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Forest Carbon Portal
Ecosystem Services in the New York City Watershed
Country Name: United States of America
Author: Alice Kenny

Nine years ago, New York City launched a revolutionary project to protect its drinking water by protecting the ecosystem services of its watershed. The Ecosystem Marketplace checks up on the most famous ecosystem services project in the world.

A black Labrador puppy romps through a woodland clearing near the Croton Reservoir, her yelps masked by the roaring overflow of thousands of gallons of freshly melted snow pounding down the dam's 18-story hand-hewn stone wall. The reservoir's underground pipes, meanwhile, pull water along the first lap of its gravity-powered exodus from this postcard-pretty upstate town to distant spigots in New York City.

For nearly two hundred years, City residents depended on upstate communities to contribute to the largest unfiltered water system in the world. The City's watershed spans nearly 2000-square-miles, an area roughly the size of the state of Delaware, with a labyrinth of 19 reservoirs and aqueducts cutting across nine counties to provide 1.2 billion gallons of drinking water daily to 9 million New Yorkers.

Having invested heavily in this delivery system, New Yorkers appreciated their water, once considered the purest in the nation. But when the federal government adopted the Safe Drinking Water Act mandating that all major surface-water systems filter their water or prove they could protect the watershed producing it, New Yorkers also began valuing the upstate watershed from where it came.

A filtration plant large enough to clean the City's water supply would cost between $8-$10 billion in today's dollars, approximately $6 billion to build and another $250 million annually to maintain. Preserving the watershed, conversely, was estimated at $1.5 billion, just over a dime invested on ecological preservation for every dollar that would have been spent on a filtration plant.

So in 1997, New York City embarked on a monumental plan to buy thousands of upstate acres, shield its reservoirs from pollution, improve treatment plants and septic systems and subsidize environmentally sound economic development. Its success depended on convincing historically disparate parties –beleaguered farmers and inner City taxpayers, federal regulators and City administrators, environmentalists and economists -- that the plan would benefit them all.

Offering something for nearly everyone, the City's watershed plan soon became the darling of environmentalists and economists alike. Now, with this novel scheme reaching its maturity, experts are examining whether the City's ecosystem approach actually proved to be the more economic choice. And, with so many competing priorities, many wonder also whether the watershed program has a future others can emulate.

From the perspective of William Harding, a biologist and executive director of the Watershed Protection and Partnership Council, a state agency offering a forum for the varied partners, the ecosystem solution could last indefinitely, "as long as the watershed doesn't make the same mistakes as others have, believing they could adequately attenuate the affects of overdevelopment."

An Unhappy History


Already the City was too late to avoid having to build a half-billion dollar filtration plant to clean water from reservoirs east of the Hudson River where the puppy romped. Although the puppy's playground appeared bucolic, the water nearby was tainted from the byproducts of suburban growth—failing septic systems, overwhelmed wastewater treatment plants and polluted runoff that slipped from streets to reservoirs. In this commuter's haven, explains David Warne of New York City Department of Environmental Protection, the City could not plausibly argue that it could control water quality.

But if it worked quickly, the City could preserve the newer portion of their watershed located west of the Hudson River in mostly farm land. Since this supplied 90-percent of City water, it could avoid building the larger budget-busting filtration plant.

Striking a deal to protect this land mass, however, would not be easy. Some would say that the City had already overplayed its hand.

During its century-long, reservoir-building spree, the City generated enormous antipathy using the bully power of eminent domain to evict entire villages. Laying claim to their water sources, the City took prime land from farmers, closed mills and moved schools and churches. From a distance, this could be viewed as an historical curiosity, a price to pay, perhaps, for a higher goal. But in upstate communities where New York City's newer reservoirs displaced current residents' parents, grandparents, uncles and aunts, the anger remains raw.

"Our shared history is not a happy one," says Alan Rosa, who represented upstate watershed residents during negotiations leading to the 1997 watershed agreement. He now directs the Catskill Watershed Corporation, the agency that implements the agreement's regional environmental protection and economic development programs. With eminent domain a continuing threat and industry sparse, Rosa grew up in a region whose main streets were dominated by boarded up buildings and aging for-sale signs.

To keep the region from following the path of its neighbors across the river, the City would have to win over wary upstate residents, using diplomacy and cash instead of the single hammer of eminent domain. While clearly more land adjoining reservoirs had to be purchased, communities also had to be convinced to change their zoning to minimize population-growth and provide run-off protection measures. Farmers had to be cajoled into altering pastures so that animal dung did not flow straight into reservoirs. Waste water treatment plants had to be upgraded. And septic systems needed fixing.

Finally, after seven years of tense negotiations documented in a file stretching a foot-wide, the City brokered a deal with the disparate stakeholders to preserve and enhance the upstate watershed.

Ecosystem Services: Parable or Reality?


Overcoming upstate objections was the City's first hurdle. Next they had to convince naysayers that the City's watershed plan, a groundbreaking effort in the new concept of ecosystem services, or letting the environment do the work, was based on concrete accounting. Some still argue that these services, particularly as they relate to the City watershed, have limited value.

Mark Sagoff, acting director of the Institute for Philosophy and Public Policy at the University of Maryland, disparagingly labeled the idea of a market for ecosystems services the "Catskills parable," after the region housing the watershed.

