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This Week In Water: The Water Stewards At The Bottom Of The Pyramid

Jack Espuelas

The main objective of microfinance is to alleviate poverty which is why the socio-economic benefits of payments for ecosystem services projects imply the potential of collaboration between the two sectors. And speaking of poverty alleviation, Bolivia has developed a conservation mechanism it says helps the poor while hurting the deforester.

4 February 2015 | Okay, so 2015 may have started on a low note, as the global impacts of water crises hit number one on the World Economic Forum’s list of global risks in 2015.
But this year holds the promise of real progress as well. In New York this fall, world leaders will decide on post-2015 Sustainable Development Goals (SDGs) to replace the expiring Millennium Development Goals. The SDGs set out a roadmap for improving the lives of the poor without, as Circle of Blue puts it, “torching the environmental foundation” of this planet.

In this month’s Water Log, the link between environmental degradation and poverty looms large. We take a look at using microfinance – providing financial services, including loans, to the poor who have historically lacked access to banking or credit – to support payments for ecosystem services (PES). While microfinance models have been hugely successful on a global scale in providing the means for people to escape extreme poverty, they are still rarely used to finance PES. According to Ecosystem Marketplace’sState of Watershed Investment 2014 report, only three active watershed investment projects use some sort of credit mechanism: one in Brazil, one in Costa Rica and one in Nepal. The latter two each use revolving loan funds to finance restoration activities that repair damaged watersheds.

 

Yet micro-lending could in theory deliver additional finance for conservation as well socio-economic benefits for communities.Access to credit also has the potential to attract more investors. The steady cash flow required to attain credit would demonstrate to institutional investors that a watershed restoration project, for instance, is worth backing. So far, tapping microfinance is mostly still an idea. But potential for growth is there, microfinance groups and conservationists agree.

 

Thinking small is also paying off in Bolivia, where where more than 90 per cent of carbon credit revenues under a proposed REDD mechanism were forecast to have gone to just five per cent of the population. Instead, the country has pursued an alternative strategy that focuses on rewarding good behavior – protecting forests and engaging in forest-friendly enterprise – while punishing bad behavior through taxes and fines. This so-called “Bolivian mechanism,” explains Lykke Andersen of the Institute for Advanced Development Studies in Bolivia, results in a “much fairer distribution of the benefits, helping the poor while hurting the big deforesters.”

 

Keep reading to learn more about what’s happening in the watershed investment world in the early days of 2015 – and chins up!

— The Ecosystem Marketplace Team

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


EM Headlines

GENERAL

The Environmental Mortgage: Connecting The Dots Between Microfinance And Ecosystem Services

All around the world, we see that environmental degradation and poverty go hand in hand – as do sustainable land-use and wealth. This link builds a case for using microfinance – providing financial services, including loans, to the poor who have historically lacked access to banking or credit – to support payments for ecosystem services (PES).

 

Yet while microfinance models have been hugely successful on a global scale in providing the means for people to escape extreme poverty, they aren’t often used to finance PES projects that offer many poverty alleviating benefits. Despite it being risky and costly, both sectors see potential in working together on a larger scale.

– Keep reading here.

Putting A Price On Nature Can Benefit The Poor If Done Right

You don’t have to go far in Bolivia to find treasure. It’s everywhere: in the vast Amazonian forests; in Lake Titicaca, which lies nearly four kilometres above sea level in the Andes; in the peaks and rain-gathering waterways of the Andes mountains; or in Bolivia’s 2,000 animal species.

 

And to call all this treasure is hardly romantic — because, to some, Bolivia’s natural environment is worth a lot of money.

 

Bolivia is not alone on that front. Program that pay people to sustainably manage ‘environmental assets’ are increasingly popular, especially in the global South. But questions about the money’s impact on efforts to reduce poverty and inequality have persisted for decades. Does the cash help poor or indigenous people living in valuable ecosystems? Or is it more likely to benefit rich landowners? In Bolivia and elsewhere, research is beginning to show that these two goals — environmental protection and poverty reduction — need not be mutually exclusive.

– Keep reading.

Colorado Shrinks The Risk Of Wildfire With Investments In Watershed Services

The late 1990s and early 2000s saw two fires that together burned 150,000 acres of forestland and dumped 40 years’ worth of sediment into Colorado’s Strontia Springs Reservoir. Strontia Springs is a key source of water. It helps supply the 1.3 million customers of Denver Water, a water provider, with clean water. The cleanup effort from those fires cost Denver $26 million on water quality, restoration, reclamation and sediment drainage beginning in 1996 after the first fire-Buffalo Creek Fire.

 

Fire suppression has made wildfire intensity that much worse. But fire isn’t the only threat Colorado’s watersheds are facing. Bark beetle and flooding plus a changing climate all pose a risk to Colorado’s forests and the water that runs through them.

 

Because of these threats – among others – various Colorado water providers have paid over $13 million in watershed investments and forged partnerships to identify and address problems plaguing the state’s forest ecosystems. These activities were highlighted last month during a webinar that showcased findings from Ecosystem Marketplace’s latest State of Watershed Investmentsreport.

