The year is winding down and the top stories of 2013 in biodiversity and wetlands may be the biggest headlines of 2014 as many of them remain unresolved. The lawsuits in Louisiana over their coastal wetlands are ongoing, as is the decision over how best to conserve the dwindling prairie chicken. Here’s a look back.
23 December 2013 | We started the new year with a TEEB (The Economics of Ecosystems and Biodiversity) report, emphasizing maintenance and enhancement of wetlands as a key element in a sustainable economy.
Then Forest Trends’ Business and Biodiversity Offsets Programme (BBOP) released an updated Overview document with its Principles on Biodiversity Offsets, introduction to the Standard on Biodiversity Offsets, and supporting materials.
We asked whether biodiversity proponents would embrace business in 2013. October 2012’s Biodiversity COP in Hyderabad, India failed to engage the private sector – largely because business, as the leading destroyer of habitat, is seen as the enemy, writes Joost Bakker of the Global Nature Fund in an opinion piece for Ecosystem Marketplace.
Also in January, the US Supreme Court heard oral arguments in Koontz v. St. Johns River Watershed Management District, a case centered on the question of whether the government can deny a land-use permit because the applicant refused to accept conditions requiring a private individual to dedicate resources to a public use. The Court’s May ruling clarified that permitting agencies can’t require compensation on lands which they control. But the ruling did emphasize principles of proportionality and the nexus in determining appropriate mitigation, with the burden of proof likely falling on mitigators.
The US Fish & Wildlife released a five-year workplan in March for clearing its backlog of 455 candidate species – giving parties hoping to keep certain candidates off the Endangered Species list a deadline for solutions.
Wetland and conservation banking market movers convened at the National Ecosystem and Mitigation Banking Conference in New Orleans in May, where highlights included launch of the Mitigation Analyst tool, analysis by Ecosystem Investment Partners’ Katherine Birnie showing that projects using bank credits enjoy a speedier approval process than other mitigation approaches, and President & CEO of The Conservation Fund Larry Selzer calling on mitigation and conservation professionals to think a less “old school utility” and a little more “Silicon Valley.” We videoblogged our way through the conference.
President Obama announced an ambitious new climate plan dramatically scaling up the deployment of renewable energy. But Obama’s plans took no steps to clarify or streamline the permitting process for mitigating wildlife impacts, leaving questions as to whether compensatory mitigation rules are in any shape to take on a boom in renewables.
In July, the Natural Capital Declaration marked the beginning of its Phase II, wherein it will begin implementing major commitments to integrate natural capital – the ecological goods and services the Earth provides that yields direct and indirect benefits, like water and timber – into financial accounting, disclosure and reporting.
We learned about a bi-national fisheries conservation project between communities residing along both sides of the Sarstoon River in Belize and Guatemala. Project developers hope to establish a model for transboundary cooperation by building an organized union of local fisherfolk with decision-making capabilities over the region’s natural resources.
Also in July, the New Orleans-area flood protection authority’s Board of Commissioners filed suit against 97 oil and gas companies, saying industry activities have severely degraded wetlands crucial to flood protection in the Gulf. Gov. Jindal responded by firing commissioners who voted for the lawsuit and eliminating the authority’s funding.
Then in December came a surprise announcement that the state’s suing the Corps instead, for $3 billion in damages from levee collapses along the Mississippi River Gulf Outlet. The levee board’s suit apparently interfered with these plans.
Also that month, the Business and Biodiversity Offsets Programme (BBOP) released a six-step process for determining what can and cannot be offset.
Alberta province in Canada unveiled a new wetland policy in September that establishes a mitigation hierarchy and ranking system for wetlands, and will create a fee system for developers to support wetland restoration or public education to mitigate unavoidable impacts.
The UK Department of Environment, Food and Rural Affairs released a consultation paper for public comment on implementing biodiversity offsets at a national scale. The proposal has set off a heated debate within the nation’s environmental community over whether offsets are a useful economic tool for conservation or a “license to trash.”
A cross-party panel of MPs examining the proposed program recently found the current plan “overly simplistic” and recommended more stringent metrics and assessment requirements.
The EPA and Corps proposed a joint rulemaking in September to clarify waterbodies covered under the Clean Water Act. The proposed rule rests on an EPA report which seems to support an expansion of jurisdiction. The rule is currently under review by the Office of Management & Budget.
Later that month, Interior Secretary Sally Jewell signed Order 3330, aiming to establish a department-wide mitigation strategy to streamline mitigation processes and improve coordination between sectors, as the US prepares for growth in development projects on public land.
In November, Spain’s legislature approved a nationwide bill that includes the use of conservation banking as a compensatory tool to achieve no-net-loss of species from development projects and other land-use impacts.
In December of this year, the US Fish & Wildlife Service sought to incorporate a five-state plan advanced by the Western Association of Fish & Wildlife Agencies, energy companies, and NGOs into a 4(d) special rule proposal for the lesser prairie chicken (LPC). The plan relies heavily on short-term mitigation – 75% of conservation efforts would take the form of 5-10 year contracts – and a large in-lieu fee program.
Advocates of conservation banking say the approach is untested and inappropriate for the LPC. During an open commenting period earlier this year, banker Common Ground Capital (CGC) submitted a letter arguing that the FWS’ strategy should be based around proven mitigation results like conservation banking.
CGC aims to create a cluster of prairie chicken banks across five states in the Great Plains. So far, CGC has secured 86,000 acres of land spread across three states, and each bank will provide at least 10,000 acres of uninterrupted prairieland. “Chicken banks are arguably the first real effort to port the conservation banking model into a landscape-scale mitigation model,” CGC Principal Wayne Walker tells Ecosystem Marketplace.
The year is winding down and the top stories of 2013 in biodiversity and wetlands may be the biggest headlines of 2014 as many of them remain unresolved. The lawsuits in Louisiana over their coastal wetlands are ongoing as is the decision over how best to conserve the dwindling prairie chicken. Here’s a look back.
23 December 2013 | We started the new year with a TEEB (The Economics of Ecosystems and Biodiversity) report, emphasizing maintenance and enhancement of wetlands as a key element in a sustainable economy.
Then Forest Trends’ Business and Biodiversity Offsets Programme (BBOP) released an updated Overview document with its Principles on Biodiversity Offsets, introduction to the Standard on Biodiversity Offsets, and supporting materials.
We asked whether biodiversity proponents would embrace business in 2013. October 2012’s Biodiversity COP in Hyderabad, India failed to engage the private sector – largely because business, as the leading destroyer of habitat, is seen as the enemy, writes Joost Bakker of the Global Nature Fund in an opinion piece for Ecosystem Marketplace.
Also in January, the US Supreme Court heard oral arguments in Koontz v. St. Johns River Watershed Management District, a case centered on the question of whether the government can deny a land-use permit because the applicant refused to accept conditions requiring a private individual to dedicate resources to a public use. The Court’s May ruling clarified that permitting agencies can’t require compensation on lands which they control. But the ruling did emphasize principles of proportionality and the nexus in determining appropriate mitigation, with the burden of proof likely falling on mitigators.
The US Fish & Wildlife released a five-year workplan in March for clearing its backlog of 455 candidate species – giving parties hoping to keep certain candidates off the Endangered Species list a deadline for solutions.
Wetland and conservation banking market movers convened at the National Ecosystem and Mitigation Banking Conference in New Orleans in May, where highlights included launch of the Mitigation Analyst tool, analysis by Ecosystem Investment Partners’ Katherine Birnie showing that projects using bank credits enjoy a speedier approval process than other mitigation approaches, and President & CEO of The Conservation Fund Larry Selzer calling on mitigation and conservation professionals to think a less “old school utility” and a little more “Silicon Valley.” We videoblogged our way through the conference.
President Obama announced an ambitious new climate plan dramatically scaling up the deployment of renewable energy. But Obama’s plans took no steps to clarify or streamline the permitting process for mitigating wildlife impacts, leaving questions as to whether compensatory mitigation rules are in any shape to take on a boom in renewables.
In July, the Natural Capital Declaration marked the beginning of its Phase II, wherein it will begin implementing major commitments to integrate natural capital – the ecological goods and services the Earth provides that yields direct and indirect benefits, like water and timber – into financial accounting, disclosure and reporting.
We learned about a bi-national fisheries conservation project between communities residing along both sides of the Sarstoon River in Belize and Guatemala. Project developers hope to establish a model for transboundary cooperation by building an organized union of local fisherfolk with decision-making capabilities over the region’s natural resources.
Also in July, the New Orleans-area flood protection authority’s Board of Commissioners filed suit against 97 oil and gas companies, saying industry activities have severely degraded wetlands crucial to flood protection in the Gulf. Gov. Jindal responded by firing commissioners who voted for the lawsuit and eliminating the authority’s funding.
Then in December came a surprise announcement that the state’s suing the Corps instead, for $3 billion in damages from levee collapses along the Mississippi River Gulf Outlet. The levee board’s suit apparently interfered with these plans.
Also that month, the Business and Biodiversity Offsets Programme (BBOP) released a six-step process for determining what can and cannot be offset.
Alberta province in Canada unveiled a new wetland policy in September that establishes a mitigation hierarchy and ranking system for wetlands, and will create a fee system for developers to support wetland restoration or public education to mitigate unavoidable impacts.
The UK Department of Environment, Food and Rural Affairs released a consultation paper for public comment on implementing biodiversity offsets at a national scale. The proposal has set off a heated debate within the nation’s environmental community over whether offsets are a useful economic tool for conservation or a “license to trash.”
A cross-party panel of MPs examining the proposed program recently found the current plan “overly simplistic” and recommended more stringent metrics and assessment requirements.
The EPA and Corps proposed a joint rulemaking in September to clarify waterbodies covered under the Clean Water Act. The proposed rule rests on an EPA report which seems to support an expansion of jurisdiction. The rule is currently under review by the Office of Management & Budget.
Later that month, Interior Secretary Sally Jewell signed Order 3330, aiming to establish a department-wide mitigation strategy to streamline mitigation processes and improve coordination between sectors, as the US prepares for growth in development projects on public land.
In November, Spain’s legislature approved a nationwide bill that includes the use of conservation banking as a compensatory tool to achieve no-net-loss of species from development projects and other land-use impacts.
In December of this year, the US Fish & Wildlife Service sought to incorporate a five-state plan advanced by the Western Association of Fish & Wildlife Agencies, energy companies, and NGOs into a 4(d) special rule proposal for the lesser prairie chicken (LPC). The plan relies heavily on short-term mitigation – 75% of conservation efforts would take the form of 5-10 year contracts – and a large in-lieu fee program.
Advocates of conservation banking say the approach is untested and inappropriate for the LPC. During an open commenting period earlier this year, banker Common Ground Capital (CGC) submitted a letter arguing that the FWS’ strategy should be based around proven mitigation results like conservation banking.
CGC aims to create a cluster of prairie chicken banks across five states in the Great Plains. So far, CGC has secured 86,000 acres of land spread across three states, and each bank will provide at least 10,000 acres of uninterrupted prairieland. “Chicken banks are arguably the first real effort to port the conservation banking model into a landscape-scale mitigation model,” CGC Principal Wayne Walker tells Ecosystem Marketplace.
Establishing an internal carbon price is becoming standard operating practice, with 29 of the top global corporations disclosing a price on carbon pollution in the latest reports to the CDP. If more companies actually want to implement an internal carbon fee, technology giant Microsoft has some sound advice on exactly how to do it.
16 December 2013 | Even in the absence of global regulation of greenhouse gas (GHG) emissions, dozens of international corporations are seeing the wisdom in setting an internal carbon price to help guide their business decisions, according to a new white paper by the CDP (formerly known as the Carbon Disclosure Project). Technology giant Microsoft, which charges its business units a carbon fee as part of its efforts to reduce its GHG emissions, has published a helpful how-to-guide for companies that want to follow in its footsteps.
In 2013, 29 companies based in or operating in the US disclosed that they use an internal price of carbon in their business planning, with a range of pricing between $6-60 per metric ton of carbon dioxide equivalent, according to the CDP.
Utility and energy companies were the most likely to use internal carbon prices in making long-term plans to meet energy and electricity needs, according to the report. Oil major ExxonMobil set the highest price at $60/tCO2e, while competitors BP and Royal Dutch Shell use a $40/tCO2e price.
A common characteristic for many of these companies is that they have international operations, where the European Union’s Emissions Trading Scheme or Australia’s carbon tax have made them keenly aware of mandatory GHG emissions reduction programs, the CDP noted. In addition, many of these companies also set internal targets for GHG emissions reductions either in absolute tons or carbon intensity and use an internal carbon price or gauge to evaluate return on related investments, or to incentivize employees.
“Many companies across the U.S. have come to recognize that there is a price associated with the carbon they emit and an economic opportunity in factoring a carbon price into their business model,” said Tom Carnac, President of CDP North America. “Companies view the establishment of an internal carbon price as both an evaluation of risk and a business opportunity if they take steps to limit carbon pollution before others do.”
Microsoft Weighs in
Microsoft, one of the early movers in imposing an internal carbon fee on its business units, has decided to help other corporations by explaining exactly how to go about such an undertaking.
The Seattle, Washington-based technology firm implemented its carbon fee in July 2012 as part of its commitment to become carbon neutral, in recognition of the fact that the information and communications technology sector emits 2% of global emissions. The company set an initial price of $6-7t/CO2e.
A white paper published by Microsoft last week makes the case for internal carbon fees, including the ability to drive changes in behavior that increase efficiency and reduce an organization’s cost and carbon footprint, as well as make responsible business decisions that help mitigate potential risks associated with an organization’s environmental footprint.
“A carbon fee model helps provide leadership in mitigating climate change,” said Tamara “T.J.” DiCaprio, senior director of carbon and energy, environmental sustainability for Microsoft and author of the white paper. “It can help drive innovation in the products and services that an organization develops.”
DiCaprio outlines the three critical components of the company’s carbon fee model: the organization’s carbon reduction policy, the price on carbon and the strategy for investing the funds generated by the carbon fee. Microsoft, for example, has invested in more than 20 carbon offset projects in countries such as Brazil, Cambodia, Ghana, Guatemala, India, Indonesia, Kenya, Madagascar, Mexico, Peru and Turkey.
The paper describes a five-step process for establishing an internal carbon fee: calculate carbon impact; establish a carbon reduction policy and develop an investment strategy; determine the internal carbon price; gain approval and establish governance and feedback loops; and administer the fee, communicate results, and evolve to increase its impact.
Microsoft’s carbon fee model is making the costs and consequences of climate risks and opportunities tangible to the broader company, said Mindy Lubber, president and CEO of investor and business coalition Ceres. While carbon neutrality is not a novel concept, Microsoft has gone beyond many companies by using a carbon fee to get there, she said.
“Microsoft’s model is based purely on consumption—there’s nothing complicated to manage, no credits to track or trade,” Lubber said. “This simplicity is what makes the model transferable. It can be adapted easily to fit other corporations, nonprofit groups and government agencies.”
The Department of Interior is attempting to establish a department wide mitigation strategy that will protect natural resources as the US prepares for an expected rise in development projects on public land. The new strategy aims to streamline the mitigation process with better coordination between the different sectors involved.
16 December 2013 | When the US Department of the Interior (DOI) was created in 1849, wetlands were considered “wastelands” to be drained and exploited in the name of manifest destiny, and “mitigation” was largely a medical term for pain relief.
Today, the DOI oversees a staggering 20% of the country’s territory and supplies the bulk of the water for 17 Western US states. It also leases out land for oil, gas, and shale exploitation while simultaneously overseeing both the Fish and Wildlife Service (FWS), which protects nearly 2,000 threatened or endangered species, and the National Park Service, which manages 59 parks and hundreds of “national trails, heritage areas, and sacred sites that intertwine public, tribal, and private land ownership.”
To balance the conflicting mandates of conservation and exploitation, it gradually embraced the new definition of mitigation that includes the “preservation, enhancement, restoration or creation (PERC)” of areas destroyed in the name of progress. By law, such mitigation is a last-resort measure that should only be used sparingly. Done right, it can lead to better, more contiguous habitat for endangered species; done wrong, it can be a sham.
Doing it right means doing it in a coordinated fashion across departments and agencies, but programs have often evolved differently in different departments within the DOI. Furthermore, programs that were innovative at their inception weren’t designed to handle the massive wind farms and other energy projects – both sustainable and not – currently underway. In May, President Obama ordered all federal agencies to review their compensatory mitigation activities, and in September, Interior Secretary Sally Jewell signed Secretary’s Order 3330, which says that the DOI will review its existing policies, procedures, practices, guidance, and statutory and regulatory requirements to identify those that should be changed or newly developed.
“The many demands placed upon these lands and resources require us to have a clear vision of how to mitigate the impacts of all development and infrastructure activities on the Federal lands and natural and cultural resources the Department is entrusted to manage,” she wrote.
What Does the Order Mean?
The DOI offsets or compensates for unavoidable impacts made to ecosystems from development. This involves an extensive planning process that tries to identify areas with fewer natural resource conflicts. If there is a conflict, however, the department works to minimize negative impacts and offsets what can’t be avoided.
The effects of climate change will be a priority of the new approach. A focus will be on mitigation efforts that improve the resilience of our nation’s resources in the face of climate change, the order reads.
Other focuses of the new strategy include integration of mitigation in the planning and design phases and ensuring the durability of those measures. Transparency and consistency throughout the process is another core element.
Creating Effective Mitigation
The DOI’s Energy and Climate Change Task Force will be directing the process. Because it’s to be a department-wide strategy, representatives from each agency or bureau make up the Task Force. This approach should maximize collaboration and coordination within the DOI. The Task Force’s first step will be to perform a comprehensive review of existing regulations relating to mitigation such as the National Environmental Policy Act and the Endangered Species Act (ESA). This will also involve input from agencies outside the DOI like the Army Corps of Engineers and the Department of Agriculture.
Once the Task Force completes the review, they will then identify necessary revisions to current policies as well as create a draft for policies or practices needed for the new strategy.
A Key Role for FWS
The Fish and Wildlife Service is expected to play a central role in crafting this strategy. It has trust responsibilities for migratory birds, threatened and endangered species, interjurisdictional fish species, certain marine mammals, National Wildlife Refuges and national fish hatcheries. In fact, the FWS is also revising its 1981 Mitigation Policy and developing a new Endangered Species Act Compensatory Mitigation Policy. These efforts will likely support the Department’s mitigation strategy.
