News Articles

This Week in Water: A Change in Climate

Recent events leading up to the Cancun climate change discussions have hinted at greater inclusion of water in the context of the climate change negotiations. The collection of stories in this edition of W.E.T. reflect this reality and suggest that some are ahead of the curve in developing programs and policies to respond to climate change.

“Climate change will affect all societies and ecosystems most profoundly through the medium of water…An integrated set of policies for water management at every level of government is critical to economic, social and environmental wellbeing of societies everywhere.”

 — Zafar Adell, Chair of UN Water

NOTE: This article has been reprinted from Ecosystem Marketplace’s Water Environmental Trading newsletter. You can receive this summary of global news and views from the world of water automatically in your inbox by clicking here.

22 December 2010 | Recent events leading up to the UN climate change discussions (COP 16), held in Cancun earlier this month, have hinted at greater inclusion of water in the context of the climate change negotiations. The collection of stories in this edition of W.E.T. are a reflection of this reality and suggest that some communities, companies and regulators are ahead of the curve in developing programs and policies to respond to climate change. This optimism is bolstered by the second convening of the ACES (A Community of Ecosystem Services) Conference held in early December in Phoenix, which aimed to share the latest scientific progress related to incorporating ecosystem services into resource management, conservation, restoration and development decisions. The multiple sessions focused on four key themes: 1) Measures and values; 2) Landscapes, geography and mapping; 3) Drivers (and impediments) of change; and 4) Institutions and decisions.   The issues of grey and green infrastructure and the role of innovative financing were highlighted in numerous sessions. Presentations are available here.

From the private sector we see increasing involvement and a heightened ‘call to action’ for greater transparency in calculating and disclosing water footprints, demonstrated by the Water Disclosure Project’s recent report and by a new report highlighting the gap in reporting water risk in the municipal bond markets.  

‘Tis the season to remain optimistic as we head into the holidays and January where we face climate change of a different sort—political. One thing is for sure, governments the world over are increasingly engaged, albeit underfunded, in protecting and restoring ecosystem services through national and regional policies which may lead to new opportunities for innovative payment programs and market-based approaches to help patch the increasing gap in government funding.

Lastly, we draw your attention to a video clip from the TEDx Rainer event that took place in Seattle back in October which succinctly tells the story of how Water Restoration Certificates (a product developed by the Bonneville Environmental Foundation) are working to put water back into severely dewatered streams in parts of the western US.

Happy holidays!
— The Ecosystem Marketplace Team

For questions or comments, please contact newsletter@ecosystemmarketplace.com

News

DOMESTIC MARKETS

Chesapeake Bay TMDL News Roundup: Public Comments Show Strong Support for Cleanup, and Strong Disagreement on How to Do It

 

By November 8th, when the window for public comments closed on the pending TMDL for the Chesapeake Bay, the EPA had received about 8,000 comments. The majority – 90 per cent – were supportive of the TMDLs and plans for restoring the Bay, after decades of failed voluntary efforts. Common criticisms included the high costs and rushed target of restoring the Bay by 2025, as well as questions about the EPA’s legal authority to implement the restoration plans.

 

Environmental groups were split over the role of nutrient trading in meeting reduction targets, wherein an entity regulated under the TMDL who goes above and beyond their requirements can sell that extra nutrient reduction as a credit to another polluter. Ag groups, wastewater treatment plants, and municipalities were more broadly supportive. Nutrient trading could give non-point sources like farmers and construction sites an incentive to contribute to the Bay cleanup; at the moment there are worries that costs will fall mostly on urban areas and point-sources.

 

The Bay Journal covers results from the public comments.

 

Meanwhile the fate of the Chesapeake Clean Water and Ecosystem Restoration Act (S. 1816) remains unclear as it awaits Senate consideration. The bill includes around $180 million in funding to help landowners and farmers implement restoration projects to improve water quality in the Chesapeake Bay. However, a number of ag groups oppose the transfer of power from state and local governments to the EPA that the bill would usher in, and are lobbying heavily against the bill.