– Learn more.

Water, Energy, Food: Nexus Thinking Catches On, But Nexus Spending Lags

Brewing giant MillerCoors recently slashed the amount of water and energy it uses to produce barley for its beer, and it did so without losing yields. How? In part by planting vegetation alongside streams and restoring wetlands, which saved them the cost of filtering water before discharging it

 

They’re hardly alone. All around the world, companies and even cities are learning that the wetlands, dunes and sea grass they once took for granted act as natural buffers against hurricanes, enhance water quality, and save energy and resources that would otherwise be spent to construct and operate gray infrastructure. In the new lingo of resource management, they’re recognizing thewater-energy-food nexus and the important role nature – and, more specifically, natural infrastructure – plays in this nexus.

 

Unfortunately the success stories are the exception that proves the rule, as investment in green infrastructure to solve nexus challenges often falls short of its potential, according to Ecosystem Marketplace’s State of Watershed Investment 2014 report. The survey tracks global investment in watershed services (IWS), and it finds investment lagging potential except in those cases that address interrelated issues such as reducing water use and pollution in agriculture or in increasing resilience to flooding and wildfires.

– Keep reading at Ecosystem Marketplace.

In The News

POLICY UPDATES

Des Moines Sues Over Nitrates, Wants Drainage Districts Regulated as Point Sources

Des Moines Waters Works notified three neighboring upstream counties that it plans to sue over nitrate pollution from agriculture in the city’s drinking water supplies. If successful, the suit would have enormous consequences. Essentially, Des Moines is arguing that agricultural drainage districts – those pipes and tiles that drain water from fields across much of the Midwest – should be regulated as point sources, just like a sewage treatment plant or factory that discharges polluted water.

 

Some lawyers think that’s a stretch. The Environmental Defense Fund suggested that rather than picking a fight, the city should look to voluntary incentives to address pollution. Iowa Governor Terry Branstad said that Des Moines had “declared war on rural Iowa.” But Des Moines says it had no choice: voluntary methods aren’t working, and seasonal surges in nitrates concentrations in the city’s drinking water are requiring its utility to spend $4,000 a day on additional treatment.

– Get full coverage from Circle of Blue.

New Stormwater Suit Means NRDC, EDF and EPA Are At It Again

Eleven years after suing the Environmental Protection Agency (EPA) over their stormwater regulation, two environmental advocacy groups are heading back to court. In 2003, the lawsuit was over strengthening a finalized 1999 rule on regulating stormwater pollution. This time, the Environmental Defense Fund and the National Resources Defense Council are requesting compliance with the 2003 regulations. They’re arguing the EPA continues to fail to regulatestormwater runoff – one of the US’s biggest sources of water pollution – in cities with a population under 100,000. The lawsuit is also pushing for a decision on whether stormwater from forest roads should be regulated – a provision the two organizations claim was covered under the 2003 ruling.

– Bloomberg BNA has coverage.

Nearly $2B Is A Lot, But Is It Enough?

Passage of Proposition 1, California’s $7.5B water bond, gives the state the opportunity to rethink and transform its complicated water system, says the deputy director of California’s Water Foundation. Some of that transformation could come in the form of investments in ecosystems like wetlands that filter and store water, and the forests where the bulk of the state’s water originates. While the lion’s share of the funds will flow toward storage projects, $1.9B is allocated for watersheds and flood management – a sum with the potential to help supply long-term water security to an area that badly needs it.

– Read more from the Sacramento Bee.

Making the Water Quality Grade Proves Difficult in Chesapeake Bay

The Chesapeake Bay Foundation graded Chesapeake Bay health recently. And while it wasn’t failing, the grade wasn’t good either. The nonprofit gave the Bay a D+ saying bordering states had made progress in terms of water quality but much of the watershed remained heavily polluted. States surrounding the Chesapeake are under a federal mandate to clean up the waterway, and risk losing federal funding if majority of cleanup projects aren’t in place by 2017. Progress on this front is being made, however slow. Virginia’s nutrient trading system, for instance, has received high praise from the federal government and is viewed as a model for other states.

– Learn more about the report here.

GLOBAL MARKETS

WQT Finds Itself the Cool Kid in Class

Water quality trading is having a big month. The Electric Power Research Institute (EPRI) just won the US Water Prize for its Ohio River Basin Water Quality Trading Project. Meanwhile, trading is being touted in watersheds across the country as a potential solution to mounting water quality problems: we find reports of interest in a state-wide market in Florida (see next story) and proposed markets in Iowa’s Catfish Creek Watershed, Wisconsin’s Lower Fox River Watershed, and in the Mississippi Gulf region (backed by oil & gas industry concerned about their water risks!).

 

Scaled-Up Trading Proposed to Clean Waterways in the Sunshine State

Water quality trading continues to intrigue Florida as a potential cure to its water pollution problems. While the state has a regional pilot project, officials are contemplating going statewide. They say such a program is cost-effective and can be a shot in the arm for the normally slow and expensive cleanup process. Right now, a statewide program is just an idea: the state is holding workshops, though officials are unsure of how well it will be received. But supporters are finding encouragement in the programs’ success in other states and the fact that many states have ongoing pilot projects. As a lawyer involved in Virginia’s program puts it, “It can be a very elegant solution to a complex problem.”