Like the DOI’s strategy, the FWS framework will address existing threats like climate change and will attempt landscape-level mitigation planning but will remain flexible for any future regulations that may need to be incorporated. The Service is also expected to embrace the principles of Strategic Habitat Conservation to promote fish and wildlife conservation at larger, landscape scales.
The purpose of the ESA is to conserve threatened and endangered species and the habitats upon which they depend. The National Oceanic and Atmospheric Administration National Marine Fisheries Service, and the FWS (jointly, the Services), share responsibility for implementing the ESA. Development projects that may adversely affect listed species or critical habitat are addressed either through section 7 of the ESA, if the project is funded, authorized or carried out by a Federal agency, or pursuant to section 10, if the project is private action with no Federal nexus. Compensation measures to offset project impacts to listed species, such as buying credits from a conservation bank or paying into an in-lieu fee fund, may be an important tool to promote conservation of these species.
How to Proceed
The new proposals will provide clarification on the relationship of the FWS Mitigation Policy to multiple authorities and programs administered by the FWS beyond those addressed in the 1981 Policy.The framework will also include new guidance on conservation banking, which first entered the federal lexicon in 2003 and was modeled after the policy guidelines that California passed in 1995.
In order to create an all-encompassing framework, multiple groups will be involved in the revision process. The FWS has assembled an in-house team with participants from all Regions and multiple programs including Refuges, the Office of the Science Advisor, the Migratory Birds program and Ecological Services.
The revision process is very much in its early days. The FWS expects it to be completed within a two year period.
As for the DOI-wide strategy, the Task Force has 90 days to complete the internal review of mitigation regulations and then must submit a draft, which outlines their findings and lays out a plan for implementing the new strategies and potential changes to Secretary Jewel.
A new plan seeking inclusion into the US Fish and Wildlife Service’s special rule proposal on lesser prairie chicken (as opposed to greater prairie chicken) conservation is facing opposition from some in the conservation banking sector who argue the plan’s voluntary program that relies on untested methods will not deliver needed results.
16 December 2013 | The US Fish and Wildlife Service (FWS) is altering a special rule proposal issued in May on conserving dwindling lesser prairie chicken populations. FWS now would like to incorporate a plan that enables energy developers to practice voluntary conservation.
The lesser prairie chicken is a candidate species – a species up for possible listing under the Endangered Species Act (ESA). The FWS administers the ESA and is in the midst of determining if the lesser prairie chicken should be listed as threatened or endangered and receive the protective measures that come with a federal listing. They published their listing proposal at the end of last year and had a revision period during the spring when they added in the proposed special rule.
The debate over whether to list or not to list isn’t divided clearly along industry and environment lines. Meanwhile, the chicken population is spiraling downward. Within the last year, the population of this little grouse has fallen by 50% and their habitat in the US Great Plain states continues to be converted from grasslands into farmland or fragmented by energy interests.
Energy companies argue that listing will result in regulations and costs that they claim are unnecessary, and they advocate instead for voluntary solutions. A consortium of energy companies and NGOs in collaboration with the Western Association of Fish and Wildlife Agencies (WAFWA) created the Lesser Prairie Chicken Range-wide Conservation Plan (RWP) to proactively conserve chicken habitat-mitigating species loss – so a listing won’t be necessary. The plan seeks to enroll oil and gas and wind developers to voluntarily preserve habitat. In return for their conservation, the energy companies receive assurance that even if the chicken is listed, they won’t face additional regulations. FWS then revised its proposal in response.
The WAFWA Plan
WAFWA released its plan in September and the FWS endorsed it the following month. This month, the Service announced they were seeking to incorporate it into their proposal and reopen the public comment period.
Incorporation of the plan would be a part of this special rule, which falls under section 4(d) of the ESA. It establishes special regulations for a species. In the case of the prairie chicken, the ‘taking’ of the bird by those participating in the WAFWA plan will be permitted. This special allowance for participants is because of the significant conservation planning efforts they have undergone, according to the FWS statement. The plan identifies a two-part strategy it will use to conserve prairie chicken habitat: a set of incentives-based landowner programs, along with the reduction of threats and off-site mitigation efforts.
The RWP would use two mitigation markets, which WAFWA says is necessary because of the bird’s migrating patterns and because of environmental changes. According to the plan, the prairie chicken adapts easily to changing habitat conditions. 75% of mitigation will be short term – five to ten years – while the remaining 25% will take the form of long-term conservation, which can’t ever be redeveloped for other uses. That structure is a sharp departure from typical habitat mitigation, which has typically made permanent protection a core requirement.
The plan establishes strongholds, which are areas of chicken habitat that are permanently protected. The short term branch is designed to provide ‘moving habitat,’ which will follow the chicken as it migrates and also help avoid conflicts with development. Under the RWP, the strongholds will maintain a prairie chicken population while moving conservation will create satellite populations that disappear and reappear over time, the plan document reads.
The Argument
Several parts of WAFWA’s plan have met with opposition from practitioners inside the mitigation banking community. Common Ground Capital (CGC), a conservation banking company with a primary focus of creating landscape-level banks for prairie chickens, has argued that the relatively new concept of ‘moving’ short term conservation won’t deliver on needed results. CGC said the approach would reduce compliance costs to industry at the expense of the grouse, calling temporary mitigation (or “term” mitigation) untested and lacking in a regulatory framework. And because of the bird’s dire situation, CGC feels the prairie chicken isn’t the right species to try it out on.
Bankers are also unhappy with the plan’s reliance on a very large in-lieu fee program to shoulder much of the mitigation action. In-lieu fees are paid by a developer into a dedicated fund, which then pays for conservation actions after the fact. The approach has been criticized in the past for resulting in long-delayed or inappropriate compensation for impacts. In 2008, the Army Corps of Engineers officially declared it a less-preferred approach compared to mitigation banking as far as addressing wetland impacts. “Why then would such a complex in-lieu fee structure be acceptable to the USFWS for use for the lesser prairie chicken?” asked CGC in its letter to the Service.
During an open commenting period earlier this year, CGC submitted a letter arguing that the FWS’ strategy should be based around proven mitigation results like conservation banking. Conservation banking, a market-based solution where land developers offset their negative impact on a species by purchasing credits from a species bank that is permanently located in an area of habitat, is the only solution that has and will continue to achieve a net benefit for a species, CGC’s Principal, Wayne Walker, wrote.
As for achieving a net benefit for the prairie chicken – a voluntary program on a whole won’t ensure that, says Walker. Voluntary efforts are basically unenforceable, the letter notes, drastically reducing the certainty of the plan’s success. Doubts about the plan’s prospects were reinforced when an ecologist for the environmental NGO, the Center for Biological Diversity, Jay Lininger, noted that the FWS’ revised rule exempts activities that destroy habitat. Development activities that ‘take’ the prairie chicken but are consistent with the RWP are permitted. Routine agricultural practices taking place on already cultivated lands that harm the bird would also be allowed.
The FWS is scheduled to make a listing decision on the prairie chicken in March. The new commenting period is currently open and will be open until January 10.
After overseeing the creation of a wetlands restoration methodology for the Mississippi Delta, the American Carbon Registry and partners are developing a new carbon offset protocol to quantify greenhouse gas emissions reductions from the restoration of California deltaic and coastal wetlands and turn those into credits for both the voluntary and the state compliance markets.
12 December 2013 | Carbon finance could soon play a critical role in the restoration of California’s wetlands, with a coalition of stakeholders developing a methodology that would allow wetlands restoration projects in the state to generate credits for both the voluntary carbon market and California’s cap-and-trade program.
The new methodology would scientifically quantify greenhouse gas (GHG) emissions reductions from the restoration of California deltaic and coastal wetlands. A number of organizations are involved in the effort, including the American Carbon Registry (ACR) and Tierra Resources, which developed a similar methodology to quantify GHG emissions reductions from restoring deltaic wetlands in the Mississippi Delta. The new methodology will integrate California data and restoration techniques.
The ACR approval process for the methodology is expected to be completed in December 2014. Once approved, the methodology will facilitate the sale of carbon offsets to corporations to meet their voluntary emissions reduction goals.
In addition, the offsets could be made available for the California compliance market if the Air Resources Board (ARB) deems them eligible. Currently, the ARB has only approved four offset protocols – ozone-depleting substances, livestock, forestry and urban forestry – while rice cultivation and coal mine methane protocols are under debate.
“I do think this could be a possibility in the medium term,” said Belinda Morris, ACR’s California Director. “ARB is interested to learn about the new methodology. However, they are not giving strong indications of the likelihood that they will adopt any new protocols until they officially decide to move forward with the development of a protocol.”
Stakeholders see abundant opportunities to restore wetlands in the Sacramento-San Joaquin Delta, Suisun Marsh, and California coastal areas. In the San Francisco Bay Area, more than 95% of crucial habitat has disappeared since the 1800s, according to the US Geological Survey. More than 2.5 billion cubic meters of organic soils have disappeared since delta islands were first diked and drained for agriculture in the late 1800s, resulting in land subsidence up to 25 feet below sea level. Drained and cultivated organic soils continue to oxidize, subside and emit an estimated 1.5 to 2 million metric tons of carbon dioxide equivalent annually.
While state and federal initiatives have raised more than $100 million for wetland restoration over the past decade, funding remains insufficient to meet restoration goals of up to 100,000 acres of marsh, according to stakeholders who see potential for carbon market revenues to fill the funding gap and provide landowners with new incentives.
“Having an approved methodology will allow for trading carbon credits, giving Delta growers opportunities to put low-productivity wet areas back into economic production, while simultaneously starting to reverse the subsidence that threatens their long-term viability,” said Campbell Ingram, Executive Officer of the Sacramento-San Joaquin Delta Conservancy, one of the partners in the effort.
The Sacramento Municipal Utility District, the California Coastal Conservancy, the Metropolitan Water District and the California Department of Water Resources combined to finance development of the methodology. Other partners include The Nature Conservancy and HydroFocus.
Its habitat fragmented and shrinking, the Lesser Prairie Chicken has seen its numbers plunge from more than 34,000 at the beginning of last year to less than 18,000 in August. Here’s how a massive mitigation banking effort aims to save the bird by preserving and re-creating large swaths of contiguous prairie to achieve a sustainable, landscape level outcome for the species.
4 December 2013 | Wayne Walker wasn’t exactly surprised when he read the report, but the numbers still hit him hard.
Entitled “Range-Wide Population Size of the Lesser Prairie Chicken: 2012 and 2013” and written by environmental consultancy Western EcoSystems Technology, the report showed there were less than 18,000 of these small grouses this year – down from more than 34,000 last year and from numbers in the millions just a half-century ago. The birds are disappearing because their habitat is shrinking and fragmenting, which is a severe threat for a species that needs thousands of acres to thrive. Those that remain are confined to a rangeland that is between 7 and 9 million acres – about 15% of their original habitat.
Their numbers are plunging despite voluntary efforts to keep the bird off the endangered species list, and Walker believes it’s time to seek new solutions and is launching a massive conservation banking effort – one that will more than triple prairie chicken rangeland as it also consolidates habitat into a few sites of more than 10,000 acres each.
From Energy to Environment
Walker first learned of the prairie chicken’s plight nearly 15 years ago, while developing wind energy projects across Texas, Oklahoma, Kansas, New Mexico and Colorado. These “green” projects, he found, weren’t exactly a boon to prairie chicken habitat.
That prompted him to gradually switch careers – from being an energy developer to a conservation bank developer. He already had the background for it with a master’s in Environmental Studies (where his thesis was called “Rejuvenating Rangeland: An evaluation of Juniper Management techniques on the Edwards Plateau in Southwest Texas”).
Last year, he created Common Ground Capital (CGC), a conservation banking company that aims to create several prairie chicken species banks across five US Great Plain states. So far, CGC has secured 86,000 acres of land spread across three states, and each bank will provide at least 10,000 acres of uninterrupted prairieland – a drastic improvement over the fragmented state of affairs today.
To achieve that size, however, he had to develop a new landscape approach to conservation banking.
Little Bird with a Big Problem
The lesser prairie chicken is a North American bird species living in the grassland, sagebrush and shinnery oak ecosystems within the US states of Kansas, Oklahoma, Texas, Colorado and New Mexico. Famous for elaborate mating performances, prairie chickens used to be widespread. But habitat loss from agricultural land conversion and fragmentation has reduced that large population to small pockets living in particular areas of the states.
Drivers of this decline primarily come from the agriculture and energy sectors. Farming and ranching as well as oil, gas and renewable energy projects, which are expected to increase, continue to disrupt chicken habitat.
This year’s deep decline has increased the probability of the chicken being listed as threatened or endangered under the Endangered Species Act (ESA). The bird has been a candidate for listing since 1998. An ESA listing would mean federal protection for the species and would enforce regulations to conserve the chicken’s habitat even if it fell on private property.
Rather than wait for the species to be listed, Walker has decided to start his conservation bank portfolio approach – where several banks for the bird is created – proactively. It’s a risk, because if the bird doesn’t get listed, demand for “chicken credits” would be marginal at best.
If it is listed, however, companies will need special permission to impact the habitat, and even if they get that permission, they will have to mitigate their damage by supporting the offset of habitat impacts of equal or greater value than what they’ve damaged. By establishing banks based on ecological principles, Walker will be able to create several contiguous habitat areas where now only scattered fragments exist.
The US Fish and Wildlife Service (FWS), which administers the ESA, will make a listing decision on the prairie chicken in March. No matter what the decision is Walker says conservation banks are necessary.
“Obviously we believe the market opportunities will vary dramatically if there is a non-listing outcome versus a listing outcome,” Walker says. “But we do concur that there should be some opportunities for voluntary credits to be sold to some of the more forward looking and responsible development minded folks in the energy space.”
The oil and gas and wind sectors of the energy space would be key buyers as they are a main threat and their activities, like pipelines, well sites, wind turbines and other infrastructure, are targeted for development on top of remaining chicken country in many cases, Walker says.
The Bank
“Chicken banks are arguably the first real effort to port the conservation banking model into a landscape-scale mitigation model,” says Walker.
To date, conservation banking is an approved method under the FWS to preserve species and is usually used on an area of 100s of acres or occasionally over 1,000s of acres. The chicken banks are designed to conserve an area of 10,000 acres at minimum. That’s the lowest estimated level of land needed to support a viable population. Over time, Walker says, they expect the banks to grow. While Walker would be interested in a multiple species bank, he hasn’t found a need or market opportunity in chicken habitat that overlaps with other species.
The first step in the process is to work with the FWS on their “strongholds,” which are areas of between 25,000-50,000 acres of permanently protected chicken habitat. The FWS has advocated that protecting strongholds in each of the ecosystems the bird lives in is fundamental to the remaining population. Walker and company then move into restoring habitat and continuing to re-connect the landscape through habitat corridors over time.
A steady supply of multiple buyers will be needed in order to sustain this landscape-level arrangement. “Not many single customers will be able to purchase all of the credits of a 10,000 acre minimum bank,” says Walker.
A steady supply of support from partnering state agencies through the Western Association of Fish & Wildlife Agencies (WAFWA), NGOs, companies, and private landowners is also critical for a new initiative like this to succeed. The past July, Walker’s company, CGC, partnered with one of the largest environmental restoration and mitigation banking firms in the country, Restoration Systems (RS). RS brings to the table both financial and institutional/market knowledge, capital and a lot of human resources to assist in executing on the prairie chicken banking strategy, Walker says.
Engaging the Landowner
The private landowner is especially important to the banks because these banks allow for the landowners to remain on their land while it’s being used for conservation. This requires good relations between the bankers and landowners. Traditionally in conservation banking, the land is bought for the sole use of the species.
CGC meets with landowners and explains their approach to conservation banking. They perform onsite development activities like the vegetative analysis and “lek” (the chicken’s mating area) surveys. They then go through the regulatory process for approval under the FWS to sell credits.
Walker acquired good working relationships with landowners while covering the same geography in wind development learning how the ranching and farming economy works and what drives these landowners’ decisions.
He realized that in order for these ranchers and farmers to consider prairie chicken conservation equally with their land operations, compensation for change must equal or surpass their traditional income. Walker doesn’t foresee real change if there is only a small increase in earnings.
“You have to pay a premium for culture change so the people on the landscape see that it will make a big difference in their livelihoods, both for the present and future generations,” he says. Landowners in this region of the country are independent, Walker says, so they would be more inclined to practice conservation if they are able to stay on the land and be in control of decisions. For the banks, landowners receive a large portion of the revenue share from the credit sales. Their existing operations are also likely to have indirect benefits, according to Walker, because of a non-wasting endowment the FWS requires banks to have. The endowment is a perpetual fund for bank management.
“It makes a difference in their life,” says Walker. They decide what to do with that money and it empowers them to make good choices for conservation versus becoming or continuing to be dependent on government type annual payments.”
It’s actually critical that banks form partnerships with landowners because of the amount of land the bird requires. CGC can’t afford to buy the total acreage needed with prices ranging from $500-$1,000 an acre across the five state range of the prairie chicken, Walker says.
Delivering Real Results
With less than 20,000 prairie chickens left, it’s critical to create a robust framework that ensures their preservation, and Walker believes this framework will affect the entire conservation banking industry, and CGC has plans to use the lesser prairie chicken model for other species like the Greater Sage Grouse in the future.
Why Conservation Banking?
The Lesser Prairie Chicken Range Wide Conservation Plan was created by the WAFWA in collaboration with several NGOs, the energy industry and other stakeholders to preserve the species and mitigate harmful impacts with the goal of avoiding an ESA listing. Walker admits that this effort is arguably the largest collaboration among multiple states to chart a regional course of conserving the species. But unfortunately, Walker says, instead of basing the mitigation strategy around proven tools like conservation banking, the plan relies on un-proven models that aren’t long term solutions.
He says, “We pursued the banking model because it is the only proven model that delivers results and is in the best interest of the species.”
Walker says the models the Conservation Plan is using are based on government payment programs that have a poor record of conservation success despite the millions of dollars invested in them. These alternative or voluntary mitigation strategies to compliance are also performed at a lower standard than what would be required under a listing status.
Walker has been involved with voluntary mitigation and would argue outside of a few industry leaders, most companies are not going to voluntarily change their behavior. It requires them to incur a cost which their competitors don’t have to incur, thus creating an unlevel playing field between competitors, he says.