 

Finally, the Chesapeake Bay Foundation has released a report arguing that the Bay cleanup makes economic sense, pointing to fisheries and tourism as important economic drivers in the region as well as the stimulating effects of high water quality and investment in clean water technologies on local economies. Read the report here.

 

Updated state draft implementation plans were due in on November 29th; the EPA will announce its final TMDL on December 31st.

 

The Pennsylvania Nutrient Credit Market Gets a Boost from PENNVEST

 

The nutrient credit trading program in the Susquehanna and Potomac watersheds, launched in late October, aims to create a market for credits representing reductions in nitrogen and phosphorus discharges that ultimately end up in the Chesapeake Bay. Now the Pennsylvania Infrastructure Investment Authority (“PENNVEST”) has entered the market as a clearinghouse, buying credits from the suppliers and aggregators, and selling them to entities like wastewater treatment plants and developers.

 

PENNVEST’s involvement should lend some stability to the market, by smoothing out mismatches in supply and demand and reducing risk for buyers and sellers. Part of PENNVEST’s new role will be hosting regular auctions, and so far two have been held. The most recent, on November 4-5, saw 41,000 credits transacted, each representing the annual removal of a pound of nitrogen from the Susquehanna River watershed and the Chesapeake Bay, go for $2.75 per credit.

 

Read the press release and more about PENNVEST’’s activities in the nutrient credit market.

 

 

City of San Francisco Inks Deal with National Park Service to Maintain Drinking Water Quality

 

Water in the Hetch Hetchy watershed in Yosemite National Park is of such pristine quality that regulatory agencies have waived filtration requirements – and the San Francisco Public Utilities Commission, which sources eighty per cent of its drinking water from Hetch Hetchy, plans to keep it that way. The SFPUC has signed a $30 million deal with the National Park Service to manage the watershed until 2015, paying for environmental and security programs to protect the water quality and thus providing the city continued exemption from expensive filtration treatments.

 

Recent Water Transfer Debate Underscores California’s Water Woes

 

A recent proposed sale of water rights in California has struck a nerve in the Central Valley. An ongoing drought has meant that farmers in the Dudley Ridge Water District haven’t gotten their full allocation of water since 2006. This year, farmers only received 50% of their allocations. Now two farmers are planning to sell $11.7 million worth of their water to urban developers in Southern California. The deal has set off a heated debate about impacts to the local agricultural economy if farmers start cashing out, and discomfort with the idea of permanently selling water rights to urban users in Southern California. (Temporary transfers are not unusual.)

 

The sale seems to have highlighted an uncomfortable trade-off. In the context of an ongoing drought, and a vast disparity between urban and agricultural prices for water (the proposed deal sells water at $5,850 an acre-foot; farmers pay the state water project about $500 an acre foot), farmers can make more money selling their water rights than their crops. As Dudley Ridge Water District Manager Dale Melville puts it, “You can’t farm a permanent crop on a fluctuating water supply.” California State Assemblyman Juan Arambula recently introduced a measure to ban long-term agriculture-to-urban water transfers, which failed.

 

The New York Times blogs on the sale here.

 

Washington State On Track to Consider New Dollars for Stormwater Projects

 

Environmental advocates in Washington are gearing up for the 2011 legislative session, and finding a new funding source for stormwater projects is set to be a major priority in the coming year. The issue has a good deal of momentum behind it: polluted runoff is a major problem in the state, and the question of how to pay for mitigation and cleanup has been on the agenda for the last two years. Legislation that would have invested in low-impact development came very close to passing last year, and lawmakers approved a $50m ‘consolation prize’ when it failed. Legislators did, however, get behind a ban on the use of copper in vehicle brake pads, which is a significant source of water pollution. California followed suit a few months later and Oregon is considering a ban as well.

 

The Sightline Daily covers the story here.

