WQ Market Monthly

January 3, 2012

Water Photo

From the Editors

After a brief hiatus, W.E.T. is back - and not a moment too soon! This month's newsletter brings you the latest on market-based mechanisms for protecting water supply and flows from around the world.

 

As we head into 2012, on our radar is the water-food security nexus; it'll be the theme of World Water Week this year. A trio of stories from Africa illustrate how watershed payments and economic valuation are gaining traction as a tool to address water security issues where livelihoods and agricultural production are at risk, a departure from the old environment-versus-development storyline. We also take a look at China's experiments with "eco-compensation" to safeguard water supplies.

 

We're enjoying watching the US water quality markets mature; read on for coverage of a new thermal trading program, nutrient credit auctions kicking off in Pennsylvania, and some suggestions for improving them.

 

Here at Ecosystem Marketplace, we've got lots of exciting things coming down the stream this year. Stay tuned for the launch of our new water portal this spring - your future one-stop shop for information on financial mechanisms for watershed conservation, from a global inventory of projects to the latest in analytical tools and best practices for program design.

 

Finally, 2011 was a big year for water markets, in both policy and practice. We'd like to ask our readers what they think were the biggest success stories of the year. Please take a minute to cast your vote in the poll below. We'll publish the top stories in a special year-end edition of W.E.T.

 

Happy New Year - and happy reading!

 

— The Ecosystem Marketplace Team

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

Poll: 2011 Success Stories

We'd like to ask our readers what they think were the biggest success stories in watershed payments and environmental water markets of the last year. Pick your favorite by clicking the little 'Thumbs Up' icon next to each entry (or write-in your own nomination), and a confirmation page will give you the opportunity to vote for more articles if you like (although only once for each article). We'll publish the top ten in a special year-end edition of W.E.T.

  1. VOTE US EPA issues final Chesapeake Bay TMDL
    (January 2011) Read Article
  2. VOTE International World Water Day takes on the urban water infrastructure challenge
    (March 2011) Read Article
  3. VOTE Water Footprint Assessment Manual launched
    (April 2011) Read Article
  4. VOTE US EPA launches new green infrastructure strategy
    (April 2011) Read Article
  5. VOTE Chinese 'eco-compensation' program found to reduce erosion on sloping lands by 68%
    (May 2011) Read Article
  6. VOTE The business community gets serious about water risk
    (May 2011) Read Article
  7. VOTE The Stanley Cup offsets its water footprint
    (June 2011) Read Article
  8. VOTE $27 million for Water Funds in Latin America
    (June 2011) Read Article
  9. VOTE US Ohio River Basin pilots multi-state nutrient trading
    (August 2011) Read Article
  10. VOTE UNEP-IMWI report recommends investing in ecosystem services for water and food security
    (August 2011) Read Article
  11. VOTE New York City Harbor restoration plan includes $2.4billion in green infrastructure
    (October 2011) Read Article
  12. VOTE Write-in option (you'll be taken to a different page to add your response)

News

 

GENERAL

Kenyan Cattlemen Map Watershed Services

Ranchers understand the importance of watershed services as well as anyone and better than most, which is why the Nairobi-based International Livestock Research Institute decided to map and value watershed services in the arid and semi-arid lands that cover approximately 80% of Kenya. Mapping and Valuing Ecosystem Services in the Ewaso Ng’iro Watershedis expected to inform the Government of Kenya on how to improve the standard of living in the region. Water valuations were calculated based on its contribution to various production systems - crops, livestock, tourism, and so on.

- Read more at Ecosystem Marketplace.


US Feds Change Course: Will Let Florida Set Own Water Standards

In a dramatic reversal of stated policy, the US Environmental Protection Agency (EPA) has called off its push for federally-imposed numeric water quality standards for Florida waterbodies, and instead given a preliminary blessing to standards developed by state officials. In a November 2nd letter, EPA Acting Assistant Administrator Nancy Stoner indicated that the agency would withdraw its own controversial guidelines pending the approval of new state rules developed by Florida's Department of Environmental Protection. State standards were approved last month by the Florida Environmental Regulation Commission and now go to the legislature. In other words, state control over water quality criteria is looking like a done deal.

- Read more here.