– Read more at the Orlando Sentinel.

US Environmental Water Markets Estimated at $56M in 2013

A new brief on US environmental water markets from WestWater Research found the environmental sector accounting for 40% of volume and 7% of total value traded in all water markets from 2003-2012. That activity amounted to 6.2M acre-feet and $562M in trading values. Leases continue to make up most of the sector’s volume. As for pricing, the purchase cost has increased consistently with the greater market, although prices dipped during the economic downturn from 2008-2009. And these prices have been declining steadily-by nearly 70% as of 2012. But overall, the market has continued to grow with activity varying with region: the Northwest leads while the Rocky Mountain region lags.

– Read the report here.

For Want of $1.8 Billion, The Reef Was Lost

To save Australia’s Great Barrier Reef, someone needs to pony up more than $1.3B (AUD$1.8B) according to recent analysis by the resource groups managing the reef catchment. The reef, battered by agricultural pollutants and coral-eating starfish, has lost half its coral cover in recent decades. The funding gap for funding agricultural best management practices, stormwater control, and infrastructure upgrades will exceed $300 million just for the next five years.

 

The report’s authors suggest that current government initiatives are inadequate; although government-funded programs have cut nitrogen loads by 10% and pesticides by 28% since 2008, that may not be enough to meet long-term goals of a 60% reduction in pesticides and 90% compliance with best practice by farmers in the region.

– The Guardian has coverage.

The Private Sector Dives Into Colorado Watershed Protection

Communities living along Colorado’s Front Range are receiving help from some major corporations in securing a clean source of water. MillerCoors, Pepsi and the Wells Fargo Foundation are collectively donating $1 million to The Nature Conservancy’s (TNC) restoration work in Colorado’s forests. The funds will help TNC build and implement projects designed to reduce the risk of catastrophic wildfire – caused primarily by drought and fire suppression – with prescribed burning and fuel treatments among other activities. Restoring the forests that catch snowpack and replenish rivers will increase water security for Colorado folks.

– Get coverage here.

Heineken’s Track Record in Sustainability Leaves More Than Beer Drinkers Impressed

Brewery giant Heineken is raising the sustainability bar for big corporations with its water-saving initiatives and commitments to slash carbon emissions. And much of Heineken’s work is happening at a community level. After beer-producing operations left regions water-stressed, the company is implementing water stewardship projects in places like Indonesia, giving back on a local level while also ensuring its own sustainability. Activities include planting bamboo trees in Indonesia to halt erosion and digging narrow troughs full of compost material to slow snowmelt and reduce flooding. The brewery was recently rewarded for its efforts with the Water Management award at the Sustainable Business Awards Singapore 2014.

– Eco-Business has the story.

EVENTS

GreenBiz Forum – 10% discount through Ecosystem Marketplace

GreenBiz Forum from February 17th to 19th in Phoenix, Arizona brings together an unprecedented partnership between GreenBiz Group, The Sustainability Consortium and Arizona State University to give attendees an unparalleled in-depth look at the key challenges and opportunities facing sustainable business today. Framed by GreenBiz’s State of Green Business report, the high-wattage stage presentations, workshops and networking opportunities make GreenBiz Forum an unforgettable event. Save 10% with Ecosystem Marketplace’s discount code GBF15EM. 17-19 February 2015. Phoenix AZ, USA.

– Learn more here.

Nexus 2015: Water, Food, Climate and Energy Conference

The Water Institute at the University of North Carolina at Chapel Hill and collaborators are hosting the Nexus 2015: Water, Food, Climate and Energy Conference on March 15-17 in Chapel Hill, NC, USA. The Conference brings together scientists and practitioners working in government, civil society and business, and other stakeholders to focus on how and why the nexus approach can be used on local and international levels. 15-17 March, 2015. Chapel Hill NC, USA.

– Learn more here.

2015 National Mitigation & Ecosystem Banking Conference

The 2015 National Mitigation & Ecosystem Banking Conference, scheduled for May 5-8, 2015, in Orlando, Florida is the only national conference that brings together key players in this industry, and offers quality hands-on sessions and training as well as important regulatory updates. Proven to be “the” place to gain insights, explore new markets and learn from sessions, the 2015 Conference will continue its focus on educational content – both advanced and basic sessions as well as moderated exchanges and a variety of mini workshops that help to connect bankers, regulators, users and others involved in this industry. Pre and post- event workshops include Primer 101, Stream Banking, Long-Term Stewardship, Financing & Valuation and more. Hear perspectives from bankers, regulators and users, get updated on regulations, legislation and legal challenges, participate in field trips and benefit from the many opportunities to network! With a high attendance this past year, we anticipate a record attendance in Orlando and encourage you to make plans to submit to present, attend, even sponsor or exhibit! Orlando FL, USA. 5-8 May 2015.

– Learn more here.

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