“This species and the industry need certainty all around, and you just aren’t going to achieve that with an over reliance on un-tested mitigation programs that have both a high probability of not working and being litigated,” Walker believes.
Realistically, the only way you are going to get a better outcome for the species and have true behavior change among the different interests is to list it under the ESA, says Walker. Even with this listing, the stakeholders will still have a voice in the mitigation process.
The California Air Resources Board issued its first forest carbon offsets to two projects, Willits Woods and the Farm Cove. Both projects were early adopters to the forest protocol and both use improved forest management techniques to sequester carbon. Companies that must reduce their emissions under California’s cap-and-trade system may use offsets for up to 8% of their requirements.
18 November 2013 | The California Air Resources Board (ARB) took a major step forward in the development of its offset program by issuing the first forest carbon offsets eligible for compliance with the state’s cap-and-trade market.
Willits Woods, developed by Coastal Ridges, covers about 19,000 acres of land in northern California. It became the first approved forestry project, with 1.2 million carbon offset credits now available to regulated California entities.
On the other side of the U.S., the ARB also approved Finite Carbon and the Downeast Lakes Land Trust’s Farm Cove project based in Maine. Also covering about 19,000 acres, the project has verified 242,000 carbon offsets and has already contracted the offsets to two non-disclosed compliance buyers. Proceeds will contribute towards ongoing fundraising efforts to purchase the adjacent 22,000-acre West Grand Lake Community Forest Project. This Maine project marks the first forestry project approved outside of California (the ARB currently accepts forestry projects in the lower 48 states, but not in Alaska, Hawaii or U.S. territories).
Though varying in size, both projects share the common characteristic as “early adopters” – meaning that they developed under earlier draft versions of the forest protocol. As Linda Adams of the Climate Action Reserve reaffirmed, “It is tremendously gratifying to see that the early adopters of the Reserve’s forest protocol are being recognized by having their credits accepted for the compliance market, just as had been assured under AB 32.”
The forest offset protocol was adopted in 2011 by the ARB alongside three other offset types. These forestry offsets follow closely on the heels of offsets issued under the Ozone Depleting Substances protocol in late September. The forest protocol guarantees that credits are issued proportional to the metric tons of sequestered carbon in each project, while demanding that projects be managed for at least 100 years and plan for wildlife habitats and watershed benefits.
“As the largest uncapped sector under California’s cap-and-trade program, agriculture and forestry have an important role to play in helping California meet its 2020 emissions reduction target,” said Robert Parkhurst, agriculture greenhouse gas markets director at Environmental Defense Fund.
Regulated entities are limited to purchasing offsets for up to 8% of their compliance. Offsets are meant to be a cost-containment mechanism to keep the prices low, with current pricing reflecting this as offsets were only valued at $9/tCO2e compared to $12/tCO2e for carbon allowances in Wednesday trading.
To reach this point, both projects had to undergo dual verification: the first under the Early Action Offset Program and the second by a separate, ARB-accredited certifying party. The Farm Cove also has Forest Stewardship Council (FSC) certification, a status simply maintained during the conversion of the lands to an ARB-accredited area. Both projects then faced additional scrutiny by the team at ARB.
While the first two projects mark a milestone for forestry projects, the real impact of the Forest Offset Protocol will be seen in whether additional forest owners buy into the market. Finite Carbon’s President Sean Carney has high hopes for this future, saying that the current “issuance and sale of forest offsets answers two important questions for landowners: ‘yes, the compliance carbon market is real, and yes, so is the revenue.” Finite Carbon will continue to be an active player in the market, as they plan to bring an additional ten projects online in upcoming months.
A ruling by the Sacramento Superior Court affirms the legality of California’s cap-and-trade program. Cap-and-trade could raise as much as $12 billion to $70 billion for the state, but a judge last week ruled that the program does not constitute a tax, in part because the ‘license to emit’ does not come for free.
18 November 2013| The Sacramento Superior Court upheld California’s cap-and-trade program last week against two affronts to its carbon auction system. The decision is unsurprising given the tentative ruling in the Air Resources Board’s (ARB) favor in August, but its affirmation in the upper court is an important step in cementing the legality of the United State’s first sub-national carbon market.
The cases, filed by the California Chamber of Commerce and the Pacific Legal Foundation (PLF), challenged the sale or auction of carbon allowances on the grounds that (1) auctions are beyond ARB’s scope of authority and (2) auctions are akin to a tax.
The first objection was relatively easy to dismiss. AB32, the 2006 law that began California’s efforts to limit greenhouse gas (GHG) emissions to 1990 levels by 2020, give ARB “wide discretion to design a system of emissions reductions,” according to Cara Horowitz, a lawyer and the Executive Director of UCLA’s Emmett Center on Climate Change and the Environment.
The question of whether the auctions constitute a tax was a stickier one. Allowance sales are in fact expected to raise a sizeable chunk of change: The Legislative Analyst’s Office has estimated that allowance sales could raise as much as $12 billion to $70 billion in revenues for California over the life of the cap-and-trade program, which runs through 2020. It’s raised about $300 million so far. Monies from the sale of allowances are earmarked towards investments that further GHG emissions reductions, with 25% going to projects that benefit disadvantaged communities.
Yesterday, Judge Timothy Frawley affirmed a previously tentative ruling that, though cap-and-trade does raise revenue for the State, allowance auctions do not count as ‘taxes.’ As Horowitz outlines, the ruling was based on findings that allowance buyers receive something valuable in exchange for their dollars: the license to emit one tonne of carbon dioxide – an allowance that is in fact a tradable commodity in the marketplace. Furthermore, auction prices are determined by market forces rather than set by government, as a tax would be. The allowances were more like a hunting license or a mineral extraction permit than a tax, Frawley ruled.
M. Rhead Enion, an environmental law fellow at UCLA, says that cap-and-trade is not a tax for another reason. Put simply, there is no right to pollute in California, as determined by a 2010 court case, Communities for a Better Environment v. SCAQMD. Enion reasons that the retirement of GHG allowances is actually very similar to the installment of pollution abatement technology under a command-and-control regulation. It certainly constitutes a cost to industry, but that cost is perfectly legal.
“Because industries represented by the Chamber of Commerce have no right to pollute, they similarly have no right to be given free GHG pollution allowances from the state of California,” he writes.
PLF has already announced that it will file an appeal to Judge Frawley’s ruling on behalf of its plaintiffs. The first listed plaintiff is Morning Start Packing Company, whose three tomato processing facilities have purchased 31,000 allowances to date at a cost of $379,860 – money they claim could have been used to hire more employees. Other plaintiffs include Merit Oil Company, the California Construction Trucking Association, the Loggers Association of Northern California, and Dalton Trucking, as well as three individuals who claim the auction process will raise their fuel and utility costs.
“In a democracy, an administrative agency comprised of unelected bureaucrats can only carry out the will of the people, as set forth by the Legislature. California’s ARB cannot carry out its own will, especially when its will conflicts with the California Constitution,” says PLF attorney Ted Hadzi-Antich. “On behalf of our clients, PLF will carry this lawsuit forward in the public interest.”
Horowitz, however, thinks that the legal challenges remain weak, and that time is on ARB’s side. “The longer the cap-and-trade program is in place, however, and the more auctions and private-party trades are conducted, the harder it becomes to imagine what remedy any judge might issue to claw it back,” she writes.
The US Environmental Protection Agency has been giving citizens a chance to say what they believe regulations for existing power plants should look like. Those regs are due in June 2014, and a key question the EPA will have to answer is whether its rules will carve out a place for market-based carbon emissions reduction programs already implemented in 10 US states.
13 November 2013 | WASHINGTON, DC | At the US Environmental Protection Agency’s (EPA) headquarters here, people approach the table two-by-two. It’s a bit like Noah’s Ark, except that the pairs are mismatched: a retired climate scientist and a high school senior; a father and a bird enthusiast; a coal lobbyist and a non-profit leader.
Speaking before three mostly poker-faced agency representatives, every person has a timed three minutes to make their case.
“I’m speaking for myself today as well as my grandchildren,” says Richard Ball, who worked on the International Panel on Climate Change’s (IPCC) first and second assessment reports, to preface his statement that power plants are capable of greater emissions reductions than any other sector.
The scene is part of the “listening sessions” that have occurred in 11 cities across the United States as the EPA seeks public feedback about the best way to regulate greenhouse gas emissions from existing power plants under the Clean Air Act. A 2007 Supreme Court case, Massachusetts v. EPA, defines greenhouse gases as pollutants, giving EPA the obligation to regulate them if it finds they pose a threat to public health or welfare, which it did in December 2009. The EPA released its proposed regulations for new power plants in September 2013. Now, under the timeline laid out by President Barack Obama earlier this year, it’s expected to propose standards for existing plants by June 2014.
Under the Clean Air Act, the what of the regulation is up to the EPA while the how is up to the states. Once the rules come out, states will submit plans outlining how they plan to meet them and states that have implemented market-based mechanisms are lobbying for their programs to be included as a compliance option under the new federal rules.
A Case for State Innovation
Mridul Chadha, the head of news and data at Climate Connect, makes the case that state-level carbon policies have already made a huge dent in the emissions intensity from power plants, during a November 7 webinar on the regulations organized by CaliforniaCarbon.info.
The average emissions intensity for a U.S. power plant was 1,216 pounds of carbon dioxide per megawatt-hour limit (lb CO2/MWh) in 2009, down 11% from 2004, according to Chadha’s calculations. As cheaper natural gas-fired generation replaced coal during this timeframe, the share of coal-based generation fell in all but four states, and the emissions intensity numbers have dropped along with them.
However, while economics explains some of the shift to natural gas, Chadha found that seven of the 11 states that most dramatically decreased the average emissions intensity of their electricity generation had implemented some kind of price on carbon, either through the Regional Greenhouse Gas Initiative (RGGI) or California’s cap-and-trade program. RGGI-member Vermont topped the list with a 69% decrease in emissions intensity.
“We can see that the states that have implemented a price on carbon have seen a reduction in coal-based power plants,” Chadha said.
The good track record of the RGGI states and California in eking more electricity generation out of fewer emissions may prompt other states to look towards market-based mechanisms as they draft plans to meet the new regulations.
Tom Lawler, the DC representative for the International Emissions Trading Association, expects states to propose cap and trade and bottom-up linkages with existing programs. “When EPA comes up with its guidelines, I fully expect and hope that more states will step up and say they want to link up with RGGI states or California as their way of complying with the EPA regs,” he says.
Source or System?
A market-based approach to meeting power plants regulation would, however, depend on whether the EPA allows states to implement a system-based approach to emissions reductions.
The proposed 2013 regulations for new power plants define a source-based approach, offering different emissions intensity standards for new natural gas- and coal-fired plants. New natural gas plants must meet a 1,000 lb CO2/MWh, while coal plants have an extra 100 lbs of wiggle room.
Whether the regulations for existing power plants will match those for new ones is yet to be determined, but the numbers indicate that further regulation could accelerate the U.S.’s shift away from coal. Currently, the average emissions intensity of coal-fired plants in the United States is 2,249 lb CO2/MWh – well above the proposed regulation – while at 1,135 lb CO2/MWh, the average natural gas plant is already close to the legal limit for new generation.
Some in the industry hope that carbon capture and storage (CCS) could eventually make new coal-fired generation viable under the regulation, but so far no U.S. power plant has implemented commercial-scale CCS. And, as Lawler points out, getting individual coal plants into compliance without CCS could be difficult: “There is only so much one can do from an engineering perspective to improve the efficiency of a power plant – maybe 8% to 9% improvement.”
So, in the absence of commercially viable CCS, will states turn to market-based mechanisms to meet carbon regulation? Such a systems approach would cap emissions on the state or even regional level rather than on the scale of individual power plants.
Jon Costantino, a senior advisor at law firm Manatt, Phelps & Phillips, thinks states will push for a market-based approach to the regulation that zooms out from the individual power plant to consider emissions reductions across the system. As previously covered in Ecosystem Marketplace, the RGGI states already are advocating for this idea. “EPA doing a direct command and control is probably not going to be the preferred alternative,” Costantino said.
Sorting out the System
A systems-based approach would raise some interesting questions. For instance, under RGGI, could a coal plant closure in Connecticut count towards emissions reduction in Massachusetts? How can cap and trade in California, which covers large industrial facilities and fuel distributors as well as electricity generators, establish equivalency? In other words, how can the state parse out emissions reductions from its power sector to prove that its plants meet the electricity sector-specific regulation? Will states be able to use offsetting as a tool to meet regulation? (Probably not, as Ecosystem Marketplace’s previous coverage suggests.)
The EPA will have the last word on answering these questions, but for now, they’re all ears. The agency’s 11-city listening tour concluded last week, but written comments can still be submitted.
We covered the COP from beginning to end, with a narrow focus on REDD and those issues still under discussion. Here is the bulk of our coverage, with a few breaking stories omitted.
Demand For Forest Carbon Offsets Rises As Forestland Under Carbon Management Grows sets the stage for Warsaw with a deep dive into the state of forest carbon markets around the world.
REDD, CDM Likely To Find A Place In New Climate Agreement: UNFCCC Executive Secretary Christiana Figueres offers hope that the troubled CDM market and REDD projects will be included in the international climate deal expected to be finalized in 2015.
Indigenous Leaders Stand Up For Active Role In REDD relates what indigenous leaders expect from forest-carbon finance
REDD Reference Levels Share Stage With Broader Land-Use Issues In Warsaw outlines the issues on the table at the beginning of the talks.
In Warsaw As In California, Forest Carbon Carrot Needs Compliance Stick explores the need for compliance drivers to boost demand for forest carbon offsets.
The REDD Finance Roundtable: A Quick Chat With EDF, WWF, and UCS takes stock of the talks on the eve of the final REDD agreement.
For REDD Proponents, No Regrets examines the early success of REDD pilot projects despite sluggish progress made in securing policy and financial support at the national and international levels.
US, UK, Norway Launch Next-Stage REDD Finance Mechanism Under World Bank examines a financing mechanism designed to support performance-based payments down the road.
After the talks, we began digging into the decisions and themes of the two-week talk, and will be rolling these stories out as they take shape.
Further stories in this series will explore the impact of individual decisions within the rulebook, the role that the rulebook can play in helping existing projects nest in jurisdictional programs, and the impact of the rulebook on the private sector.
11 November 2013 | WARSAW | Farms and forests loom large as year-end climate talks kick off here today. Negotiators are expected to agree on methods for measuring existing rates of deforestation in developing countries, and that will set the stage for clarity on how hundreds of millions – and, eventually, billions – of dollars in performance-based funding will flow to halt deforestation and promote climate-smart agriculture under the United Nations Framework Convention on Climate Change (UNFCCC).
There is, unfortunately, a catch – and it’s a big one. The 1.4 billion-ton reduction that private conservationists have undertaken will only come to fruition if developers can keep their projects going, and developers can only keep their projects going if investors step up to buy millions of tons of reductions. That translates into a multi-billion dollar cash infusion, up to ten times more than all the money that’s flowed into voluntary forestry projects to-date.
Project developers concede that a significant proportion of this demand will have to come from compliance markets like California’s and public-sector purchases from donor countries and UN agencies. With land-use front-and-center in Warsaw, common sense would dictate a simple solution: simply incorporate the existing projects into emerging frameworks. Politics, however, dictates otherwise.
“A lot of bilaterals and multilaterals on the donor side are uncomfortable with having a direct relationship with projects,” said Naomi Swickard, manager of Agriculture, Forestry, and Land Use at the Verified Carbon Standard, quoted in the State of the Forest Carbon Markets report.
“We need to define structures that can reward emissions reductions at different scales within that type of relationship,” she added.
Those structures have come to be known as “nesting” – a general term for the various ways that existing projects can somehow be woven into emerging national accounting programs.
The Nesting Option
Donor countries like Norway and UN agencies like the Forest Carbon Partnership Facility (FCPF) will be sending billions to developing-world countries over the next few years, but most of that money is targeted to “readiness” initiatives that build up carbon accounting. Performance-based funding is part of the equation as well, but that won’t start flowing until much later – and isn’t likely to end up in existing projects.
That’s partly because voluntary projects follow rigorous methodologies developed for very specific instances. They have reference levels based on local factors, and their start dates aren’t tied to national strategy. That makes it difficult for donors to actually purchase offsets outright.
What they can do, however, is support the creation of national accounting mechanisms that make it easier to calculate leakage (which is what happens when a project reduces deforestation in one region only to see it move someplace else) and that also creates a trusted regulatory framework within which existing projects can “nest”.
“Nesting can create new opportunities for projects to access different types of finance from different sources of demand,” said Swickard.
Regional Markets
Meanwhile, regional programs such as those in Australia and in California can promote the use of forest carbon offsets, which would drive the demand needed to prevent the programs already underway from backsliding. Buyers in both locations sought forest carbon offsets in 2012 in preparation for domestic compliance regulations, with these credits often receiving above-average pricing, according to the report.
While California’s compliance cap-and-trade market launched in January, regulatory delays in releasing the offset program guidelines meant that many potential forestry projects found themselves in a holding pattern, an impact that would have been more noticeable in the North American region had it not been for significant volumes traded in the Chicago Climate Exchange’s offset program, according to Ecosystem Marketplace Co-Director Molly Peters-Stanley. Meanwhile, the future of Australia’s carbon price is uncertain, with new leadership pledging to ax the country’s carbon tax.
The lack of a compliance market that fully embraces forestry projects remains the fundamental problem in raising capital for such projects, said Eric Bettleheim, CEO and Founder of Floresta Group, speaking to attendees of the 2013 State of report launch last week.
“We need a market with real demand, demand that is measurable, demand that is driven by large commercial players needing to comply,” he said. “This has eluded us again and again. It eluded us in the EU ETS. It eluded us most recently in Australia. It may even elude us in California, which I think would be a tragedy.”
“Until we have a compliance market, we’re going to continue to struggle to find a financing model which is robust and consistent,” Bettleheim added.
Following California’s Lead
California’s program currently allows improved forest management, avoided conversion and urban forestry offsets and the regulations have placeholder language that would allow international forestry offsets to become eligible. But California legislators could renew a push to prevent the state program from becoming the first compliance market to welcome REDD offsets, particularly amid vocal opposition to REDD by certain environmental and indigenous groups.