 

 

Bond Markets Turning a Blind Eye to Water Risk

 

Rating agencies and investors are overlooking water scarcity risk in the municipal bond market at their own peril, according to a new report coauthored by Ceres, PWC, and Water Asset Management. The Ripple Effect: Water Risk in the Municipal Bond Market takes a comprehensive look at how water scarcity, climate change, and ever-growing demand for clean water, can lead to serious risk exposure for water and electric utilities, especially in the US Southwest and Southeast.

 

Water stresses could easily shake up the $32.1 trillion US bond market. “If water supplies run short, utility revenues fall, which means less money to pay off their bonds,” points out Mindy Lubber, Ceres’ president. Yet water risk doesn’t seem to factor into bond ratings. For example, the study found the Los Angeles Department of Water and Power to have the highest risk score of the utilities evaluated, given its dependence on importing supplies from elsewhere. But LADWP received an AA+ rating from Fitch and an Aa2 from Moody’s.

 

Read the full report here.

Get in-depth coverage at Circle of Blue and Reuters.

 

POLICY UPDATES

Slowing Deforestation in South Carolina by Finding New Sources of Forestland Income

 

A new World Resources Institute investigation into the disappearance of forests in South Carolina reaffirms a disturbing trend: the state is losing 200 acres a day, and landowners have little financial incentive to keep their forests intact. As Joe Felder of the South Carolina Forestry Commission puts it, “Because of taxes and other costs of owning land, if landowners are not receiving income from it, most landowners are simply waiting for the price to escalate to sell it for development.”

 

Now WRI is looking at what kinds of opportunities exist to make conservation more profitable for individual forest landowners. Alternative new sources of income might include small-scale timbering, payments for watershed protection from downstream users, and carbon sequestration. Logan Yonavjak, a research analyst with WRI, points to the New York City – Catskills Watershed example, where the city opted to pay for watershed restoration and protection upstate, rather than invest $6 billion in filtration plants, as a successful example of this kind of model.

 

Get the full story at the Post and Courier.

 

New Resource for Market-Savvy Farmers and Ranchers

 

The Guide to Environmental Markets for Farmers and Ranchers, recently published by the American Farmland Trust, provides an overview of available market opportunities for environmental credits and services, how farmers and ranchers can get involved in them, and ways to encourage their continued growth. The guide emphasizes forms of market participation that complement, rather than replace, agriculture, and how to carry out a realistic assessment of options. The AFT developed the guide specifically for farmers and ranches in Washington State, but much of its content should be useful at a wider scale. Encouragingly, the AFT found that a majority of farmers and ranchers in the state already have access to environmental markets opportunities or will in the near future.

 

Nutrient trading and payments for instream flow rights to protect aquatic species are discussed as potential revenue streams for farmers and ranchers, as well as the challenges – in particular, lack of a regulatory structure that facilitates demand – limiting these markets. Water quantity markets are identified as being particularly robust in the state thanks to demand from conservation groups like the Washington Water Trust and the Columbia Basin Water Transactions Program, while formal nutrient trading programs have yet to take off. The report details best management practices that can generate credits, such as planting riparian buffers or adopting reduced or no-till agriculture in order to sell nutrient credits, or fallowing land or more efficient irrigation in order to sell or lease flow rights.

 

Download a copy of the guide and read more about the American Farmland Trust’s work in the Pacific Northwest.

 

Beyond the News: An Update on the Willamette Partnership in Oregon

 

The ecosystem service marketplace in the Willamette Basin is at the forefront of ecosystem market development, with its pioneering multi-credit model and collaborative stakeholder process. Recently, the Willamette Partnership, which administers the market, has been busy working with stakeholder groups throughout the Pacific Northwest as the market model takes off around the region. The ultimate goal is a national network of regional coordinators supporting ecosystem service marketplaces around the country, sharing market infrastructure and expertise with one another. As ecosystem service markets hit this new stage in their development, they’re confronting new challenges but also reaping the rewards of expansion. As Devin Judge-Lord, Ecosystem Market Specialist at the Partnership points out, a major benefit of a regional network is the ability to pool resources. One watershed group can develop, for example, a nutrient crediting protocol, and easily share it with others in the network. On the other hand, one of the biggest obstacles to extending the market model has simply been waiting for regulations to catch up with enthusiasm for market-based strategies.