Reached by phone at his Maryland office, Sagoff expounded on his perspective, discussed in an article he wrote for Politics and Life Sciences Magazine and excerpted last June in PERC magazine.

Sagoff argues, in essence, that the City's watershed did not need protection because it was never actually threatened. The City preserved the ecosystem to obtain EPA approval to forego building a filtration plant, he says, not to obtain ecosystem services disinfecting water. "It is not clear that rainwater needs to be purified or filtered by the Catskills ecosystem," he says. The City's upstate reservoirs met Clean-Water standards before the watershed agreement was signed and may be compromised, he said, by the City's push to preserve open-space.

Rainwater, he says, "approximates distilled water...so impurities...are more likely to come from, rather than be removed by, the landscape onto which rain water falls." Wildlife, specifically deer and beaver running rampant in undeveloped forests, drop fecal matter into soil that leaches into upstate reservoirs. None-the-less, he added, the City's long-standing chlorination system destroys these and other impurities.

Harding, the biologist directing the Watershed Partnership Council, strongly disagrees. "There are reams of good science showing the demonstrable effect of watersheds on good water quality."

First, rainwater is not distilled water. "It carries a lot of unpleasant things such as acid rain, mercury and pollution," he says. Land, he added, as opposed to paved roads or concrete spillways "is the only stop gap between dirty water getting into receiving bodies." City-funded pathogen-transport studies demonstrate that germs can travel no further than 150 feet through soil. "If dirt didn't purify," he adds, "then septic systems wouldn't work."

Sagoff overlooks the preventative aspect of clean water legislation, Harding argues. Although chlorine destroys most impurities, studies show that water quality is heightened by keeping impurities out of the water in the first place.

"Just because water is safe to drink today," Harding adds, "doesn't mean it will be safe five-to-ten years from now."

None-the-less, water flowing from reservoirs west of the Hudson River is safer today than when the watershed agreement was signed nine years ago. And nearly every stakeholder involved deems the agreement a success, although most stress that ongoing efforts are needed. Water is cleaner, with one fewer reservoir labeled as having excess amounts of nutrients. Farmers are pocketing profits. And environmentalists are pointing to the City's watershed agreement as the prime example of how ecological solutions reap financial benefits.

Financial Report Card


The City's daring promise to save taxpayer dollars by underwriting the environment proved accurate, according to a recent audit. The City spent or committed between $1.4 - $1.5 billion in watershed protection projects so far, says City EPA spokesperson Warne, averaging $167 million in expenditures per year.

Had the City opted instead to build the filtration plant, taxpayers would have already dished out approximately $6 billion to build the plant plus another $250 million per year for maintenance.

Since the City completed the bulk of its capital-intensive programs, Warne adds, savings on future watershed protection costs will be even greater. Specific future financial expenditures will be determined after the federal Environmental Protection Agency's upcoming ten-year review.

Meanwhile, the federal EPA gave the project high marks on interim report cards, noting that five new sewage treatment plants have been built and hundreds have been rebuilt. More than 2000 septic tanks have been replaced or repaired. Three million dollars have been spent and seven times that amount has been committed to stream water management to lessen the threat of flood damage, reduce erosion and improve stream ecology.

The City purchased 70,000 acres of land, "one of most effective and crucial tools for permanently protecting water," according to the Watershed Protection and Partnership Council. Money needs to be set aside for further purchases, Warne says, although specific acreage requirements have not been set.

The effort to purchase land is chugging along, says Eric A. Goldstein, a lawyer for the Natural Resources Defense Council. "But developers and bulldozers are also moving along. I view the next ten years as the last opportunity to acquire priority lands."

Meanwhile, rural New Yorkers found a market for the ecosystem service they house. "We've become a water-exporting region," says Catskill Watershed Corporation director Rosa.

The watershed agreement boosted the upstate economy, with money pouring in at a rate of $100 million a year. It provided employment, invested in local businesses and promoted ecotourism. The City pays local contractors to install septic systems, upgrade wastewater treatment plants and set up storm-water-protection measures. Locals land jobs with the City and state Department of Environmental Conservation. Farmers receive reimbursements for building fences and bridges that herd their livestock away from waterways. Landowners are paid to keep forests undeveloped.

Work in Progress


Although the benefits are clear, says Al Appleton, the former Director New York City's Water and Sewer System who helped initiate parts of the watershed agreement, the cost/appreciation equation of this ecosystem investment is not as simple as it looks. "You can't make a single investment and expect to be done. It remains a work in progress requiring nurturing, monitoring and money."

None-the-less, he continues, the program already established that "ecosystem services not only produce superior environmental and social results, it produces them far more cheaply that traditional environmental strategies."

The watershed agreement's documented environmental and economic achievements sent ripples throughout the United States. More than 140 cities are now considering watershed conservation instead of building filtration plants.

As for the program's future, it could go on indefinitely, Harding says. More land is being acquired, better scientific advances have been made and increased funding is coming from the federal, state and local government.

"We're not running out of time, steam or money."

Alice Kenny is a prize-winning science writer and a regular contributor to The Ecosystem Marketplace. She may be reached at alkenny@aol.com.

First published: February 10, 2006