Bettleheim implored stakeholders to pressure key decision makers in California to ensure that the market works. “The real problem with carbon markets is that because it’s a legal regime, it attracts political interference,” he said. “That repeated interference causes enormous stress, particularly on an early-stage market.”
The US state, as well as other second-generation markets developing in China, Japan and South Korea, have learned from the mistakes of the EU ETS and are better designed than the programs put forth by the first movers in the carbon markets.
“My fear is that if California doesn’t work, nobody is going to follow,” Bettleheim said. “That the first generation of markets wasn’t properly designed is hardly surprising. Hopefully one of (the second-generation markets) will actually take forest credits as part of the system. I think the nearest and most impressive political and most important globally is California. Where California goes, the rest of the states go. Where (the United) States goes, a lot of the rest of the world will go.”
California has a memorandum of understanding with the Mexican state of Chiapas and the Brazilian state of Acre, with Acre seen to be further along in the quest to become the first jurisdiction-scale program to deliver REDD compliance offsets based on its use of the Verified Carbon Standard’s (VCS) jurisdictional nested REDD guidance. Between 60-95 MtCO2e of VCS REDD credits are rumored to be coming from Acre soon.
“It’s a big number,” said Alfred Evans, CEO, investor Climate Change Capital. “However, the government there is pretty sophisticated. They know what happens when you flood a market. I don’t think you’ll see millions and millions of tons suddenly transacted.”
Evans objected to the notion that the carbon markets have collapsed, citing the implementation or efforts to implement carbon markets in California, China and Rio de Janeiro and continued trading in the EU ETS, albeit at much lower prices than in previous years. Even the Australian carbon pricing program, now under threat from newly elected lawmakers, may shift from a tax to a market-based mechanism, he said. Policymakers continually return to markets as a potential tool to mitigate GHG emissions in their geographies, Evan said.
“Carbon markets have not gone away. In fact, they have proliferated,” he said. “The EU ETS hasn’t collapsed as of the last time I checked since we trade it every day. What has happened is the price has come down. But that tells us the market is working. It’s sending a signal that reflects supply and demand. It’s telling us that the design of the market might need to be addressed. It is a carbon market and it is highly relevant. And if you look around the world, it is one of many.”
Drawing in the Private Sector
Recent funds that have closed are not raising money from private equity investors, some of whom have either been burned by or lost confidence in the carbon markets, Bettleheim said. “Private investors are not here and the few that are there are very anxious and they don’t bet on carbon,” he said. “They want to know there is a hard asset that they actually can take away when the whole thing goes bust. They want downside protection.”
The problem for financing forestry projects is that these investors are stewards of private capital and they have to protect their returns, Evans said. His firm is in relatively advanced discussions around some forestry projects with other revenue streams such as agroforestry, tropical hardwoods and Forest Stewardship Council-certified wood, with carbon seen more as peripheral revenue stream rather than guaranteeing a good return on investment.
“Impact investors want a financial return and the carbon market won’t give them that,” he said.
This has led to an increasing focus on measuring and quantifying the non-carbon benefits and impacts of forestry projects, the report found. In 2012, the Climate, Community & Biodiversity Standards (CCB Standards) and the VCS introduced a joint project approval and offset issuance process, with the CCB Standards supplying the criteria for evaluating land-based projects’ community and biodiversity co-benefits.
“It’s really difficult to monetize the different impacts that forestry projects have, but for a lot of projects it’s very important to address these different impacts besides carbon,” said Kars Riemer, Consultant for NGO Face the Future.
Gloria Gonzalez is the Senior Associate in Ecosystem Marketplace’s Carbon Program. She can be reached at [email protected].
Steve Zwick is Managing Editor of Ecosystem Marketplace. He can be reached at [email protected]
New developments in the species banking sector from a case study on developing a market for gopher tortoise habitat credits to approval of a five-state incentives-based plan for the lesser-prairie chicken. Meanwhile, the debate continues over if biodiversity offsets should be permitted in the UK. And remember to support Ecosystem Marketplace with a donation to the Forest Trends campaign in the Social Entrepreneurs Challenge.
This article was originally published in the MitMail newsletter. Click here to read the original.
7 November 2013 | Greetings! Right now, we’re entering the final stretch of the Skoll Foundation’s Social Entrepreneurs Challenge. When you donate to Forest Trends, we get matching funds from Skoll too. There’s a bonus challenge this week: if we get the greatest number of donations this week, we’ll get an additional $5,000 for our organization. That means funding to pursue special projects, like in-depth coverage of the stories that matter to you.
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As for the news, we have some new developments on candidate species banking and incentives – including a new case study on developing a market for gopher tortoise habitat credits. A five-state incentives-based plan for the lesser prairie chicken was also just approved last month, though it’s not clear yet how it would interact with a developing habitat credit exchange for the prairie chicken in the same region.
How can impacts be so different? Location, for one thing: one is in the desert and the other on agricultural lands. But it’s also a matter of balancing clean energy and wildlife protection goals. We expect that stories like the two above are just going to increase in coming years. It’s an issue that doesn’t get the kind of coverage it deserves, and which we love writing about. If you find our work useful, consider donating. This week, even a tiny donation can translate into a big impact.
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—The Ecosystem Marketplace Team
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Communicating Marine Ecosystem Services Values: An “Office Hour” Highlights Reel
Linwood Pendleton, the Director of Ocean and Coastal Policy at Duke University and manager of the Marine Ecosystem Services Partnership,recently answered questions on marine and coastal ecosystem services during an interactive ‘Office Hour’ online chat. Pendleton offered his insights into the science, the politics, and the economics of developing results-based financing for oceans. Conversation was wide-ranging and touched on whether valuation is always the right strategy, tools and models, and just why marine ecosystem services are so tough to protect. If you missed the chat, Ecosystem Marketplace has coverage of highlights.
The United States faces an infrastructure crisis that will only get worse as climate change takes hold. Last month, the World Resources Institute, together with Earth Economics and the Manomet Center for Conservation Sciences, published a detailed examination of the science, the finance, and the business case for meeting the challenge with new investments in forests and green infrastructure.
The guide is intended to be a foothold for those who can champion natural infrastructure in water utilities, local conservation groups, and private businesses, and who need a persuasive case, a road map of next steps, and overarching guidance to do so. It attempts to provide the resources, science and economics, illustrations, and guidance needed to foster meaningful dialogue with watershed decision makers and stakeholders around natural infrastructure options, to secure adoption and commitment, and to begin early design and implementation steps on solid footing.
On the Plains, An Array of Incentive Proposals for the Prairie Chicken
In October, federal regulators endorsed a voluntary conservation plan introduced by the Western Association of Fish and Wildlife Agencies that uses incentives to protect the lesser prairie chicken, and thus keep it off the federal endangered species list. US Fish and Wildlife Service Director Dan Ashe said the Service will consider the plan when making a listing decision in March 2014. The plan would ramp up voluntary conservation incentives in Colorado, Kansas, New Mexico, Oklahoma and Texas, and sets a population goal of 67,000 lesser prairie chickens within a decade. Funds for incentives would come from impact and enrollment fees; oil and gas companies would pay a minimum of $20,000 to enroll.
The Western Association of Fish and Wildlife Agencies haven’t yet taken a position on another incentive-based proposal to protect the prairie chicken: a habitat credit exchange backed by the Environmental Defense Fund and a number of oil and gas companies. The exchange would take the idea a step further, and create marketable habitat credits that could be sold at auction to mitigate for impacts to prairie chicken habitat. As of yet, the proposal also is awaiting Fish & Wildlife Service approval. Meanwhile, a recent survey suggested that the prairie chicken population fell by a startling 50%between 2012-2013 – down to an estimated 17,600 prairie chickens in the five-state area that would be covered by the plan.
UK Offset Project Moves Forward Amidst a National Debate
The Telegraph last month covered the UK’s first fully realized example of biodiversity offsetting, with a story on an Oxfordshire grassland offset. A housing development was required to offset impacts to nine acres of already-degraded lowland meadow. The builder contracted with offsetting specialists with the Environment Bankto restore and protect a site eleven miles away. Project costs, including arranging for long-term management arragements by the charity Earth Trust, has so far totaled £43,000 (about USD $68,000).
The project may find itself getting a lot of unanticipated attention lately, with a proposal to scale up offsetting nationwide a subject of intense debate over whether offsets are a useful economic tool for conservation or a “license to trash.” For his own part, Environment Bank CEO Tom Tew points out to the Telegraph that offsets will make high-ecological-value sites less attractive to developers, and that “it is hard to imagine that it could be any worse” than the current planning process.
The Tortoise As Guinea Pig: Candidate Species Markets’ First Test
A new case study from the Property and Environment Research Center (PERC) examines the case of the gopher tortoise in the United States. The US Fish & Wildlife is currently considering a threatened species designation for the gopher tortoise’s entire range in the southeastern US. PERC offers an overview of candidate conservation banking, wherein private landowners receive incentives for protecting ‘candidate’ species like the gopher tortoise from parties looking to mitigate for their impacts – the US Department of Defense could be one major buyer. “If a voluntary, pre-compliance market can work for the gopher tortoise, the door will be open for other imperiled species seeking healthy habitat on private land,” writes author Laura Huggins. The candidate credit market for the gopher tortoise is expected to go live in 2014.
A bill as big as the Farm Bill (it authorizes half a trillion dollars in federal subsidies) is bound to be the source of arguments in Congress. But a major sticking point in the efforts to pass a new Farm Bill is of interest to the environmental world: whether to re-include conservation compliance requirements, which would link crop insurance subsidies to farmers’ implementing basic environmental protection measures when it comes to soil, water quality, and wetlands. If this sounds familiar – it should. The same issue came up last summerduring a failed attempt to pass a new Farm Bill before the last one expired. Right now, representatives from the House Ag Committee are horse-trading with their Senate counterparts, with the goal of getting a bill passed before the end of the year.
Rwanda’s Ministry of Natural Resources and the World Bank in early October inked a deal to introduce natural capital accounting (NCA) in the country through the World Bank’s Wealth Accounting and the Valuation of Ecosystem Services (WAVES) initiative. The chair of Rwanda’s new NCA steering committee says the approach is critical in a country like Rwanda, where careful management of natural capital is necessary: “Rwanda has few natural resources compared to its huge population,” he noted. Minister of Natural Resources Stanislas Kamanzi added that he hoped valuation would guide investment and planning decisions. “If you have wealth and you measure it in part, you cannot use it all,” he said.
Offsets for Next-Gen Solar Thermal Project a Moving Target?
Recent public hearings found scientists and regulators thinking through exactly what compensatory mitigation is going to look like for BrightSource Energy’s proposed 500-megawatt Palen solar thermal plant in Riverside County, California. It seems clear enough that offsets will be needed: “We do believe this is an unmitigatable project [onsite]” said Chris Huntley, a biologist for the California Energy Commission during his testimony. But uncertainties about impacts to birds from solar flux (i.e. intense radition from concentrated sunlight used to power a steam turbine), as well as to sand dune corridors critical to Mojave fringe-toed lizards, remain. Commission officials say that means mitigation plans may change during and after construction, as better information emerges.
Meanwhile, Solar Project in Devon Claims to Increase Biodiversity
Developers of a proposed 6.5 MW solar project on agricultural land in Devon, England, say it would actually boost biodiversity in the area. Lightsource Renewable Energy would create new hedgerows, seed wildflower meadows, and install mammal gates to enable movement of small animals in and out of the fenced site near Yelverton. Lightsource’s planning and development director Conor McGuigan explained: “The diversification of farmland with solar is a tried and tested solution for us, and we believe that when it is done responsibly it is a revolutionary way to generate clean, locally produced energy whilst retaining the land’s agricultural use and supporting local farm businesses.”
Wildlife Refuges Add $2B to the US Economy Each Year
A new study from the US Fish and Wildlife Service documents more than $2 billion a year in economic activity driven by the country’s federal wildlife refuges. Wildlife refuges also generated $343 million in tax revenues for local, state, and federal government, and created 35,000 jobs. Three-quarters of economic activity – including entrance fees and local business generated – comes from recreational birders, hikers, and picnickers; the remainder comes from hunting and fishing. In a statement, Interior Secretary Sally Jewell said that the federal wildlife refuge system is “the world’s greatest network of lands dedicated to wildlife conservation, but it is also a powerful economic engine for local communities across the country.”
NJ Wetlands In-Lieu Fee Program in Hot Water with the US EPA
The Garden State’s gotten a slap on the wrist from the federal government for failing to spend wetland mitigation fees and lacking a watershed planning approach to mitigation projects, putting it out of compliance with the 2008 federal mitigation rule and the Clean Water Act. A US Environmental Protection Agency spokesperson said that the state Wetlands Mitigation Council’s been sitting on more than $2 million in mitigation funds for over three years. The Council says a lack of staff – it relies on volunteer members – is behind it missing the June 2013 deadline to comply with the 2008 Rule. It’s asked the EPA for an extension until December to submit a new plan for approval.
South Australian Gov’t In Trouble Over Rumored Offset Fee Hikes
The South Australia state government is experiencing some blowback from the public over rumors that it plans to increase offset payment rates into the Native Vegetation Fund. Local governments including the Port Augusta City Council are not happy about higher offset fees, citing regional development concerns. Conservation and Land Management executive director Brenton Grear took the defense, saying that offsets have not been as effective as expected. “What is occurring is a review of the policies that apply to what is known as ‘offsetting’ when an application to clear native vegetation is made,” Grear wrote in a letter to the editor last month. The Department of Environment, Water and Natural Resources would not confirm whether offset fees would increase.
Responsible Business Forum on Sustainable Development
The Responsible Business Forum on Sustainable Development will bring together business leaders, NGOs and policy-makers from around Southeast Asia to discuss commitments and policy recommendations to increase sustainability across seven sectors – agriculture & forestry, palm oil, consumer goods, mining, financial services, building & urban infrastructure and energy.The forum will discuss the transformational journey to the green economy and offer practical ways to accelerate business solutions and policy frameworks for a more sustainable world. 18-19 November 2013. Singapore.
The inaugural World Forum on Natural Capital will be the first major global conference devoted exclusively to turning the debate on natural capital accounting into action. It will build on the enormous private sector interest shown at the United Nations Earth Summit in Rio in June 2012 and the many developments that have taken place since. The World Forum on Natural Capital will bring together world-class speakers, cutting edge case studies and senior decision makers from different sectors, in order to turn the debate into practical action. Lively plenaries and interactive breakout sessions in four conference streams will explore the risks and opportunities for business, allow access to the very latest developments and provide an opportunity to help shape the debate through dialogue between policymakers, business leaders and prominent experts in the field. 21-22 November 2013. Edinburgh, Scotland, UK.
2014 National Mitigation & Ecosystem Banking Conference
The only national conference that brings together key players in this industry, and offers quality hands-on training and education sessions and important regulatory updates. Learn from & network with the 400+ attendees the conference draws, offering perspectives from bankers, regulators, and users. 6-9 May 2014. Denver, Colorado.
Conference on Ecological and Ecosystem Restoration
CEER is a Collaborative Effort of the leaders of the National Conference on Ecosystem Restoration (NCER) and the Society for Ecological Restoration (SER). It will bring together ecological and ecosystem restoration scientists and practitioners to address challenges and share information about restoration projects, programs, and research from across North America. Across the continent, centuries of unsustainable activities have damaged the aquatic, marine, and terrestrial environments that underpin our economies and societies and give rise to a diversity of wildlife and plants. This conference supports SER and NCER efforts to reverse environmental degradation by renewing and restoring degraded, damaged, or destroyed ecosystems and habitats for the benefit of humans and nature. CEER is an interdisciplinary conference and brings together scientists, engineers, policy makers, restoration planners, partners, NGO’s and stakeholders from across the country actively involved in ecological and ecosystem restoration. 28 July – 1 August 2014. New Orleans, LA.
Face the Future is hiring a Team Leader and Senior Consultant Natural Resource Management (combined function) who will be primarily responsible for the management, strategy development and implementation of the Environmental Advisory unit and the Project Development unit, with a strong focus on business development. Responsibilities:
Further develop and implement the strategy for business opportunities for the Environmental Advisory unit and the Project Development unit.
Create and build relationship with clients, partners, funders and investors, developing the consultancy business in the landscape development, forestry and climate change sector.
Represent Face the Future in our business network and in conferences and workshops.
Manage the team of NRM experts.
Provide consultancy in the field of (carbon) forestry, PES and agroforestry.
Access finance for PES and integrated landscape management projects, including forest carbon projects.
Supervise the development of forest carbon projects and other PES projects.
Administration and Finance Officer, Coastal Resources Management Program
Wildlife Conservation Society – Bata, Equatorial Guinea
The Administration and Finance Officer is a full-time position, based in the city of Bata, Equatorial Guinea. Key duties include:
Set up and administer a financial management system to ensure that the program funds are administered based on WCS practices and policies.
Ensure that financial information flows smoothly between the program and the Global Services Center of WCS/NY.
Install and manage WCS accounting software.
Elaborate appropriate administrative policies for managing purchasing, inventory, vehicle use, and other matters.
Support the INDEFOR-AP administrator in the management of subgrants to ensure compliance with WCS financial management practices and policies.
Support INDEFOR-AP to define and implement measures to strengthen its ability to manage financial resources according to international standards of efficiency and transparency.
Train the Administrative Assistant to assume greater responsibility for program management.
1 November 2013 | Natural ecosystems like forests and wetlands provide essential services to water utilities, businesses, and communities—from water flow regulation and flood control to water purification and water temperature regulation. To ensure these ecosystem functions and associated benefits continue, com- munities can strategically secure networks of natural lands, working landscapes, and other open spaces as “natural infrastructure.” While concrete-and-steel built infrastructure will continue to play a critical role in water storage and treatment, investing in natural infrastructure can reduce or avoid costs and enhance water services and security as part of an integrated system to cost-effectively deliver safe drinking water.
Now is a critical moment facing water resource managers and beneficiaries nationwide. Much of America’s aging built infrastructure for drinking water is nearing the end of its useful life, according to the American Society of Civil Engineers. Yet funds for investment in water infrastructure are drying up in an era of fiscal austerity. As utility rates for drinking water are increasing faster than inflation and household incomes (Harris 2012), the need is clear for lower cost, integrated solutions to meet water infrastructure demands of the 21st century.