 

Getting a market-friendly regulatory structure in place is an ongoing challenge. Agencies may not have the funding and staff to overhaul the rules on permitting and what constitutes compliance. But regulatory certainty is crucial to attracting demand in ecosystem service markets, a key finding from a demand assessment survey the Partnership carried out this summer. The project analyzed demand for different types of credits, how much regulated entities were willing to pay, and what factors might be limiting participation in the marketplace. The results showed strong support for a market model and confidence in the quality of restoration projects, but concerns about high transaction costs and especially regulatory issues. Surprisingly, buyer uncertainty about credits being compliance-ready didn’t seem to correlate to lower bid prices for credits. Instead, there was a strong negative correlation between regulatory uncertainty and the likelihood of purchase. In other words, any hint of regulatory risk means it will be difficult to get potential buyers to to the table. A regional ecosystem marketplace could help to change this. “People are really motivated at the local level,” Judge-Lord has found; coordinating all of this local momentum could be the key to getting unified and market-ready standards across the region.

 

GLOBAL MARKETS

Bringing Water to the Climate Change Agenda

 

 

In the leadup to the Copenhagen talks in 2009, water issues were removed completely from the negotiating text. Fast forward a year and support is surging for a renewed focus on the water-climate link, and particularly the importance of water in climate change adaptation planning. The ‘Green Group’ countries released a statement just before COP16 commenced in Mexico, arguing, “Water is the primary medium through which the impact of climate change will be felt by both people and the environment…It is our collective responsibility to make the water issue more visible.” A second group of six countries, spearheaded by Ecuador and Sudan, collaborated with the Water and Climate Coalition on a proposal, presented at a meeting of the UNFCCC’s scientific and technical advisory body, calling for a more prominent role for water issues on the agenda. However, as Circle of Blue notes, some advocates are concerned that water is still relegated to the side events at the COP talks, rather than the main negotiations.

Led by CONAGUA, Mexico’s National Water Commission, a series of dialogues on the water-climate link were front and center at COP 16. “This is the first time that water issues will be addressed in a climate change COP,” said José Luis Luege Tamargo, CONAGUA Director General. The dialogues culminated in a high-level meeting to identify key priorities for a comprehensive agenda on water and climate, and how water fits into the UNFCCC framework.

Hannah Kett covered COP 16 progress on water at Ecosystem Marketplace.

Read more about the water-climate link at Circle of Blue.

 

 

 

Financing Clean Water Aid Through the Carbon Markets

 

“The villages of Africa and South Asia are littered with the ghosts of water projects past,” writes the New York Times. A new business venture by a Swiss company, Vestergaard Frandsen, has an unusual solution: start a for-profit business that provides free clean water technology to people in developing countries, and finance it through the carbon mitigation markets. The company’s LifeStraw product is a tube containing several filtering membranes. A LifeStraw Family unit hangs on the wall; water is poured through and comes out the bottom end purified. It’s an innovative and inexpensive way to provide clean water. Equally innovative is Vestergaard Frandsen’s realization that the LifeStraw, widely used, reduces carbon emissions, because it eliminates the need to boil water by burning wood or coal.

 

Vestergaard Frandsen plans to distribute LifeStraw Family units to four million families in Kenya for free in the spring of 2011, and to replace the units – again, for free – in three years’ time. It would profit from this arrangement by selling GHG emissions reduction credits on the carbon markets. These markets, it’s expected, will not only cover Vestergaard Frandsen’s initial $24m investment, but drive performance improvements in the product. Since profits come from the amount of boiling avoided, Verstergaard Frandsen has an incentive to distribute as many LifeStraws as possible, and make sure they’re functioning. From an aid perspective, this is a crucial point, since all too often NGOs install water projects and move on, leaving the project to fall into disrepair for lack of parts, funding, or people trained to maintain them. Carbon markets also add accountability: “Normally, water projects get financing from donors up front,” explains Tina Rosenberg at the New York Times. “Whether they end up working or lasting is rarely even measured, because there is no cost for failure.”