China Uses Eco-Compensation to Combat Water Shortages

As the People's Republic of China (PRC) continues to expand economically, access to clean drinking water is an increasing problem. The central and provincial governments are currently experimenting with "eco-compensation" methods, prompting the central government's National Development and Reform Commission (NDRC) to develop a national Eco-Compensation ordinance.

 

According to the authors of a new paper published by the Asian Development Bank, "Eco-Compensation for Watershed Services in the People's Republic of China," the success of this ordinance and other innovations will have ramifications for global resources as well as PRC's domestic water crisis. Authors Michael T. Bennett and Qingfeng Zhang provide detailed recommendations for developing an effective national ordinance along with background on the use of eco-compensation within PRC and the recent innovations around water resource management.

- Learn more at Ecosystem Marketplace.
- Download the paper here.


Can This Water Bank Help Montana Solve its Water Troubles?

The state of Montana has more outstanding water rights than it has water, and it's taking a toll on the state's streams and aquifers. Chris Corbin, founder of Lotic Water Marketing, and the Grass Valley French Ditch Company think a water bank specifically for mitigation - the first of its kind in Montana - can solve the problem. If their idea works, it will provide an alternative revenue stream for agricultural operations feeling pressure from urban growth, incentivize greater efficiency of use within the ditch company, and help make sure that the upper Clark Fork River and the local aquifer aren't depleted further. It'll also be the latest in a series of innovative projects in the West that use water rights markets to remedy environmental problems.

- Get the full story at Ecosystem Marketplace.


Tracking Water into the Forest

It may seem like magic sometimes, but we all know that the water gushing out of your faucet is the product of a water treatment facility - and, in the best cases, that treatment is minimal because the watershed that delivered the water is healthy and clean. The US Forest Service recently released a series of maps highlighting the integral role forests play in providing clean drinking water. The project, Forests to Faucets, features interactive maps that describe threats to watershed's forests, like development, fire, insects and disease. According to USFS, the cost of treating drinking water increases 20 percent for every 10 percent loss of watershed forest land. No wonder many communities in the US are already engaging in this type of program.

- Get the story here.


DOMESTIC MARKETS

Deal to Clean Up Chicago Waterways Requires Green Infrastructure Investments

The Metropolitan Water Reclamation District of Greater Chicago (MWRD) reached agreement on a settlement on December 14th with the Environmental Protection Agency (EPA), Department of Justice (DOJ), and the State of Illinois on the District's failure to keep untreated sewage out of waterways.

 

Under the terms of the new deal, the MWRD agreed to a series of deadlines to complete the Deep Tunnel project, a series of tunnels and reservoirs for flood-control. The MWRD is also required to invest in green infrastructure - between $25 and $50 million dollar's worth - a big jump from an earlier draft of the consent decree that had required that only $325,000 be spent on green infrastructure. Failure to meet deadlines will mean that the district has to compensate with even more green infrastructure such as pervious pavement, rain gardens, and green roofs.

- Read more at the Chicago Tribune.
- Get details on the settlement here.


Medford OR Gets the Go-Ahead for a Thermal Trading Program

Oregon's Department of Environmental Quality (DEQ) recently approved a thermal credit trading program in Medford, OR. Under the program, Medford's water reclamation facility will fund riparian restoration, including vegetation and tree plantings, to cool waters in the Rogue River and its tributaries. Those actions generate water temperature credits to meet the City of Medford's Total Maximum Daily Load caps for temperature. It's estimated that thermal trading, expected to cost about $8.3 million, will deliver $10 million in reduced compliance costs over twenty years compared to other water cooling options like chillers or holding ponds.

- Read a press release here.
- Get background at the MailTribune.


Markit Completes First-Ever Auction of Nutrient Credits for Pennsylvania Watersheds

Markit recently posted its first-ever auction of nutrient credits. Markit's exchange platform was chosen by the Pennsylvania Infrastructure Investment Authority (PENNVEST) to administer spot and forward auctions for nitrogen and phosphorus credits representing pollution reductions in the Potomac and Susquehanna River watersheds - part of the greater Chesapeake Bay watershed. 20,859 nitrogen (at $3.10/lb) and 700 phosphorus (at $4.73/lb) credits were transacted. In addition to its new role administering environmental credit auctions, Markit currently operates a multi-credit environmental registry.