Recognizing this critical moment, water resource managers are looking to invest in ecosystems to address emerging water issues. Promising efforts across the country have secured natural infrastructure for water management objectives through a variety of means—from land acquisition, zoning ordinances, and conservation easements to catastrophic wildfire risk mitigation and pay- ments to private landowners for best management practices. These efforts have yielded a number of valuable lessons and highlighted several challenges.
A number of barriers have impeded efforts to scale up the integration of natural infrastructure into water management nationwide. For example, many utilities, municipalities, and businesses face knowledge gaps among key constituents or even internal decision makers. These entities often lack the financial resources or technical guidance needed to champion natural infrastructure. Moreover, utilities have struggled to quantify the ecological and economic benefits of natural infrastructure, a task made more difficult by imperfect science.
Even where the case has been made, public utilities work with financial accounting standards that do not enable operations and maintenance spending on natural infrastructure as part of normal business practices, despite the clear benefits. Ultimately, however, the movement toward widespread, landscape-level investments in natural infrastructure nationwide can be successful if key decision makers in key institutions have the understanding, know-how, and tools needed to act.
In light of these challenges and opportunities, this guide is intended to be a foothold for those who can champion natural infrastructure in water utilities, local conservation groups, and private businesses, and who need a persuasive case, a road map of next steps, and overarching guidance to do so. It attempts to provide the resources, science and economics, illustrations, and guidance needed to foster meaningful dialogue with watershed decision makers and stakeholders around natural infrastructure options, to secure adoption and commitment, and to begin early design and implementation steps on solid footing. It is the most comprehensive publication of its kind to date, pulling together the perspectives of 56 authors spanning the stakeholder groups and experts who need to be involved for natural infrastructure efforts to be successful. As such, it is a go-to reference for their colleagues across the water resource management and conser- vation fields, agencies at all levels of government, and academia.
Together, these authors have threaded together the evolving “story” of the forest-based natural infrastructure approach to source water protection. These take-aways from the economics and underlying science, the opportunity for the approach across the country, and lessons for program design and implementation comprise the guidance and over- arching narrative of this guide.
Economcis
The economic benefits can be substantial. High source water quality and well-regulated flow can reduce the capital and water. Numerous studies have affirmed the intuitive: High source water quality can reduce treatment costs. And across the United States, we have seen utilities with high source water and even major capital investments, by bypassing elements of the conventional treatment process. Similarly, ecosystem-regulated water flow can have substantial economic benefits by avoiding flood-related damage and maintaining water supply through dry seasons.
The financial case can be made. The case for natural infrastructure investment has been made in several watersheds nationwide, and a methodology for “green-gray analysis” is available to compare the financial merits of integrated natural and built infrastructure alternatives.
Natural infrastructure investments are actionable despite uncertainty. Ultimately, the strength of natural infrastructure economic analyses depends on the robustness of the underlying science. Even where detailed scientific modeling has not been conducted, conservative assumptions and careful sensitivity analyses can produce actionable results. However, being overly conservative about costs and benefits can also lead to underestimation of the returns of natural infrastructure.
Science
The scientific foundation is imperfect, but robust. The water-related functions of healthy forested landscapes are well- established; maintaining healthy, forested landscapes and implementing best practices in forestry management can be effective strate- gies for promoting source water quality and regulating flow. For example, forests help to anchor soil against erosion, promote infiltration and minimize overland flow, prevent nutrient delivery to streams, minimize the impact of rain-on-snow events, and maintain snow pack later into the spring. Best practices in forest management can help maintain these critical functions and mitigate the potentially negative impacts of activities such as timber harvest and road construction.
Inherent variability poses challenges for quantification. While the science is robust, there is inherent variability across and within watersheds in the magnitude of water resources impact of a given land cover change or management practice. Quantitative water- shed models can help to address part of this variability. These tools are advancing in reliability and usability, and can account for a portion of the variability in natural ecosystems. While there is a growing number of applications of these models, modeling remains relatively resource-intensive and results inevitably come with some level of uncertainty.
Risks and uncertainty can be managed. Despite residual scientific uncertainty, natural infrastructure options are actionable. Given robust but imperfect science and the need to prevent the perfect from being the enemy of the good—as in all things—the dominant approach to natural infrastructure investments has been to manage uncertainty and maximize cost-effectiveness by: a) prioritizing types of interventions (e.g., easements and best management practices) and the distribution of those interventions throughout the watershed, b) carefully monitoring the response of water resources throughout implementation, and c) managing investments adaptively to maximize outcomes.
Opportunity
The opportunity is widespread. Water- sheds across the United States have opportunities to integrate natural infrastructure alongside critical built infrastructure. The fundamental conditions needed for natural infrastructure to be a potentially viable solution to water needs are quite basic and found in diverse watersheds across the United States. Unfortunately, costly water management challenges are increasingly widespread in the United States. Where there is a clear connection between these challenges and ecological conditions on the landscape—for example, loss or degradation of natural ecosystems due to development, wildfire, invasive species, or unsustainable forestry—the natural infrastructure investment approach can play a role.
Local decision maker participation is critical for success. The success of the approach depends on the ability of natural infrastructure champions to make the case to local decision makers and stakeholders, and to articulate a vision of success. Early engagement efforts with decision makers should be careful to understand and take into account their priorities, preferences, and perceptions related to water delivery, source water management, and natural infrastructure.
Design and Implementation
Cultivating partnerships is an important first step toward success. In each of the successful attempts to build robust pro- grams for investment in natural infrastructure, essential components have been collaboration among a variety of stakeholders and experts, and the emergence of champions within stake- holder groups to push the program forward. The co-benefits associated with natural infra- structure—benefits such as carbon sequestration, wildlife, and recreation—can motivate a wide range of stakeholder groups to partner with water utilities and other beneficiaries. These partnerships can be critical to success as they expand available resources, increase capacity, and provide political capital.
Landowner participation is essential in privately owned watersheds. Landowners are highly independent, value their autonomy, and generally engage in agriculture or forestry because it is a way of life as well as an eco- nomic enterprise. In addition to the financial inducement being offered, landowners con- sider how the program is designed and admin- istered as part of their participation decision.
Investment must be large-scale and sus- tained. A long list of public, private, and hybrid public/private finance mechanisms is available to get dollars on the ground to restore, enhance, protect, and manage natural infrastructure for water resources. The primary challenge is to select a finance mechanism (or combination of mechanisms) that is capable of gaining the nec- essary political support for adoption, while also generating sufficient funds for meaningful and sustained investment in natural infrastructure.
While there are several challenges facing the natu- ral infrastructure approach, several forest-based water management efforts have been successfully implemented in watersheds across the United States to provide clean and abundant source water at reduced cost and with a suite of co-benefits for people and nature. These efforts and the lessons they produced are profiled in this guide.
From experience with the natural infrastructure approach, a set of “action items” are evident for both watershed stakeholders and the broader community of practitioners working to scale up the approach nationwide.
Action items for water managers, conservationists, and other stakeholders at the local watershed level
Assess the watershed for ecological condition and trends causing water-related issues tied to substantial current or projected costs;
Engage with key stakeholders and decision makers early and often to articulate a vision of success, expand capacity for program development and implementation through strategic partner- ships and consultation with experts, and build on the lessons of past successes and failures;
Conduct necessary economic analyses to determine if natural infrastructure is the best approach and to make the case for financial investment;
Assess a broad array of finance mechanisms with an eye toward securing large-scale “anchor funding” as well as a broader “funder quilt” to ensure meaningful and sustained investment over the long term;
Prioritize investments across parcels and interventions (i.e., reforestation or forest best management practices), monitor outcomes, and adapt investments accordingly.
Action items for the broader community of practitioners
Actively participate in the community of experts, facilitators, consultants, and “mobilizers” seeking to scale up integration of natural infrastructure into water management strategies, in order to leverage others’ efforts;
Assist in securing large-scale natural infra- structure funds such as bonds by ballot mea- sure and natural infrastructure “set-asides” like the 20 percent green infrastructure require- ment in the State Revolving Funds (SRS);
Expand research to quantify forest-to-water connections and improve the reliability and accessibility of watershed models;
Improve accounting standards to enable opera- tions and maintenance spending on natural infrastructure by public entities as part of normal business practices;
Build awareness among the water resource management industry, the urban planning field, ratepayers, and taxpayers of the impor- tance of natural infrastructure as a cost-effec- tive and beneficial element of an integrated solution to emerging water issues.
Perhaps the two most important lessons learned from natural infrastructure efforts to date are the power of individuals and the importance of partner- ships. Ultimately, the most effective messengers to decision makers and stakeholders affecting natural infrastructure decisions at the local level are influential individuals within their own institutions. Behind successful natural infrastructure programs are consistently the often-unsung source water coordinators, conservation staff, and sustainability officers creating real change.
These champions can be those in positions of power, but they need not be. A source water coordinator or manager in a public utility, a risk manager in a private business, or a water program manager in a state environmental agency can have immense impact within their respective institutions—many have been creating that impact for decades. These champions lead and inspire by offering fresh ideas and creativity where precedent might otherwise win the day—and by coming to the table with the evidence base to support those ideas. They identify likely challenges within their institutions and seek external support where appropriate to overcome those challenges.
In the source water context, these champions may need to help decision makers step outside the bounds of their primary roles and grow their competencies through various learning processes. Water utilities and municipalities that have been able to innovate in the face of the internal and external challenges they face recognize that bringing the natural infrastructure approach to scale will require institutional change in combination with a concerted effort to provide external cover by raising public awareness.
At the same time, successful cases have illustrated the importance of leveraging the resources, capacity, and political capital of a wide set of partners—including those who have not traditionally partnered with water utilities. The wide range of benefits offered by natural infrastructure—not just for water but also wildlife, recreation, climate, and rural economic development—offers a salient opportunity to build new coalitions across utilities, rural landowners, conservation groups, and private businesses.
But the task is not easy. As one utility staffer put it, if this were so, we’d have been doing it at scale a long time ago. This guide can be a resource for these individual champions and their partners as they work to gain traction for investment in natural infrastructure in their watersheds.
A Background on Natural Infrastructure
In the late 1990s, in the face of growing development pressures in its largely privately- owned Catskill and Delaware watersheds, New York City initiated a plan to protect its source water and avoid the cost of an $8–$10 billion filtration plant. Strategic investments in its 2,000-square-mile watershed were estimated to cost $1.5 billion. This watershed program staved off the need to build a filtration plant and provided an annual $100 million injection to the rural economy in the upper reaches of the watershed. The program provides financial incentives to forestland owners to keep forest intact and to farmers to fence off livestock, as well as payments to local contractors to install septic tanks and stormwater protection measures.
The fundamental premise of this highly cited example, and the “natural infrastructure” approach more generally, is that healthy natural ecosystems provide essential services to water utilities, governments, and businesses—from water flow regulation and flood control to water purification and water temperature regulation. Investments in natural infrastructure can complement essential concrete-and-steel built infrastructure components as part of an integrated system for water treatment and storage. This integrated approach is commonly referred to by the U.S. Environmental Protection Agency (EPA) and the industry as the “multi-barrier approach.”
Todd Gartner is a Senior Associate in WRI’s Forest, Food and Water Program. He can be reached at [email protected]. James Mulligan is Executive Director of Green Community Ventures. Rowan Schmidt is a Research Analyst at Earth Economics. John Gunn is the Executive Director of the Spatial Informatics Group-Natural Assets Laboratory.
The California Air Resources Board (ARB) was expected to vote on several draft amendments to carbon market regulations last week, including the proposed Mine Methane Capture (MMC) offset protocol, but put off a vote in the context of lively debate. The delay could shrink the volume of offsets available during the second compliance period of the state’s cape-and-trade program.
This article was originally published in the V-Carbon newsletter. Click here to read the original.
30 October 2013 | In London on November 6th…
STATE OF THE FOREST CARBON MARKETS 2013 REPORT LAUNCH
Forest Trends’ Ecosystem Marketplace will unveil its most recent State of the Forest Carbon Markets report on November 6, 2013. The report, which details our latest findings on the state of forest carbon projects’ structure, standards, and finance, will be freely available on both the Ecosystem Marketplace and Forest Carbon Portal websites on and after this date.
In 2012, the State of the Forest Carbon Markets report was Ecosystem Marketplace’s most widely-accessed research product. This year’s edition explores topics ranging from global market activity; to the time-cost of the project cycle; to the changing dynamics of forest finance. Supported by more data points and representing projects in more locations than ever before, we’re confident that our 2013 report will inform a broad range of policy, practitioner and investment discussions.
Join us to learn about the results first-hand at our London launch event! Hosted by Ecoinvest Services/Bunge Environmental Markets, we will host a panel of experts to present and discuss report findings from 4:30-6pm, followed by cocktails. RSVP here to reserve a space – and act fast, space is limited to 50 seats!
The California Air Resources Board (ARB) met last week but did not vote to approve the addition of the proposed Mine Methane Capture (MMC) offset protocol, as expected. Instead, the board voted on a resolution to provide staff with more guidance on proposed amendments to the state’s cap-and-trade regulation.
In the context of a potential shortage of available offsets, many stakeholders have their sights on the proposed MMC offset protocol that could produce a potential domestic offset supply of 60 million tonnes of carbon dioxide (tCO2e) in emissions reductions, according to an ARB presentation on Friday. The proposed methodology covers activities from three project types: active underground mines, abandoned underground mines, and active surface mines. Under the protocol, the methane that would otherwise be vented or drained to the atmosphere is either destroyed or captured to generate heat or electricity.
Public comment on the protocol was mixed. Groups that oppose its adoption are generally skeptical of offsets sourced from fossil fuel companies. In their submitted comments, nonprofit Food & Water Watch calls the protocol a “pay to pollute scheme” and claims that the protocol could “even cause an increase in coal production.”
Supporters of the protocol’s adoption say that offset revenue would not increase coal production but would rather incentivize the installation of methane capture technology, which is currently not required by law. Harold Buchanan, CEO of CE2 Carbon Capital, says that the reality is that fugitive methane emissions are unregulated, and coal mines have no incentive to invest in its capture without the MMC protocol.
In their comments to the ARB, Solvay Chemicals, which operates an underground trona mine in Wyoming, said that they are considering doubling the capacity of their mine methane capture treatment system, and that the ARB’s adoption (or not) of the MMC protocol will play a key role in that investment decision. Because capital for new projects will be “very tight” until the protocol is approved, the delay could significantly shrink the volume of offsets available from coal mine projects during the second compliance period, said one MMC project developer. The protocol does not preclude future regulation.
The ARB’s staff is now tasked with answering the questions raised by the latest guidance document, even as they continue to accept public comments. They will revisit the MMC protocol in the spring, along with the rice cultivation protocol, which was delayed last August. Read more about the draft amendments under consideration by the ARB below.
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Voluntary Carbon
Big plans for small projects
The Gold Standard Foundation this month registered its first project under the Programme of Activities approach for micro-scale projects (called mPoA for short), which allows emissions reduction projects of less than 10,000 tCO2 per year that share the same baseline and methodologies to join forces under a single Programme. The first mPoA is a cookstove project in southeastern Rwanda funded by Climate Corporation Australia and developed by co2balance that aims to distribute 1,600 Carbon Zero stoves to rural households. The development of the micro-scale approach, which is meant to reduce transaction costs and open up opportunities for otherwise too-small projects to access climate finance, was funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. The Gold Standard has more big (or should we say small?) plans in the works: 12 micro-scale Programmes in Asia, Africa, and Latin America are in their pipeline.
Better World Club, the “nation’s only eco-friendly auto club” recently announced that it would offset “one of the nation’s most important sources of hot air: the U.S. Congress.” Based on a Department of Energy estimate of Congress’ emissions, the group says that the “Capitol Power Plant” emits more than 100,000 tCO2e per year, but the Better World Club can only afford to offset 100 tCO2e of the carbon pollution. “We’re not Warren Buffett, so we can’t offset all of it!” they write. The offset purchase will support emissions reductions at an industrial recycling facility in California. Better World Club, which provides roadside assistance and insurance, promotes less driving and investment in public transportation but encourages Americans to purchase carbon offsets to mitigate unavoidable emissions. They have a carbon calculator for drivers on their website.
London-based Standard Chartered Bank last week renewed its contract with DHL GOGREEN to offset its shipping emissions for another three years, through 2016. In 2012, the bank offset 1,900 tCO2e through DHL to neutralize its emissions from shipments to 21 countries. The DHL GOGREEN program is opt-in for customers like Standard Chartered Bank that pay a modest surcharge to neutralize the carbon dioxide emissions of their shipments. The offsets support a portfolio of GOGREEN-approved projects, including ceramic water purifiers in Cambodia, reforestation in Uganda, wind energy in China and Nicaragua, and a biomass power plant in India. Last year, DHL customers sent 2.4 billion shipments through GOGREEN, neutralizing 180,000 tCO2e. In 2013, they’re on track to increase that number. The offsets all meet Certified Emissions Reduction (CER) or Verified Emissions Reduction (VER) Gold Standard requirements and are verified by Swiss-based Societe Generale de Surveillance, an independent United Nations (UN) auditor.
Yesterday, a 65,000-hectare portion of the Jari-Amapa forest in the Brazilian Amazon achieved third-party verification as a carbon offset project under the Verified Carbon Standard. The project, developed by Biofílica Environmental Investments, will leverage capital to deter the major drivers of deforestation in the area–including cattle ranching, expanding human settlement, and infrastructure projects–to avoid over 3 million tCO2 of emissions under the Reduced Emissions from Deforestation and forest Degradation (REDD) protocols. The Jari-Amapa forest, which covers 200,000 acres in total, is Forest Stewardship Council certified, and its harvesting operations by Brazilian forest products company Jari Forestral are carefully planned based on monitoring and inventory data. The forest is home to more than 150 threatened species.
Last week, Finite Carbon registered 4,000 acres of the Shannondale Tree Farm with the Climate Action Reserve (CAR). The farm belongs to the Missouri Mid-South United Church of Christ and marks the first religious organization in the U.S. to complete a carbon offset for CAR. The project qualifies for more than 120,000 offsets and can supply early action offsets to California’s cap-and-trade program. “One of my personal hopes is that the churches will use this moment to inventory their own emissions of carbon through travel, heating and cooling, and plastic purchases, and to commit to reduce our church-wide carbon footprint.” said Rev. Dr. Davida Foy Crabtree, UCC Missouri Mid-South Acting Conference Minister.
