funded for that $25,000,000?

Name Acres Cost Name Acres Cost

Petrified Forest, AZ 26,496 $5.5m Acadia, ME 37 $3.0m

San Antonio Missions, TX 20 $1.2m City of Rocks, ID 878 $2m

Santa Monica Mts, CA 350 $3.0m Appalachian Trail, VT 1,081 $1.8m

What projects could have been funded for that $25,000,000?

Name Acres Cost Name Acres Cost

Pecos Ntl. Hist Park, NM 9.2 $0.8m Haleakala, HI 156 $0.1m

Saratoga, NY 350 $3.0m Mojave, CA 200 $0.4m

Prince William Forest, VA 183 $6.0m

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What is the best outcome for $30 million?

2 projects 43,477 acres

12 projects, 72,561 acres

(67% increase in acres)

Is protecting the Last Great Places without considering cost

always the best idea?

• What if lots of money is wasted along the way?

• Could this money be invested in other projects that better improve the environment?

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Is protecting the Last Great Places without considering cost always the best idea?

Budgeted $240 for wine for Thanksgiving and following weekend with friends and family.

What is the best outcome

for $240?

Benefit Targeting

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What is the best outcome

for $240?

Benefit Targeting

Optimization

What is the best outcome

for $240?

Benefit Targeting

Optimization

Cost Targeting

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Changing Face of Conservation: Focus on Environmental Services

Examples • Wetlands for water filtration and flood

prevention

• Trees and forests to cleanse the air

• Carbon sequestration

• Salt marshes for wildlife habitat and storm surge prevention

For these examples, there are multiple opportunities to invest funds and what matters is the on-the-ground realities.

Applying Economic Science

1. Markets are powerful and de-centralized. Withcareful design, they can help improvement environmental outcomes.

2. Develop optimization tools to improve the public investment in conservation services.

3. Educate (and persuade) government and nonprofit leaders to use these tools.

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The Power of Markets• Agricultural preservation in Delaware

• Founded in 1991, annual market where winners are determined by the percentage of ‘discounting’ off development rights. – Discounting is the “percentage off ” the

appraised value.– 60% discount of a $1m farm means

government pays farmer $400,000.

• Creating markets helped Delaware protect an additional 25,000 acres in first decade.– 67,834 acres instead of just 42,852 acres

Source: Messer and Allen (2010)

Designing the Cost-Effective Conservation Markets

LABORATORY FOR EXPERIMENTAL & APPLIED ECONOMICS– 025 Townsend Hall

Funding Support• College of Agriculture and Natural Resources• Delaware Department of Agriculture• Delaware Environmental Institute• National Science Foundation• Environmental Protection Agency• UD Department of Economics• UD General University Research• US Department of Agriculture

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Improving SelectionWhat is environmental project

selection most like?A. Buying wine?

(Improvements in benefits can cost lots more money)

B. Buying beer?(Improvements in benefits costs a little more money)

C. Finding true love?(Improvements in benefits are free)

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Improving Selection

Last Great Places (Benefit Targeting)

• Invests in highest ranked projects until the budget is expended.

• Optimal, only if all costs are equal.

• Large efficiency problems if there are high quality substitutes at a lower price.

Best On-the-Ground(Optimization)

• Maximizes aggregate conservation benefits given budget constraint

• Invests in “Best Buys” that provide high quality at a lower price.

• Excellent for environmental services

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Improving Selection

If the State of Delaware had used optimization with its market it could have protected an additional 12,000 acres (worth $25-40 million).

Benefit Targeting: 42,852 acresMarket: 67,834 acresMarket + Optimization: 79,178 acres

… 36,000+ acres of high quality agricultural land preserved

Source: Messer and Allen (2010)

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Lorenz Curve Analysis

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Lorenz Curve Analysis

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Lorenz Curve Analysis

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Lorenz Curve Analysis

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DALPF Historical Analysis 1996-2007(Estimated benefits $25-40 million)

42,852

67,834

79,178

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Rank-Based Model DALPF Optimization Model

1,893

5,122

2,742

956

4,404

1,639

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GreenInfrastructure

LESA score

Rank-Based Model DALPF Optimization Model

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USDA Forest Legacy Program

• The Forest Legacy Program works in partnership with States to protect environmentally sensitive forest lands.

• 82 possible projects that are being considered for 2009 funds with a budget of $53 million.

• Panel of ten experts rated each project and provide a numeric score (the highest and lowest scores were excluded).

• Optimization could have helped them protect an additional 91,621 acres in the first year for the same budget.

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Readiness and Environmental Protection

Initiative (REPI)

• Office of the Secretary of Defense’s Readiness and Environmental Protection Initiative (REPI)

• Fastest growing federal conservation program.– $54 million in 2010.

– $100+ million estimated in 2011.

• UD report suggests that the benefit for using optimization will exceed $20 million annually.

Could apply the optimization technique of Goal Programming to maximize both the military readiness and environmental protection objectives.

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Baltimore County, Maryland

• Baltimore County has one of the most well-established farmland preservation efforts in the country, dating back to 1979 .

• In 2006, Baltimore County reached a major milestone of preserving 40,000 acres – half of its 80,000 acre goal.

• Wanted to apply optimization to improve the use of their limited financial resources while maximizing the return on investment.

Experience of Baltimore County

Wally Lippincott, Baltimore County Land Preservation Administrator

"After trying for years to balance price with farm quality using rank based

methods, we switched to optimization. In the first three years of using

optimization, Baltimore County has been able to protect an additional 680

acres for the same amount of funds that would otherwise have been

spent. This also translates into a savings of approximately $5.4 million.”

Rob Hirsch, Baltimore County GIS Analyst

"Optimization has proven easier to administer and run than our old

methods. During our rank-based days, we performed extra administrative

and mathematical work in order to solicit discounts and award extra

LESA points for discounting. With optimization, this is no longer

required.”

2010 amounts: +129 acres+$932,525

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Optimization as a Planning Tool

• At times, it may be best for political or fundraising reasons to purchase the highest ranked parcels

– In this case, can optimize with the remaining funds (hybrid approach).

• Sensitivity analysis can be done to help evaluate how changes in variables, weights, and/or constraints effect overall selection results.

• Training is needed to ensure that staff know how to properly set-up an optimization problem and use the user-friendly software.

• Often involves an iterative process (adaptive management and planning)

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Application of Optimization in Conservation Settings

1. US Fish & Wildlife and NiSource – Largest multiple

endangered species, multiple-state recovery program

2. US Military’s Readiness and Environmental Protection

Initiative

3. Highway 301 near Waldorf, Maryland – Green

Infrastructure

4. Maryland State Highways Association

5. Marsh habit for migratory birds in Delaware

6. Pennsylvania’s Dirt & Gravel Road Program

7. Trash and recycling program in Newark, Delaware

8. Halibut fisheries in Alaska

9. Agricultural preservation in Baltimore County, Maryland

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Endorsements & Obstacles2013 survey of conservation professionals about optimization• 87.3% of respondents believe that optimization is a good idea.

Most important criteria in selection process1. Staff knowledge of process (4.1 on a 5-point scale)2. Fairness to applications (4.0)3. Transparency (4.0)4. Cost Effectiveness (3.7)

Obstacles for adoption1. Lack of incentives to justify a change (3.6 on a 5-point scale)

Good News 23% more likely to adopt optimization if they were given training and

computer software to help implement optimization.

Thus, this important work continues…

PRESERVING MORE WITH LESSKent D. Messer

Unidel Howard Cosgrove Chair for the EnvironmentUniversity of Delaware

messer@udel.edu