 

Vestergaard Frandsen still needs to get approved to sell these credits, and it remains to be seen how well their plan will go once rolled out. But it’s certainly a venture worth tracking.

 

Learn more at the New York Times.

 

Double the Value of Mangroves Against Climate Change

 

Healthy mangroves offer double protection against climate change: they slow it by sucking massive amounts of carbon from the atmosphere, and they help us adapt to it by protecting coastal areas from storms – yet no formal mechanism exists for capturing the economic value of these treasures. A diverse network of conservationists, scientists, and policymakers aimed to change that in Cancun. “We have been extremely unsuccessful in reversing these trends,” says Eveline Trines, co-owner of forestry consultancy Silvestrum. “That is probably because so far there has been a serious lack of incentives.”

 

She is one of more than 40 wetland scientists, economists, policymakers, and businesspeople from all five continents who have endorsed the Call To Action Protecting Mangroves for Climate Change Mitigation and Adaption, which was formally announced on December 1st at the 16th Conference of the Parties (COP 16) to the United Nations Framework Convention on Climate Change (UNFCCC). The Call to Action urges negotiators to embed mangrove protection in the concluding text of COP 16, setting in motion the development of science-based methodologies for measuring, reporting, and verifying the amount of carbon captured in mangroves and the impact of human action on that carbon. That, in turn, will lay the groundwork for schemes that make it possible to offset industrial emissions by saving endangered mangroves or reviving degraded ones. Such schemes are also being considered under voluntary carbon schemes.

 

Get the full story at Ecosystem Marketplace.

 

Alberta Considers Expanding its Water Rights Transfer System

 

A review of the water allocation system by the Government of Alberta has brought up the possibility of extending the market-like approach to water rights used in the southern part of the province to all of Alberta. Water scarcity in recent years in southern Alberta has led to the elimination of new water licenses, meaning those seeking water rights must pay senior license holders for some portion of their allocation. “The transfer system in place in southern Alberta is a pretty good system,” says Cara Tobin, a spokesperson for Alberta Environment, and “something that could be expanded throughout the province if the public and government agreed to that.”

 

However, a number of Albertans have voiced concerns about market forces driving up the price of water beyond what farmers can afford, and allocations being determined by price rather than the public interest. A common theme is a lack of information or consultation about the water allocation review. Tobin notes that the review is still in the process of making recommendations. A series of public consultations is slated to start in early 2011.

 

Learn more at the Grande Prairie Daily Herald Tribune and Bonnyville Nouvelle.

 

Business Strategies for Water Risk Moving into the Mainstream

 

Businesses – especially those with very water-intensive operations or supply chains – are more aware than ever of how water risk can affect the bottom line. Exposure can stem from physical risks like scarcity or poor quality, to financial risks (for example, being slapped with a pollution fine), to reputational damage.

 

Now the Carbon Disclosure Project has released the results from its new Water Disclosure Project survey, compiling results from 150 of the world’s 500 largest companies reporting on their water use strategies and practices. Key findings include the high profile of water issues among surveyed companies: 89 per cent have already developed specific water policies, and 60 per cent have set performance targets. Also of note is the immediacy of water challenges facing companies: the majority said that timescales associated with water-related risks fall in the current or near term (one to five) years and 39 per cent reported already facing negative impacts related to water stress.

 

Read the Water Disclosure Project Report and more about how businesses are tuning in to water risk at the Guardian.