Developer Finite Carbon and transportation company Norfolk Southern have registered the Brosnan Forest Improved Forest Management carbon project in South Carolina under CAR’s forest project protocol. The project has resulted in more than 282,000 compliance-eligible carbon offsets at initial registration and is being transitioned as an early action project for the California cap-and-trade program. Brosnan Forest stretches over 14,400 acres in South Carolina’s Lowcountry, almost half of which is longleaf pine forest, a threatened ecosystem that provides habitat for some of the last remaining populations of red-cockaded woodpeckers, an endangered species. Norfolk Southern’s subsidiary Railway Company operates 20,000 miles of track across 22 states and supports reforestation efforts along and around its route, focusing on restoration of longleaf pine and American chestnut forests.
In the wasteland of Deramandi, India outside of New Dehli, the grasslands and native flora that once flourished are beginning to make a comeback after a century of degradation from urbanization and open cast quartzite mining. The revegetation project launched in 2008 after the government handed the land over to the Eco-Task Force of the Indian Territorial Army, members of which did most of the planting. It was recently accepted under the UN’s Clean Development Mechanism as an urban forestry project–the only one of its kind in India. The project is expected to save 12,138 tCO2e per year, but the forest department says it is too early to say how much money the sale of the CERs will generate, which depends partly on whether they find a buyer in the compliance or voluntary markets.
The California ARB met last week to discuss several draft amendments to carbon market regulations. The proposed changes include adding liquefied natural gas production facilities and importers as regulated entities; clarifying what counts as ‘resource shuffling,’ a practice that is prohibited under the cap-and-trade regulation; and adopting MMC as a new offset protocol, among other amendments. The Board has received 101 public comments on these proposed amendments to the cap-and-trade regulation since September. Diverse stakeholders–from the Central Contra Costa Sanitary District to the Yurok Tribe to Southern California Edison Company to the Sierra Club–have voiced their views. The Board was expected to decide on the amendments last week, but delayed the vote in the context of lively debate.
The governors of California, Oregon, and Washington and the premier of British Columbia yesterday signed the Pacific Coast Action Plan on Climate and Energy. The four sub-national governments have agreed to coordinate their 2050 greenhouse gas (GHG) emissions targets and interim goals. California and British Columbia will maintain their respective cap-and-trade and carbon tax programs and their clean fuel standards, while Oregon and Washington are moving forward to implement similar policies. “We are the first generation to feel the sting of climate change and we are the last generation who can do something about it,” Governor Jay Inslee of Washington said of the agreement. Governor Jerry Brown of California called climate change the “world’s greatest existential challenge” and said that, though states can’t make much single-handed progress on climate change, linkages can be powerful. The group has a meeting scheduled with Chinese leaders in January. The four-state region has a population of 53 million people and a combined GDP of $2.8 trillion.
CAR’s Board of Directors just adopted the organization’s Mexico Forest Protocol. The protocol marks several years of collaboration between California, Mexico and CAR and was created with special attention given to ejidos’ (local communities) involvement. The Mexican Forest Protocol uses a standardized approach for measuring avoided deforestation and enhanced carbon sequestration while enhancing Mexican environmental and social safeguards. It was designed for integration within evolving Mexican REDD+ policies and could play an important role if California seeks REDD offsets for its cap-and-trade program. The protocol will “spur innovation in Mexico… and support California’s ongoing efforts to reduce greenhouse gas emissions, while expanding business opportunities and job creation,” explains Senator Lou Correa (D-Santa Ana), chair of the Select Committee on California-Mexico Cooperation.
The US Environmental Protection Agency (EPA) last week began an 11-city “listening tour” to gather input as they draft emissions rules for existing power plants. Each commenter will have three minutes to make a statement to agency representatives. One of the big questions on the table is whether the EPA will opt for a rate-based approach, which would set a standard for each power plant, or a mass-based approach, which would credit states for reducing pollution across a variety of sectors. Officials from the nine northeastern states in the Regional Greenhouse Gas Initiative (RGGI) and from California’s cap-and-trade program are expected to make the case for the mass-based approach they’ve already taken, arguing that their power plants are compliant with carbon regulation. The rules for existing plants, which will be finalized in June 2015, are the next regulatory step after the agency proposed regulations for new power plants in September.
Kenneth Kimmell, Commissioner of the Massachusetts Department of Environmental Protection, was elected the new chair of RGGI Inc, the nonprofit organization overseeing the RGGI cap-and-trade program in the Northeast US, in mid-October. He will replace current chair Collin O’Mara in January. The nine RGGI states are expected to complete approvals of the planned overhaul of the program by January, which would allow RGGI to reduce its 2014 emissions cap by 45% and adopt a new offset category known as sequestration of carbon due to reforestation, improved forest management or avoided conversion. O’Mara also reiterated that the RGGI program would be an appropriate compliance mechanism for federal carbon regulations expected next year. In addition, the RGGI Inc board unanimously approved the proposed 2014 operating budget of about $2.3 million, slightly lower than the 2013 budget and a 10% decrease from the 2012 budget.
Thirteen European environment ministers who call themselves the “Green Growth Group” yesterday released a document that called on the European Union (EU) to adopt ambitious energy and climate goals and reform the EU Emissions Trading Scheme (ETS). Ed Davey, Britain’s energy and climate secretary, said that the US and China are “catching up” to the EU on renewable energy technology and urged the EU to push for a target of a 50% cut in emissions from the 1990 baseline by 2030. (The current basis for the EU ETS is a 20% cut from 1990 levels by 2020.) Connie Hadegaard, the European Commissioner for Climate Change, said that the executive body of the EU is analyzing the impact of slightly less ambitious targets for 2030, comparing scenarios of 35%, 40%, and 45% GHG reduction targets. The proposals will be discussed during the Brussels summit in March that is expected to clarify the EU’s position for the much-anticipated 2015 UN negotiations, when countries will lay the groundwork for binding emissions targets.
All eyes are on Chancellor Angela Merkel of Germany, who earned reelection last month, as coalition negotiations between her Christian Democratic Union party and the Social Democratic Party are underway. Two weeks ago carbon permit prices spiked after Merkel mentioned her support of backloading–or delaying the sale of some EU ETS permits to tighten supply and bolster crashing prices–in a speech. Last week, the slow pace of the negotiations prompted prices to fall again by more than 10 percent, and some analysts don’t expect Germany’s Climate Change Committee to vote on backloading until 2014. Germany’s position is seen as key in breaking the current deadlock over what (if anything) to do about oversupply in the EU ETS.
The GFI Group closed its carbon desk in London in October due to lethargic trading of EU permits. In the context of an allowance surplus, emissions allowances trading was down 79% last month compared to a year ago, with prices falling 23% in 2013. Permits for December are selling at 5.12 euros (US $7.01) per tCO2e. GFI’s European brokerage services will now be handled from their main offices in New York.
New government modeling shows that New Zealand’s GHG emissions are set to rise nearly 50% by 2040, from their current level of about 60 million tCO2e to 90 million tCO2e. The models account for the fact that many of the trees planted in the 1990s are expected to be harvested in the coming decades. Current carbon prices on New Zealand’s ETS are too low to incentivize much tree planting: domestic permits trade at NZ $3.75 (US $3.15), but regulated entities can also purchase UN CERs for just 30 cents. Legislation to strengthen the ETS last year by disallowing international credits and by including the agricultural sector fell through. Kennedy Graham of the Greens party wrote on his blog that it is this kind of “policy incoherence” that often wins New Zealand the infamous fossil award, assigned daily at the international climate negotiations to the country that is obstructing action on climate change mitigation.
After signing an agreement to link their cap-and-trade program with Quebec’s earlier this month, California is forging ahead with another relationship–this time with China. The San Francisco-based Bay Area Council and the Chinese Chamber of Commerce for Imports and Exports for Machine and Electronics–a group that represents more than 10,000 manufacturers–have signed an agreement to promote technologies that slash emissions at oil refineries, power plants, wastewater treatment facilities, and the like. Members of the partnership will also push the expansion of carbon markets in China–there are currently seven pilot programs in the country–and they’re keeping the option open to connect the Californian and Chinese carbon markets.
As the world waits to see if Prime Minister-elect Tony Abbott will be able to make good on his campaign promise to send Australia’s carbon tax up in flames, the countryside itself is burning: 70 wildfires raged through the bush last week, devastating more than 25,000 hectares and approaching the outer suburbs of Sydney. Adam Bandt, the deputy leader of the Australian Greens party that currently hold the majority in the senate, tweeted this week that Abbott’s backward movement on climate change mitigation means “more bushfires for Australia.” 2013 is on track to be the hottest year on record for the country, and long periods of hot, dry weather increase the risk of wildfire. Industry groups remain strong supporters of the Prime Minister’s plan, and Chamber of Commerce and Industry chief Greg Evans said last week that scrapping the carbon tax would provide $1 billion in economic growth.
Costa Rica, which aims to become the first carbon neutral country by 2021, has created a new financial institution, aptly called BANCO2, to handle carbon credit trading. The bank will deal with Costa Rica’s compensation units, called UCCs, as well as UN CERs, and some types of voluntary market credits. Fonafifo, the Costa Rican government’s forestry company, has made 1.2 million tCO2e worth of CCUs available through BANCO2, selling them at $5 each. And transport operator Reyna del Campo has agreed to pass on its rights over UCCs from an efficient vehicles project to the bank. BANCO2 plans to support greenhouse gas reducing projects: “If a company, for example, wants to switch its energy source for a cleaner one, we could support it. If a family wants to buy solar panels to reduce its energy consumption, we could support it,” Rene Castro, Costa Rica’s environment and energy minister, said.
Governance of Forests Initiative Project Manager/Senior Associate – World Resources Institute
Based in Washington DC, the Project Manager/Senior Associate for the World Resource Institute’s (WRI) Governance of Forests Initiative will provide project leadership towards the goal of strengthening land use laws and practices that reduce deforestation and increase communities’ rights to natural resources. The Project Manager will help develop country-level strategies for Brazil, Cameroon, and Indonesia, as well as global strategies through international institutions. The position requires an advanced degree in a relevant field and at least 5 years experience working on issues related to forest governance.
Team Leader/Senior Consultant Natural Resource Management – Face the Future
Based in Holland, the Team Leader/Senior Consultant will develop and implement strategy for Face the Future’s Environmental Advisory unit and Project Development unit. The position requires building relationships with clients, accessing financing for payment for ecosystem services (PES) projects, representing Face the Future at conferences, and managing a team of experts. Candidates must have at least an MS and a minimum of 10 years of international experience in natural resources management and/or climate change.
Based in Germany, the Project Officer for ICLEI Local Governments for Sustainability will coordinate small- or medium-sized projects on sustainable procurement and provide training and consultancy services. The ideal candidate will have a degree in a relevant field such as public procurement or environmental sciences, excellent project management skills, and knowledge of financing sustainable infrastructure projects. Fluency in English is required; another European language is a plus.
EU Climate & Energy Policy Officer for South East Europe – Climate Action Network
Based in Brussels, Belgium, the EU Climate & Energy Policy Officer for South East Europe will support and coordinate with NGOs on their no coal campaign efforts. The position requires monitoring policy developments and creating advocacy briefs; developing network positions among NGOs; building relationships with EU institutions, think tanks, and media outlets; fundraising; and reporting on activities. The successful candidate will have 3 years of professional experience working with NGOs, preferably in a network environment.
28 October 2013 | The American Tea Party hates Obamacare. They hate it with a visceral passion because it’s a government program that may – just may – succeed where the private sector failed. Such a success would invalidate basic Tea Party tenets, so they fight it with everything they have: a few rational points and a barrage of lies, half-truths, and innuendo.
Sadly, the tactic worked. Instead of a rational debate on national healthcare, we have a cacophony of non-points and negations.
Some of the same people also hate climate science, and for the same reason: if the science is right, then their premises are wrong, and that can’t be. So they bring out the lies, the half-truths, and the innuendo – again polluting public discourse.
But the ideological right doesn’t have a monopoly on this brand of intellectual pollution. Some of our friends in the environmental community have applied this same tactic to their own bogeyman: a new wave of tools to finance forest protection called “REDD+”.
The acronym stands for “reduced emissions from deforestation and degradation”, and it describes a set of practices that includes the use of private carbon offset purchases and government-to-government payments earned by people – and policies – that save the world’s critical forest areas.
REDD+ has emerged as a powerful tool for financing forest conservation, and forestry-based carbon offset purchases alone have financed the protection of over 26 million hectares in developing countries, according to data that we’ll be releasing in our next State of Forest Carbon Markets report. That’s larger than the entire forested area of the Democratic Republic of the Congo, or the total land area of Ecuador.
Yet certain ideologues hate REDD, and they hate it with the same visceral passion that the Tea Party hates Obamacare. They hate it because they think the profit motive got us into this climate mess, and there’s no room in their worldview for a market-based mechanism that succeeds where philanthropy and traditional policies have failed.
Even the generally reliable Atlantic Monthly took the bait, and the result is a piece entitled “The Forest Mafia: How Scammers Steal Millions Through Carbon Markets“. It harvests a particularly cartoonish anti-REDD meme from an entertaining but sloppy segment that the Australian version of 60 Minutes produced last year.
The piece tells the story of David Nilsson, a serial swindler who likes to talk big and dress like Crocodile Dundee. A few years ago, he pretended to be a forest carbon project developer, and he tried to swindle some indigenous people in Peru.
His goofy plans, however, didn’t resemble any legitimate attempt at forest carbon mitigation, and most of the indigenous people he targeted as partners wouldn’t sign with him. The contracts he did sign were declared invalid, and he was roundly ignored by everyone who knew anything about conservation-based climate solutions. He has also been rightly barred from ever entering Peru, according to media reports.
60 Minutes rightly identified him as a charlatan, but they failed to differentiate him from the legitimate (i.e, boring) conservation project developers who really are using these financing tools to save endangered rainforest. Then (perhaps because there’s no glory in “exposing” an irrelevant wannabe), 60 Minutes cast him as the Bond Villain of the carbon markets: the archetypal “carbon cowboy” who is too colorful to resist, too easy to lampoon, and too much of a clown to be taken seriously. Al Jezeera picked up the meme as well, and now the Atlantic has taken the bait.
In fact, The Atlantic takes it a step further. Not only do they cast Nilsson in his familiar role as the cartoonish heavy, but they cobble together bits of a half-dozen other stories from one, two, and even three years ago – nearly all of which are outdated, many of which are irrelevant, and some of which were recognized by credible actors as wrong the day they came out. (The gist of the piece is that nasty practices like phishing and tax-dodging exist, and someone will find a way to apply them to REDD, so REDD is bad.)
The Atlantic rightly pillories Nilsson’s revolting attempts to swindle indigenous people, but it also implies that these practices take place in legitimate REDD projects. In so doing, it ignores the fact that conservation projects only work if indigenous people are on board. That, in fact, is a pillar of REDD finance and part of its beauty: it rewards indigenous people for acting as guardians of the rainforest, because it compensates them for being providers of an ecosystem service. While logging and mining extract value from the forest, conservation finance helps indigenous people keep the value there, and that means it requires their active participation. That means it works best if you treat them as equal partners rather than as museum pieces.
Legitimate project developers have always worked with indigenous people as equal partners, and the new generation of project developers are indigenous leaders themselves – like Chief Almir Surui (Disclosure: I’m helping him on his autobiography). He spent the last six years building a privately-financed conservation project by and for his own community. REDD made his project possible, and REDD itself was made possible by existing carbon standards.
Standard-setting, by the way, is another pillar of REDD finance, but the Atlantic makes only passing reference to it – and when it does, it gets it wrong, referring to the Verified Carbon Standard as the “Voluntary Carbon Standard” – a moniker that VCS abandoned two years ago.
By ignoring its sophistication, the story is able to characterize REDD as a well-intentioned device that was created by eggheads but then hijacked by scoundrels like Nilsson. In reality, the Nilssons of the world are frozen out of REDD, largely because the eggheads who created VCS and other standards knew what they were doing. But the eggheads don’t blunder around the forest dressed like Crocodile Dundee, so they don’t make good television, and they don’t get covered by 60 Minutes.
Anyone who has worked in media knows what’s happening here: a fun read needs a compelling villain, and Nilsson comes prepackaged. He’s the perfect foil for a grandstanding journalist trying to cast himself or a favorite “activist” in the role of hero.
If a journalist wants to cast the people he’s writing about as heroes and villains, he should at least make sure the characters are relevant to the larger issues he’s trying to explore. Why pick out a clown like Nilsson when scores of interesting and relevant climate heroes are doing private conservation right?
Almir is a “certified” hero, and he also dresses colorfully (Cowboys and Indios, anyone?), but there are scores of others. American project developer Mike Korchinsky and his Kenyan partner, Chief Pascal Kizaka, are using REDD to protect 500,000 acres of endangered forest in the Kasigau District in Kenya, while a woman named Leslie Durschinger is working with Buddhist Monks and subsistence farmers in the former Khmer Rouge stronghold of Oddar Meanchey, Cambodia, to save forest there. Both of these are fascinating (and colorful) stories that illustrate how REDD really works. Both projects broke new ground – both technically and socially – in project development, and both have been virtually ignored by the mainstream media.
The National Geographic of Canada did actually dive into the weeds of a project there in a way that was entertaining and informative, but that’s the exception that proves the rule. Other coverage of the same project has been muddled at best. Critiques of REDD are certainly needed if the mechanism is going to deliver real benefits, but those critiques need to be accurate.
The one good thing you can say about mainstream treatments of this topic is that they usually do touch on the critical challenges that REDD projects face. But then they they almost always ignore the real ways these challenges are being met.
Let’s take just one: tenure, which is generally phrased as being about who owns the land. This is another pillar of REDD, because if indigenous people don’t have rights to their land, they can’t reap the benefits of REDD. Lack of clear tenure has hurt many indigenous people when loggers and others come to take their resources.
Let’s now look at how Chief Almir dealt with it. Before starting his project, he asked Forest Trends (which publishes Ecosystem Marketplace) to see if there was a way to straighten out the tenure issue. Forest Trends commissioned the law firm of Trench, Rossi and Watanabe (an associated firm of Baker & McKenzie) to determine if the Surui actually owned the rights to carbon in the trees on their territory. They found that, yes, indigenous people do own the rights to income generated by carbon sequestration, and Chief Almir then leveraged this opinion into support for his project. It was a deft political maneuver, and now other indigenous groups are building on that, and similar dynamics are playing out across the globe.