- Read a press release here.
- View public auction results here.


The Trouble with TMDLs

A recent High Country News article captures all too well the limitations of the Total Maximum Daily Load (TMDL) tool for policing water quality. The Mora Mutual Water and Sewer Association, which serves a small town in New Mexico, can't afford to upgrade its treatment facilities, and thus is about to get its discharge permit revoked by the Environmental Protection Agency (EPA). Mora Mutual has two choices: "Build a [groundwater discharge system] that would treat wastewater less stringently than the EPA requires and let it percolate into Mora's groundwater -- the community's only source of drinking water -- or abandon subscribers to septic tanks." Either solution puts sewage treatment in the area beyond EPA's regulatory reach.

 

Mora Mutual's story demonstrates a recurring regulatory problem; since under the Clean Water Act the EPA can't regulate non-point sources like septic tanks or agricultural runoff, the agency is forced to be that much stricter with a relatively small number of point sources like treatment plants. In this case, it sounds like the EPA may have one less point source and one more pollution problem to worry about.

- Read the article at High Country News.


POLICY UPDATES

Boosting Participation in PENNVEST's Nutrient Credit Auctions

A recent paper on the Pennsylvania Infrastructure Investment Authority (PENNVEST)'s nutrient credit auctions argues that the auction mechanism's design has had the effect of limiting participation. Author Alexandra Chiaruttini, head of the environmental practice at Pennsylvania firm Stock & Leader points out several major issues. Firstly, the 'blind bid' process coupled with a November auction date mean that prospective credit buyers "take an unnecessary risk waiting until a November auction and not knowing: (1) how many credits are available to buy at auction; or (2) how many credits are needed by others participating in the auction." The lack of transparency is also problematic on the supply side, since credit generators aren't inclined to create credits speculatively, instead only doing so where they have contracts in place. Consequently, buyers and sellers seem to prefer private contracts earlier in the calendar year, avoiding the auction process altogether.

- Download the paper here.


Whither a Post-Construction Stormwater Rule?

December 2nd, the Environmental Protection Agency's self-imposed deadline for a final rule on stormwater controls at post-construction sites has come and gone, with EPA Acting Assistant Administrator for Water Nancy Stoner conceding in recent Congressional testimony that the agency is "behind schedule." No new deadline has been announced; a November 19, 2012 target for promulgating a final rule looks increasingly unlikely. Stricter post-construction stormwater controls are expected to include specific requirements for the Chesapeake Bay.

- Read an update here.


GLOBAL MARKETS

UK Defra-nitely Ramping Up Watershed Payments

A new white paper from the U.K. Department of the Environment, Food, and Rural Affairs (Defra), Water for Life, sets out a national water strategy that puts market mechanisms front and center in addressing future water security. The white paper offers details of ten pilot projects using payments for watershed services (PWS) and a 'catchment approach' to manage water quality. Defra aims to make these project permanent and support 25 pilots in total. Water for Life also promotes water trading and water market deregulation as the solution to supply issues. Defra plans to release an action plan for using PWS mechanisms to deliver clean water in 2012. 

- Read a press release here.
- Download the white paper here.


In Chile: Free the Market, Free the River?

A post at Sense and Sensibility discusses how Chile's "free market" approach to water resource management actually looks a lot like a market failure right now. The Chilean government has indicated that it supports more hydropower development, including several planned dam projects in Patagonia region including the massive HydroAysén project. But, as the piece points out, Chilean water law doesn't recognize in situ rights to water. Water can be used consumptively (for example, for agriculture) or non-consumptively (for example, to power a dam's turbines before continuing downstream). If instream use was recognized as a legitimate use, meaning that the value of river flows for rafting tour companies or ecological health were recognized, unpopular dam projects might be a lot less likely to happen.

- Read more here.


€2.3 million for Watershed Protection in Kenya's Mau Forest

A project to protect watersheds in the Northern Mau Forest of Kenya employing payments for environmental services and watershed restoration work recently received €2.3 million from the European Union. The project will focus on improving and diversifying livelihoods of communities in the Mau forest via forest management plans, with an eye towards piloting a REDD mechanism. The work will be carried out by the Kenyan Government and the United Nations Environment Programme (UNEP). The Mau, a critical water source for western Kenya and the Rift Valley, has lost a quarter of its forest cover in the last twenty years, including in critical catchment areas

- Read a press release here.