 

USAID Takes on Global Challenge of Growing More Food with Less Water

 

The newest issue of Global Waters, USAID’s newsletter on water resource management issues, takes a look at the link between water security and food security. Global demand for food is expected to double by 2050, and yet, the USAID Water Team notes, “Increased food production must often be achieved within food systems that are at, or have surpassed, their ecological limit.” The newsletter examines how five innovative programs – in Rwanda, Honduras, Morocco, the island nations of Southeast Asia, and in the Middle East – are taking a systems approach to food production that meets the needs of both human societies and ecosystems.

 

Read the latest issue of Global Waters here.

 

New Hydrological Services Publication for the Andean Region

 

Water as a bridge between nature and society is the theme of Hydrological Environmental Services in the Andean Region, a publication by the Consortium for the Sustainable Development of the Andean Ecoregion (CONDESAN) and the Institute of Peruvian Studies (IEP). The publication provides an overview of the current state of scientific understanding of the hydrological environmental services (HES) generated in the Andes, and of the actual state of financing mechanisms for the protection or recuperation of these HES and related policy.

 

Read the publication here.

 

CITATION CORNER – THE LATEST JOURNAL ARTICLES

An Eco-Compensation Policy Framework for the People’s Republic of China: Challenges and Opportunities

 

Authors: Qingfeng Zhang, Tun Lin, Michael T. Bennett and Leshan Ji

 

This paper by the Asian Development Bank synthesizes findings from the International Conference on Payments for Ecological Services, held in September 2009 in Ningxia Hui Autonomous Region, People’s Republic of China. It examines the PRC’s past and current approach to eco-compensation schemes – including payments for watershed services that total roughly $7.8 billion and covering about 290 million ha, and $2 billion for forest-related eco-compensation – and looks ahead, detailing emerging trends and policy recommendations.

 

Read the paper here.

 

Issues in Water Quality Trading: Perspectives on the Market-Based Approach

 

Author: M.T. Heberling.

Presented at 2010 Annual AWRA Conference, Philadelphia, PA, November 01 – 04, 2010.

 

Seven papers were submitted by authors ranging from researchers in Federal Agencies and Universities to practitioners overcoming challenges and facilitating successful water quality trading programs. All provide insight into the issues faced by water quality trading programs, but each has a different take on how to remedy some of these problems; the variety of perspectives enhances this Featured Collection. This presentation will provide an overview of water quality trading and the obstacles facing these types of programs; it will also describe the proposed Featured Collection, Issues in Water Quality Trading. The three presentations that follow are based on papers included in the Featured Collection.

 

An abstract and downloadable PDF can be accessed here.

 

SCIENCE AND TECHNOLOGY

Mapping Water Challenges in Africa and India

 

 

UNEP’s new Africa Water Atlas maps out successes and setbacks in the continent’s water quality and supply. It contains detailed imagery showing, for example, Lake Chad’s progressive drying and the erosion of the Nile Delta, and more optimistically, new irrigation and rainwater conservation projects.

 

Read an overview and access the atlas.

 

Meanwhile, In India, the Ministry of Rural Development (MoRD) and National Remote Sensing Centre (NRSC) have presented the latest Wastelands Atlas, put together as part of the National Wasteland Monitoring Project to map out unutilized/vacant lands and their use in watershed and wastelands management.

 

Learn more at http://www.indiawaterportal.org/node/12607

 

 

EVENTS

Events of Note

 

The Public Water Supply and Sanitation Company of Quito, Ecuador convened over 20 governmental and non-governmental organizations in the symposium “NATURAL ENVIRONMENT AND WATER MANAGEMENT IN LATIN AMERICAN CITIES”, which took place from 23 to 26 November 2010 in the Quito. This event brought together leading national and international experts addressing four areas: Institutional development of public water, sanitation and decontamination; Management Proposals for Water Resource Conservation: Approaches and Challenges; Climate Change and Water Availability; and Decontamination and Urban Wastewater: Proposals and Technical Trends in Latin America.

 

Upcoming events:

Additional resources

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