REDD, in other words, is being used to help indigenous people resolve the tenure issue that loggers and others have worked so hard to obfuscate, which means REDD is helping people make progress on a thorny issue that decades of more traditional “activism” have failed to address, yet the Atlantic ignores this fact – just as it ignores almost anything that’s happened in real-world REDD in the last three years.
Take, for example, the REDD Offsets Working Group (ROW), a scientific body that just wrapped up years of open consultations among indigenous leaders, environmentalists, and governments. The ROW codified a set of rigorous procedures for making sure REDD works both for the environment and the indigenous people who use it, and it published a detailed backgrounder and policy brief in English, Spanish, and Portuguese that addresses all the issues that the Atlantic implies aren’t being dealt with.
That’s the real REDD: a concrete set of rules and procedures agreed on through an open process among diverse stakeholders and delivering tangible results – yet it’s been virtually ignored by the mainstream media.
Instead of trying to first understand and the explain and question real-world REDD, mainstream publications have been devoting massive amounts of coverage to swindlers pushing imaginary projects, and then daring to quote people who dismiss real carbon quantification processes as “imaginary” (as The Atlantic did) or unworkable (as Harper’s did three years ago in a cover story called “Conning the Climate: Inside the Carbon-Trading Shell Game“).
The Harper’s piece wasn’t as bad as the recent Atlantic piece, but it did commit the sin of sloth. The author brought the reader on a colorful journey into the rainforest, laid out the concepts, and then abruptly concluded that it was all so complicated that it will never work.
Ask Chief Almir how “imaginary” or unworkable the process is.
Members of the Paiter-Surui measuring trees to determine their carbon content.
In order to earn their carbon offsets, the Surui had to first determine which parts of their forest were in danger, and then they had to prove that only finance from the sale of offsets would enable them to save it. After that, they had to develop a plan for saving it, then get that plan approved by a series of auditors and review panels, then implement a logging moratorium, then enforce that moratorium, and finally prove that they did everything they said they were going to do.
As a first step, they brought in economists from a Brazilian organization called IDESAM to analyze logging patterns and the economic needs of indigenous people in the region. The economists looked at patterns of land-use across the region and developed new analytic tools and methodologies using the detailed rules of VCS. Those rules, in turn, follow principles that the Intergovernmental Panel on Climate Change (IPCC) developed by drawing on decades of research by thousands of independent scientists into what causes deforestation, how to measure the amount of carbon captured in trees, how to determine what is and isn’t “endangered”, and how to credit people for positive interventions.
After all this, the economists concluded that, of the 248,147 hectares that comprised the Surui territory, roughly 13,000 hectares would have to be converted to farmland over the next 30 years if the people were to survive. Thus the Surui will only receive carbon offsets for protecting a small proportion of their territory – the portion they would have had to harvest to survive. It’s this type of nuance that underscores another of the great misconceptions on REDD: for, while clowns like Nilsson (and reporters who fail to do their homework) assume that REDD is a lucrative endeavor, the fact is that while it can be a money-maker, it’s nowhere near as lucrative as logging or farming. As Chief Almir says, “It will always be easier to chop down the forest than to preserve it.”
And preservation is an active endeavor. Chief Almir and his people spent the long and tedious VCS assessment period patrolling the territory to keep out illegal loggers. He also threatened to prosecute even members of his own people who colluded with loggers, and the loggers responded with a bounty on his head. At least one local tried to earn that bounty, so the federal government assigned members of the elite Força Nacional to give him 24/7 protection.
Despite these challenges and the best efforts of opponents to discredit him and the financing mechanism – including many quoted in the Atlantic article – Almir persevered. In August, Brazilian cosmetics giant Natura Cosméticos stepped up to buy the first tranche of Surui Carbon Credits, and now scores of other indigenous people are developing projects of their own.
This is all part of a rigorous process that’s evolved over decades – the same process that the Atlantic dismisses as “imaginary” and Harper’s dismissed as too complicated to work.
Well, yes – it is complicated, but it’s also working, and it’s working incredibly well. What’s not working is the media that’s charged with informing the public – largely because a contingent of ideologically-driven organizations are hell-bent on making sure that non-traditional conservation finance never gets a fair hearing, and because reporters aren’t doing their homework.
Mindful of the knowledge gap, WWF recently teamed up with the University of California at San Diego to launch a course in terrestrial carbon accounting. I took the course this summer, and can tell you that baselines are far from “imaginary”. They’re just not as much fun to write about as characters like Nilsson are.
The failure of media to even try to understand these new tools for conservation finance is a truly global tragedy, because we stand at a critical juncture when both forests and the people who depend on their services – that’s all of us, by the way – are in a peculiar race for survival. On one hand, trees are mopping up the carbon that we’ve pumped into the atmosphere, and because there is more carbon to mop up, they’re getting fatter at a faster rate than they did before. Trees we save today, in other words, could end up sequestering more carbon than they have in the past, making conservation an even more valuable tool than it’s been to date.
But the research is mixed on how forests will respond to climate change. Intact forests may continue to thrive – or they may succumb to droughts and pestilence. That’s already happening in the Pacific Northwest, where the northern pine beetle is thriving in the longer summers, and trees are dying as a result.
REDD in one of many tools that we can use to slow climate change, but it has its limitations, and it needs to be examined critically if it’s to deliver meaningful results. That’s why we need the media to let us know if REDD is working or if it isn’t – but they can’t do that if they’re so preoccupied with cowboys and cartoons that they neglect their calculus. If they’re going to report on REDD, they need to first invest a bit of time into learning what it is. VCS is REDD. ROW is REDD. Nilsson is not REDD.
A combination of ideological campaigning and journalistic laziness got us into the climate mess. A similar campaign is conspiring to keep us from exploring very real and scalable solutions to that mess, and journalistic laziness is again enabling that campaign. By swallowing the disinformation fed to them and not learning before they lecture, outlets like the Atlantic could end up doing more damage to forests and forest communities than all the carbon cowboys combined.
The past month saw movement in the green infrastructure space with an assessment on green infrastructure valuation tools and a $50 million fund slated to implement natural infrastructure upgrades in Chicago. Also this month, two papers from Forest Trends offering thoughts on the social impact assessment of investments in watershed services programs.
This article was originally published in the Water Log newsletter. Click here to read the original.
24 October 2013 | Greetings! A new pair of papers from Forest Trends offers initial thoughts on guidance for social impact assessment (SIA) for investments in watershed services (IWS) projects. In addition to the intended environmental outcomes, IWS can have unplanned social or equity impacts. The papers include recommendations for IWS-specific SIA, and a literature review on gender and social impacts related to watershed investments. We invite you to take a look here.
As far as the news, well – sometimes you just have to stop and contemplate your navel. In China, despite success in cleaning up the Xin’an River, officials are wondering whether “eco-compensation” levels were really high enough. A fascinating study of PES projects in Africa suggests that a buyer-seller structure might only work for carbon: for watershed services, perhaps it’s better to use a co-investment model that links different stakeholders and their respective assets (such finance, labor, or land). Another paper asks why valuation studies don’t seem to be influencing policy.
We wanted to let you know that Valorando Naturaleza, sister site to Ecosystem Marketplace, will host the second webinar in its report launch series Considering Compensations in Latin America: Carbon Management, Communities And Corporate Responsibility on Friday Oct 25th at 12pm EST. The webinar focuses on green decision making and south-south marketplace developments and will be presented in Spanish.
VN.org brings together private sector speakers including Keyvan Macedo of Natura (Brazil), Carlos Berner of the Santiago Climate Exchange (Chile), Valentina Lira of Concha y Toro Winery (Chile) and Sylvia Chaves of Florex (Costa Rica), to discuss how forest carbon offsets fit into their strategies and what their experience has been engaging in such deals. Register here to reserve your place.
Forest Trends’ work doesn’t grow on trees – we rely on readers’ generosity to help keep them standing.
Now through November 22, (and for the cost of a typical lunch!), donations to Forest Trends’ Crowdrise campaign could leverage up to $1 million in matching awards through the Skoll Foundation’s Social Entrepreneurship Challenge. Help Forest Trends expand our vital services to communities and experts on the front lines of ecosystem conservation. $10 will go a long way!
GENERAL
Julio Tresierra: Transforming Lives With Investments In Watershed Services
Julio Tresierra has always been obsessed with change. That’s what lured him from his native Peru five decades ago, and it’s what keeps him going at 71. Since then, he’s been traveling the world – both geographically and philosophically – in search of real-world solutions to our deepest societal problems. He found the answers living with the poorest of the poor and working on over 60 social development projects with various civil society organizations and government agencies across Asia, Latin America, and Africa. Eight years ago, Tresierra went to work for the environmental NGO World Wildlife Fund (WWF) in cooperation with CARE, a humanitarian organization specializing in assisting marginalized populations. The result is a global network of pilot projects called Equitable Payments for Watershed Services.
Tresierra reasoned that if farmers and ranchers improved the areas upstream of a watershed by preventing sedimentation and erosion, then residents, businesses and landowners downstream, who rely on healthy watersheds to conduct business, would be willing to pay for the service. It would help lift farmers out of poverty, he thought, and also generate a sustainable cycle: farmers in upland areas, which are usually those who live in extreme poverty and grow food for consumption, would benefit from better crops to restore water quality. This would also enable them to sell their crops to local markets or even trade with foreign buyers. Ultimately, an investments in watershed services (IWS) scheme would allow for cooperation between the water sector and other stakeholders operating in a basin, instead of conflict and competition.
Restoration vs. Renewable Energy: Amateurism Doesn’t Pay
Critics of renewable energy investments usually focus on the relatively high cost of the power they generate. New project proposals require sophisticated financial models that compare permitting, manufacturing, and operating costs against projected power generation rates and pricing over time. On the other hand, environmental restoration proposals are rarely assessed using return on investment calculations. In fact, project developers may need only a before-and-after illustration and a willing land owner to receive funding for a new project. Restoration investments may face criticisms, but not due to their estimated output being more expensive than alternatives. Output is rarely measured using metrics that the public can understand and thus frequently not valued at all.
So why is it, asks Damon Hess of Sitka Technology Group, that the requirements for funding renewable energy are so much more onerous than those for environmental restoration? Public investments in renewable energy projects are meant to spur larger private investments and thus are held to a higher standard, he writes. Public investments in environmental restoration are meant to make us feel good about our commitment to “mother nature” and thus are given treated with kid gloves.
Understanding Social Impacts of Watershed Investments
A new pair of papers from Forest Trends offers initial thoughts on guidance for social impact assessment (SIA) for investments in watershed services (IWS) projects. IWS, like any intervention, likely will result in some negative social or equity impacts, as well as hopefully some positive ones.
The main paper provides recommendations for carrying out SIA in the watershed investment context. The paper draws on an extensive literature on the theory and practice of SIA, on the authors’ experiences of applying SIA in other natural resource contexts, and on discussions from a workshop with IWS program practitioners. It sets out the case for SIA as an issue of self-interest for IWS interventions. “Good practice” SIA can strengthen the design of IWS programs in terms of social sustainability, reduce risk levels, increase capacity for adaptive management, and (if done in a participative way) increase stakeholder participation and ownership of project objectives. An accompanying literature review of gender and other social impacts of IWS projects looks at what the existing literature has to say about wider social impacts of IWS, and examines gender issues specifically in greater detail.
The Intergovernmental Panel on Climate Change (IPCC)’s report Climate Change 2013: The Physical Science Basis is the most detailed assessment of climate science ever. Over 2,000 pages of scientific consensus make clear that climate change is real, that it is happening now and that human influence on the changing climate is more certain than ever.
To help the business community better understand the implications of climate change for their business model, the European Climate Foundation, which promotes energy and climate policy that reduces carbon emissions in Europe, have produced a digestible summary of the IPCC report. Published by the University of Cambridge’s Judge Business School and the Programme for Sustainability Leadership and supported by the ECF, Climate Change: Actions, Trends and Implications for Business distills key findings into an easily readable, but non-the-less scientifically accurate document. The report summarizes scientific basis of climate change projections and anticipated impacts and includes infographics charting the “pathway to two degrees,” i.e. the targeted maximum increase in global temperatures.
There’s a growing drumroll to include a water goal in the post-2015 development agenda’s sustainable development goals; the Millennium Development Goalsnoticeably lacked one. At a high-level meeting in Budapest earlier this month, a ‘Budapest Statement‘ was developed calling for a dedicated water goal. Targets would include universal access to safe drinking water and sanitation, a shift to integrated basin-level management, reducing pollution and scaling up collection, treatment, and re-use, and increased resilience against the water-related impacts of global changes. UN Secretary General Ban Ki-Moon says he supports a water goal as well: “Water holds the key to sustainable development.”
Judge Forces EPA’s Hand on Water Pollution Standards in the Mississippi
A decision handed down by a federal judge last month gives the US Environmental Protection Agency (EPA) six months to set numeric (i.e. quantitative) nutrient standards in the Mississippi River basin, or explain why standards aren’t needed. The EPA has since 2008 taken the position that numeric standards should be developed by states, as it did in the case of Florida. But the agency declined to comment on whether it believed standards were needed at all. Environmentalists challenged that in court. Now the EPA has to either find that water quality issues in the 31-state basin don’t merit pollution standards (even though the agency has long said these problems are severe), or undertake a formal rulemaking. That determination need not be limited to the scientific basis for standards, but can consider other factors such as social impacts – an outcome welcomed by farm groups who had taken the EPA side against environmentalists.
Ecosystem services valuation methodologies are, after two decades of sustained academic attention and debate, finally (reasonably) well-accepted in the environmental economics community. But are they translating into policy change? A recent Institute for Sustainable Development and International Relations (IDDRI) project examined hundreds of journal articles on ecosystem services valuation (ESV) in search of evidence of influence on decision making. What they found: in just 2% of cases, ESV clearly influenced a decision.
Even for the “same half-dozen” examples repeatedly cited, it’s not clear that ESV drove decision-making. “The case that came up most often was New York City paying to protect the Catskills watershed,” explains Raphaí«l Billé, the project’s coordinator. “As the story goes, this was done after an economic valuation showed that it would be cheaper than letting the watershed degrade and building a sophisticated water treatment plant. There is evidence, however, that the decision was made first, and that an economic valuation was commissioned later to strengthen its legitimacy.”
In its efforts to manage water and energy consumption, Anheuser-Busch InBev, the world’s biggest brewer, has found it needs to think beyond its own walls, at both its supply chain and the watersheds in which it operates. “Access to safe water is critical for our business and the communities where we live and work, so we need to have sustainable water resources in the areas where we operate,” says Daniel Navaresse, global director of energy and fluids for the company. He says the company plans to support watershed protection efforts around its facilities in seven countries, implement best management practices in key barley-growing areas, and improve efficiencies in beermaking – all by 2017.
New Report Charts the Path to Natural Infrastructure Investments
A new report from the World Resources Institute, Earth Economics and Manomet Center for Conservation offers a roadmap to investing in natural infrastructure as a complement or supplement to engineered solutions. Natural Infrastructure: Investing in Forested Landscapes for Source Water Protection in the United States sets out the economic and scientific basis for source water protection for water managers. The focus is on concrete lessons, with case examples of successful programs, a review of available tools and approaches, and additional resources for developing a source-water protection strategy in your own watershed. “Natural infrastructure has long been recognized by state drinking water administrators as a powerful and sustainable approach for protecting sources of drinking water and thereby, public health,” said Jim Taft, Executive Director of the Association of State Drinking Water Administrators in a press release. “This guide will be of considerable value to states by providing comprehensive information about innovative tools that will help bring the use of natural infrastructure approaches to scale.”
Calhoun Utilities may be the site of Georgia’s first nutrient trading program. Plant upgrades to control phosphorus pollution in Weiss Lake would cost several million dollars upfront and another $800,000 annually, according to Jerry Crawford, the utilities’ director of water and wastewater. “With nutrient trading we find a way to remove the phosphorous a cheaper way,” Crawford said. “We would spend $800,000 a year at the waste water plant, or we can spend $200,000 dealing with the poultry farmers.” Participating poultry farmers could sell their nutrient-rich chicken litter to other agricultural producers for fertilizer, rather than letting it run off into the lake – a double win, says Crawford. The utility is currently engaging farmers in the area for pilots.
Florida Nitrogen Trade Awakens the Additionality Monster
A proposed purchase by the city of Jacksonsville, FL from a utility is being criticized for a lack of additionality – in other words, the trade lets Jacksonville get credit for nutrient reductions that would have happened anyway. “You’re using money to buy a credit for [pollution] reductions that have already been made. It’s not an addition,” said St. Johns Riverkeeper Lisa Rinaman. “We’re not going to move the needle if we use that [money] to buy water-quality trading credits.” But the utility says under the terms of the sale, its permitted allowance for nitrogen loading will be reduced by 67,000 lbs (i.e. the amount of the trade), meaning that the pollution reductions are real. Water quality trading in Florida was just expanded statewide in June 2013, after a pilot in the Lower St. Johns River basin.
Are Eco-Compensation Levels in Anhui-Zhejiang Deal High Enough?
In 2011, Anhui and Zhejiang provinces in China entered into an unusual bet. If water quality in Anhui reached basic standards, then Zhejiang province would pay Anhui 100 million yuan (US $16.4 million). But if pollution persisted, then Anhui would have to pony up. The central government contributed another 300 million yuan (US $49 million) in support of efforts. An article from Xinhua News offers an update: 2012 levels exceeded water quality standards, so Anhui won the bet (though downstream Zhejiang likely considered themselves winners as well).
Still, some say the pilot could be improved. Many industrial facilities and agricultural producers were required to cease operations along the Xin’an River. They were compensated for doing so, but many feel the compensation was not high enough. “After two years of treatment, water quality in Xin’an River has improved a lot. But residents in the upper reaches who sacrificed their own interests to protect the ecological environment have not got substantial returns,” said Gu Jiawen, a senior political advisor in Huangshan. “500 million yuan (US $82 million) is not much and even could not pay for the costs of the current environmental protection projects,” added Lu Haining, deputy head of the Huangshan Municipal Environmental Protection Bureau. “The amount of the compensation fund should be increased annually. Otherwise, it cannot be called compensation.”