Integrated Watershed Management in Ethiopia a Collective Success

A project linking collective resource management, microfinance, in-kind payments for watershed restoration, and sustainable agricultural practices has seen great success in the Lenche Dima watershed in the Ethiopian highlands. Under the auspices of the Amhara Micro-enterprise Development, Agricultural Research, Extension and Watershed Management (AMAREW) project, food aid in the area was tied to restoration activities like tree planting, erosion control structures, and creating watering points for livestock to limit their movement. Microloans were also granted for water harvesting structures. "The watershed development project demonstrates the benefits of managing hills collectively to increase grass and forage to improve livelihoods," said Tilahun Amede, CGIAR Challenge Program on Water and Food Nile Basin leader.

- Read more at the New Agriculturalist.


CITATION CORNER - THE LATEST JOURNAL ARTICLES

Appraising Costs and Benefits of Green Infrastructure in Land-Use Planning

 

Climate model predictions make a compelling case for investing in 'green infrastructure' as an adaptation strategy - for example, preserving wetlands for improved flood control. A new report from Resources for the Future (RFF) offers a framework for evaluating costs and benefits of green infrastructure investments in land use planning. It takes as a case study the Lower Fox River Basin in Wisconsin. Economic evaluations are based on land use, property values, and flood risk; RFF finds that the costs of conservation of green infrastructure can drop sharply if interventions are carefully targeted.

- Learn more and download an executive summary here.


In-Stream Flow Transactions are Big Deals in the US West

Environmental interests are emerging as a major player in water rights transactions, according to a recent Environmental Business Journal article. The article recounts $600 million in transactions to date, wherein buyers have bought rights to water that they leave in-stream to restore flows. A full third of the California water rights market over the last ten years has been for environmental purposes. Success is uneven across the west - in some places like Colorado, urban demand for water has largely priced ecological interests out of the market; moreover, regulations governing environmental water transactions vary from basin to basin. Still, says Stephen Maxwell of TechKNOWL-EDGEy Strategic Group, the use of rights to protect in-stream flows is "increasingly being recognized as a legitimate use and a true value."

- Read the article here.

SCIENCE AND TECHNOLOGY

Mapping Marine Ecosystem Values Around the World

The Marine Ecosystem Services Partnership just updated their database of marine ecosystem service values, beefing up their interactive tool mapping valuation studies around the world. The tool is searchable by Exclusive Economic Zone (read: country), ecosystem service, and ecosystem type, and includes data on economic valuation, ecological data, and references for the original study.

- Visit the MESP interactive map here.


The Tech is High, But the Groundwater is Low

A new NASA map of groundwater storage in the United States shows critically low levels across much of the US west, compared with long-term averages. The news is worst in Texas: in more than half of the state, the current groundwater levels have been seen less than two percent of the time since groundwater and soil moisture data first began being recorded in 1948. These areas are in the midst of a drought, but more rainfall won't necessarily help, says NASA hydrologist Matt Rodell. "Even if we have a major rainfall event, most of the water runs off....Texas groundwater will take months or longer to recharge." The maps are based on satellite observations and long-term meteorological data.

- Get the story at Circle of Blue.


JOBS

Request for Proposals: Ecosystem Services Tool Developer

The purpose of this Request for Proposals (RFP) is to adapt and develop the tools needed for the Mokelumne Watershed Environmental Benefits Program (Program) to measure, track and report ecosystem services gained through restoration that includes a method for connecting the site scale improvements to the watershed scale. The work includes developing a tool to measure improved timing and duration of in-stream flows in the Mokelumne watershed, California and adapting existing tools where possible, such as the water quality tool created by Sustainable Conservation's work in neighboring Stanislaus County.

- Learn more here.


Postdoctoral Researcher: Hydrology

The Natural Capital Project - Stanford, CA.

The Natural Capital Project (NatCap) is a partnership among Stanford University's Woods Institute for the Environment, University of Minnesota's Institute on the Environment, The Nature Conservancy, and World Wildlife Fund developing tools to model and map the distribution of biodiversity and the flow of multiple ecosystem services across land- and seascapes. Our freshwater team is based in Stanford, CA and we have active partners around the globe. We now have an open position for a postdoctoral researcher starting Jan 1st 2012. Duties will include developing, implementing, testing and reporting in peer-reviewed journals our water-related ecosystem services models.

- Learn more here.


Postdoctoral Fellow: Ecosystem Services Analyst

The Natural Capital Project - Stanford, CA.

The Natural Capital Project is a partnership among Stanford University's Woods Institute for the Environment, University of Minnesota's Institute on the Environment, The Nature Conservancy, and World Wildlife Fund developing tools to model and map the distribution of biodiversity and the flow of multiple ecosystem services across land- and seascapes. We seek a creative and talented ecologist or economist with strong analytical and modeling skills to advance the development, testing and application of terrestrial and freshwater ecosystem service models. This position is housed at Stanford University and will be advised by Gretchen Daily and Heather Tallis.

- Learn more here.


Intern: Water Quality

World Resources Institute - Washington, DC.

The World Resources Institute (WRI) seeks an intern to support its water quality projects. WRI aspires to reduce the cost of improving surface water through market- and performance-based mechanisms in the United States and abroad. The intern will support this effort through research, analysis, and general administrative support. Potential work areas include stormwater management, wastewater treatment, agricultural nutrient management, the U.S. Clean Water Act, Chesapeake Bay, and Chinese surface water policy. Individuals should be able to start immediately and work part- or full-time for six months to one year.

- Learn more here.


Watershed Management Project Manager

Mercy Corps Vie, Te & Eneji Project - Haiti

The Vie, Te & Eneji project seeks to address the root causes of extreme poverty and environmental degradation in the mountains of Arcahaie by making environmental protection profitable and promoting environmentally sustainable sources of income. The Project Manager will work with the Mercy Corps team as well as our local partner organizations on landscape level natural resource management and economic development activities and will work to create cohesion between all partners and beneficiaries, while working on the full range of environmental, agricultural and economic project activities.

- Learn more here.


EVENTS

Water Rights and Trading Summit: Southwest

Water rights trading and water resource development are emerging markets that are creating abundant business opportunities. However, these new markets are not always easily understood. WestWater Research and American Water Intelligence are coming together to provide information and direction to water trading and development opportunities through a series of thought-provoking, regional conferences. 2-3 February 2012. Scottsdale AZ.

- Learn more here.


2012 Sustainable Water Management Conference

The 2012 Sustainable Water Management Conference will be a true sustainability conference focused on water resources integration. This conference seeks to combine technical presentations with in-depth discussions on legal, regulatory, and legislative matters facing water utilities today. The conference will address a wide range of topics concerning sustainable water management, including managing water resources and the environment, water conservation, sustainable utilities and infrastructure, urban planning and design, and community sustainability. 18-21 March 2012. Portland, OR.

- Learn more here.


AWRA Spring Specialty Conference on GIS and Water Resources

We are living through a remarkable period of advancement in information technology -- in just a few years we have learned to take for granted the massive computing resources for geospatial searches provided by the major internet search engines. Every type of work in Water Resources is impacted by these new developments as new sources of data and new tools come online; but, standards for data quality, statistical reliability (uncertainty), and metadata standards are still trying to catch up. We look forward to sharing experiences in New Orleans; meeting others who deal with the same challenges at every level of detail on the wide array of information and technologies that will help us meet the water resources challenges of the new century. 26-28 March 2012. New Orleans, LA.

- Learn more here.


Planet Under Pressure Conference

Building on a comprehensive update of knowledge of the Earth system and the pressure it is under, the Planet Under Pressure conference will present and debate new insights into potential opportunities and constraints for innovative development pathways based on novel partnerships. 26-29 March 2012. London, UK.

- Learn more here.


Water Rights and Trading Summit: California

Water rights trading and water resource development are emerging markets that are creating abundant business opportunities. However, these new markets are not always easily understood. WestWater Research and American Water Intelligence are coming together to provide information and direction to water trading and development opportunities through a series of thought-provoking, regional conferences. 12-13 April 2012. Santa Barbara, CA.

- Learn more here.



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