ADB Issues High-Level Guidance on Managing the Nexus
The water-food-energy nexus has gotten a lot of press recently, but solutions to nexus issues aren’t always clear. A new report from the Asian Development Bank (ADB) scopes the nexus in Asia and the Pacific and offers guidance on increasing water, food, and energy security. Recommendations include reforming governance, improving data and information, protecting freshwater resources, increasing agricultural water use productivity, and investing in strategic storage (including aquifer recharge). A core suggestion in Thinking About Water Differently: Managing the Water-Food-Energy Nexus – that governments need to take a much longer-term view of water management – isn’t new, but bears repeating.
Recent work by the World Agroforestry Centre offers a different way of thinking about program design for payments for ecosystem services (PES). Lead researcher Sara Namirembe looked at 50 “tree-based” PES projects in Africa. She found that efforts based on a high degree of commodification of an ecosystem service, and the identification of a buyer for that service, tended to work only in the carbon space. Instead, “co-investment” models that establish partnerships between stakeholders with different assets (such as land, labor, or finance), instead of buyer-seller relationship, seem to be more successful on the continent. Namirembe suggests this is because have lower requirements for “proving” benefits, since there is no buyer: all participants are on a level playing field.
$4.5m for Marine Ecosystem Valuation in the Coral Triangle
A $4.5 million grant from the Global Environment Facility (GEF) will support efforts in the Philippines and Malaysia to value mangrove, sea grass and coral reef ecosystems services and inform policies and projects aimed at protecting these ecosystems. The “Coral Triangle” that lies between the two countries is the world’s biodiversity epicenter, say project funders. “This wealth of natural capital has the potential to be a major driver of inclusive green growth in the region, if we overcome some huge challenges. We especially need better resource governance regimes, measures to adequately value the environment for current and future generations when calculating economic benefits, and good scientific information to inform decision making and tradeoffs,” says Marea Hatziolos, Senior Environmental Specialist and the World Bank’s team leader for the project.
Chicago Mayor Rahm Emanuel announced earlier this month that a $50 million fund has been dedicated to green infrastructure in the city, to be spent over the next five years. It’s welcome news, given that a previous stormwater settlement – the terms of which have been compared to Boston deciding to trade Babe Ruth to the Yankees – between the Metropolitan Water Reclamation District and the EPA included just $325,000 for green infrastructure. Chicago’s aging infrastructure network currently struggles to cope with even small volumes of stormwater. The fund puts Chicago back in the big league with cities like Philadelphia, Milwaukee, New York and Seattle – all of which are making serious investments in green installations. Work is set to start this fall.
Assessing Tools for Green Infrastructure Valuation
A new report from Natural England offers a useful review of valuation tools that estimate monetary benefits of green infrastructure. Nine different examples – including tools like NatCap’s INVEST and the Center for Neighborhood Technology’s ‘Guide to Valuing Green Infrastructure’ – are assessed against research standards for natural science and economics. Summaries of each tool are provided, as well as recommendations for appropriate use. The authors also report on the gaps they find: for example, the tools evaluated don’t seem to cover cultural and provisioning ecosystem services well, nor do they offer methods for valuing ponds, grass verges, or hedges.
CDP’s Global Water Forum will bring together institutional investors, corporations and policy makers to discuss one of the most pressing issues facing the world today: water security. This virtual roundtable will be broadcast live online using cutting edge TelePresence technology, where leaders in their field will apply expert insights on the topic of water security. 31 October 2013. Online.
Land and water has always been the immediate surroundings of peoples in all existences and continents. It has always been the base on which Man depends on for his existence. Land serves as home, a nutrient-filled and agricultural base, a thoroughfare, a religious base, et cetera. Water is all important beginning with the human body made up of water, water also serves as nourishment, used for cooking and the rivers, streams and oceans are home for very many habitats necessary for life. Wars have been fought to protect and preserve land and water space meaning that they are fundamental resource for human survival. Prevailing civilizations and epochs are chronicled with the effects these constituents have on human life. The conference therefore would like to explore these great connections from the humanities, science and social science perspectives. The hope of the conference is to discuss the interconnectedness or relatedness of these three theatres of life for existence/ living and chart a model or value system for the preservation of the resources and sustainable use by the human society. 3-6 November 2013. Contonou, Republic of Benin.
Irrigation and Water Forum: Water and the Green Economy
The Irrigation and Water Forum (the new name for ICID.UK) and UEA Water Security are hosting a one day conference on Water and the Green Economy. The term ‘green economy’ implies economic growth alongside a decreasing consumption of natural capital. (UNEP’s working definition considers a green economy to be one which results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities). However the conference will mainly be from an agricultural water point of view, and the interpretation of agriculture, water and the economy will be wide; including water and environmental conservation, productivity, the food chain and the role of the private sector. Guidance on attendance and pricing is given below. The final programme is subject to adjustments. The conference is followed by a complimentary networking event. The event will be available to watch on-line to registered participants using the ICE website – contact Tim Fuller for further details. [email protected]. London, UK. 8 November 2013.
Webinar – Green Infrastructure as a catalyst to economic growth
Over the summer Defra and Natural England published a report on the role Green Infrastructure plays as a catalyst to economic growth. This study pulled together evidence from the UK and around the world demonstrating how investment in GI encourages inward investment and attracts increased visitor spending at a local level and saves environmental costs and provides health benefits which in turn boost productivity. As part of the work of the Green Infrastructure Partnership, Natural England will be running a webinar to introduce and discuss the findings of this report. The webinar will be held on 18th of November running from 10:00 until 11:30. If you would like to join this webinar please email [email protected]. 18 November 2013. Online.
Presenting solutions for balancing the benefits of conservation with the costs, managing infrastructure, developing robust supply models and watershed management plans, water reuse, resource management, green infrastructure and more. 30 March – 2 April 2014. Denver CO, USA.
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The proposed rule developed jointly by the EPA (Environmental Protection Agency) and the Army Corps of Engineers on the Clean Water Act (CWA) could bring millions of acres of wetlands under the authority of the CWA. Meanwhile, the Business and Biodiversity Offsets Programme (BBOP) has held three new webinars covering biodiversity offsetting in Australia and New Zealand.
This article was originally published in the Mitigation Mail newsletter. Click here to read the original.
21 October 2013 | Greetings! Last month, the US EPA moved on a joint rulemaking with the Army Corps to clarify once and for all which waterbodies are covered under the Clean Water Act – a question that had been contested for years, with debate hinging on whether waters connecting to “navigable waters” fell under the agencies’ authority.
The report suggests a broad interpretation of authority under the Clean Water Act (CWA). “Streams, regardless of their size or how frequently they flow, are connected to and have important effects on downstream waters,” writes acting assistant administrator Nancy Stoner in a blog post.Wetlands and open waters in riparian areas and floodplains also meet the connectivity test. But the report declines to make any hard and fast rules when it comes to geographically isolated wetlands like prairie potholes – preferring to consider these on a case-by-case basis.
The rulemaking will presumably replace already-controversial 2011 EPA-Corps guidance on CWA jurisdiction. If accepted, it could bring millions of acres of wetlands under CWA protection and the end of arguing about jurisdiction one case at a time. Right now everything’s under review (or more accurately will be, as soon as the government reopens).
While you’re waiting, the Business and Biodiversity Offsets Programme (BBOP) has posted recordings of recent webinars on Australia’s EPBC Environmental Offset Policy and Offsets Assessment Guide, lessons learned on biodiversity offsetting in New Zealand, and New South Wales’ offset metrics.You can watch the webinars and view presentations here.
Valorando Naturaleza , sister site to Ecosystem Marketplace will present the second webinar in its report launch series, Considering Compensations in Latin America: Carbon Management, Communities And Corporate Responsibility on Friday Oct 25th at 12pm EST. This webinar focuses on green decision making and south-south marketplace developments and will be presented in Spanish.
VN.org brings together private sector speakers including Keyvan Macedo of Natura (Brazil), Carlos Berner of the Santiago Climate Exchange (Chile), Valentina Lira of Concha y Toro Winery (Chile) and Sylvia Chaves of Florex (Costa Rica), to discuss how forest carbon offsets fit into their strategies and what their experience has been engaging in such deals. Register here to reserve your place!
Finally, if you enjoy your monthly MitMail, consider making a small donation. As a not-for-profit organization, it’s our mission to provide top-notch, freely available information on environmental markets and conservation finance, and we rely on our supporters to be able to do so. Just $150 gets you a place of honor on our sidebar, and helps us keep the lights on. Click here to donate.
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If you have comments or would like to submit news stories, write to us at [email protected].
Forest Trends’ Fundraising Challenge
Forest Trends’ work doesn’t grow on trees – we rely on readers’ generosity to help keep them standing.
Now through November 22, (and for the cost of a typical lunch!), donations to Forest Trends’ Crowdrise campaign could leverage up to $1 million in matching awards through the Skoll Foundation’s Social Entrepreneurship Challenge. Help Forest Trends expand our vital services to communities and experts on the front lines of ecosystem conservation. $10 will go a long way!
Restoration vs. Renewable Energy: Amateurism Doesn’t Pay
Critics of renewable energy investments usually focus on the relatively high cost of the power they generate. New project proposals require sophisticated financial models that compare permitting, manufacturing, and operating costs against projected power generation rates and pricing over time. Once a project is in production, those initial projections are held up against actual outputs so that the models on which they were based get adjusted based on real data.
Environmental restoration proposals are rarely assessed using return on investment calculations. In fact, project developers may need only a before-and-after illustration and a willing land owner to receive funding for a new project. Restoration investments may face criticisms, but not due to their estimated output being more expensive than alternatives. Output is rarely measured using metrics that the public can understand and thus frequently not valued at all.
So why is it, asks Damon Hess of Sitka Technology Group, that the requirements for funding renewable energy are so much more onerous than those for environmental restoration? Public investments in renewable energy projects are meant to spur larger private investments and thus are held to a higher standard, he writes. Public investments in environmental restoration are meant to make us feel good about our commitment to “mother nature” and thus are given treated with kid gloves.
Waccamaw Wetland Mitigation Bank Helps Developers And Environmentalists Make Peace In South Carolina
A large gap in Lewis Ocean Bay Heritage Preserve on the outskirts of Myrtle Beach has been filled with the long-desired acquisition of a piece of old Horry County family land known as the Vaught Tract. The 754-acre addition brings the preserve, which holds 23 of the mysterious wetlands known as Carolina Bays, to 10,444 acres.
The addition is being hailed as a precedent in the way it was acquired. The new parcel was donated as a wetlands mitigation bank, meaning credits can be bought from it by private owners, businesses or government agencies to compensate for wetlands they must destroy when they build something. The state’s residents got more preserved green space “next to a very urban area” without expense to the taxpayers, and the bank will make it possible for some development to proceed.
“Not only are we adding to the already significant Lewis Ocean Bay with easements into perpetuity, but it also allows the sale of much-needed mitigation credits to local developers,” said state Rep. Nelson Hardwick, R-Surfside Beach, who chairs the House Agriculture and Natural Resources Committee and was instrumental in swaying the delegation’s vote.
The IPCC’s report Climate Change 2013: The Physical Science Basis is the most detailed assessment of climate science ever. Over 2,000 pages of scientific consensus make clear that climate change is real, that it is happening now and that human influence on the changing climate is more certain than ever.
To help the business community better understand the implications of climate change for their business model, the European Climate Foundation, which promotes energy and climate policy that reduces carbon emissions in Europe, have produced a digestible summary of the IPCC report. Published by the University of Cambridge’s Judge Business School and the Programme for Sustainability Leadership and supported by the ECF, Climate Change: Actions, Trends and Implications for Businessdistills the key findings of the report into an easily readable, but non-the-less scientifically accurate document.
EPA and Corps Propose New Rule on CWA Jurisdiction
A major new report released by the US Environmental Protection Agency (EPA) last month on connectivity of the nation’s waterbodies will “serve as a basis” for future rulemaking, according to acting assistant administrator Nancy Stoner.
In 2006, the Supreme Court ruled in Rapanos v. United States that all waters with a “significant nexus” to navigable waters fall under government under the Clean Water Act – a term that’s had everyone scratching their head ever since.The EPA and the Army Corps in 2011 put out guidance to clarify jurisdictional issues, which was not received well by some industry groups. Now they appear ready to pull the guidance and instead move to rulemaking:an EPA-Corps proposed joint rule based on the report’s findings was sent to the Office of Management and Budget in late September.
The rule isn’t publicly available for the time being, though the report offers some clues. It makes a case for scientific connectivity but not how that might translate into scope of authority for the EPA. Its findings would seem to support a broad interpretation of authority under the Clean Water Act, though the EPA appears to be inclined to consider geographically isolated wetlands (which were a big question mark) on a case-by-case basis rather than offering any general rule of thumb. The report undergoes a review by a Scientific Advisory Board in December and is open for public comment this month.
Alberta unveiled a new wetland policy in September that establishes a mitigation hierarchy and ranking system for wetlands, and will create an fee system for developers to support wetland restoration or public education to mitigate unavoidable impacts. It’s a big step for the province, which has been mulling a policy for the last eight years to protect threatened wetlands, especially from oilsands development in the northeast. Environment Minister Diana McQueen said that flexibility was a priority in balancing wetland preservation with continued development.
But as a blog post by LL.M. candidate in the University of Calgary Faculty of Law Dave Poulton notes, the policy diverges from other compensatory frameworks in some significant ways. There is no reference to no net loss, a somewhat unclear scope and timeline, and the policy only applies to permanent impacts. There’s also no mention of mitigation banking – just of the in-lieu fee option.
A new deal deal between Chesapeake Energy and the Wyoming governor would open large swathes of land to oil drilling in the state that have been designated as sage grouse habitat. The brokers behind the agreement say it will enable drilling while sticking to the state’s sage grouse conservation strategy. Officials call the deal an ‘exception,’ but concerns have arisen that it sets an unwelcome precedent.
To this point, Wyoming’s “core area” strategy has been praised as a model for protecting the sage grouse, which will come up for possible listing as an endangered species in 2015. With that date looming, others are considering state-level planning to avert stricter rules under a federal ruling, including Montana and in North Dakota. A recent report suggests that federal listing would cost Coloardo and Utah millions. Chesapeake Energy says it’s committed to protecting the sage grouse, citing a commitment of $2.3 million for restoration under the deal.
A new article by Richard Mattison, Chief Executive at Trucost, walks readers through the making of an Environmental Profit & Loss (EP&L) statement, which Trucost helped to develop for Puma in 2011. Mattison discusses the tricky conceptual questions – for example, how do you know where to look across the supply chain to understand a business’s environmental footprint? – and offers a closer look at the EP&L methodology. The piece also notes how natural capital accounting has helped shape Puma’s decision making on issues like the most sustainable approach to sourcing cotton. (The answer, by the way: Environmentally Extended Input Output modelling. It’s very advanced sausage.)
What Do Victoria’s New Veg Clearing Rules Mean for Biodiversity?
New changes to vegetation clearing laws in Victoria have some conservation-minded observers uneasy. The new rules, which purport to cut “green tape,” slim down on-site assessment requirements; now only projects on moderate or high risk lands trigger an assessment and offset requirements. But as an article on the Conversation points out, the maps of species impacts underpinning the system narrowly focus on threatened and endangered species and appear to contain a number of classification errors. There’s also a shift in language from “net gain” to “no net loss.” On the plus side, publicly-available maps are a positive development, bugs and all. The new system also provides much-needed clarification on the assessment process.
Amidst the recent boom in research and practice around payments for ecosystem services (PES), something is going unnoticed: the discussion is getting muddled. Terminology and classification systems are often too broad, inconsistent, and confusing, according to a new paper. The paper suggests distinguishing between “genuine” market based instruments (MBIs) and those simply involving monetary transactions. The terms are often used interchangably, but perhaps PES, with “with very little or no feature of market governance or commodification” doesn’t wear the MBI hat very well after all.
Last but never least, here’s a roundup of news bites on mitigation from around the web:
A 364-acre Oregon Department of Transportation (ODOT) mitigation bankis underway off Highway 101 near Seaside. Completed by Henderson Environmental Design on a parcel owned by the North Coast Land Conservancy, the bank does double-duty as a credit source for ODOT and a means for controlling frequent flooding on the 101.
We have a sighting of that rarest of wetland beasts: a credit price.The Zachary, Louisiana City Council will pay the Gum Swamp Mitigation Bank $56,000 for 1.3 acres of wetland to mitigate for a new bypass road, or about $43,000 an acre.
Meanwhile in Marin and Sonomia Counties, California, Sonoma Marin Area Rail Transit (SMART) has acquired 56 acres of tidal wetlands habitat to develop its own bank. County officials say commercial mitigation bank credits are too expensive, having risen “as high as $1 million per acre” thanks to competition for credits.
An MOUbetween the Vermont Agency of Natural Resources and Green Mountain Power (GMP) requires the latter to pay $18,438 into a bat conservation fund. GMP’s 21-turbine wind project is permitted to ‘take’ four bats listed as endangered (none have been recorded killed to date). GMP also curtails its turbines during conditions when bats are likely to be out and about.
A 867.9 acre wetland and stream bank’s been approved serving north & central Louisiana. The Little Eva Mitigation Bank, developed by Resource Environmental Solutions, LLC, aims to restore and protect bottomland hardwood wetlands, stream and riparian buffer habitats to meet offset demands in the Red River Drainage Basin.
EVENTS
Responsible Business Forum on Sustainable Development
The Responsible Business Forum on Sustainable Development will bring together business leaders, NGOs and policy-makers from around Southeast Asia to discuss commitments and policy recommendations to increase sustainability across seven sectors – agriculture & forestry, palm oil, consumer goods, mining, financial services, building & urban infrastructure and energy.The forum will discuss the transformational journey to the green economy and offer practical ways to accelerate business solutions and policy frameworks for a more sustainable world. 18-19 November 2013. Singapore.
The inaugural World Forum on Natural Capital will be the first major global conference devoted exclusively to turning the debate on natural capital accounting into action. It will build on the enormous private sector interest shown at the United Nations Earth Summit in Rio in June 2012 and the many developments that have taken place since. The World Forum on Natural Capital will bring together world-class speakers, cutting edge case studies and senior decision makers from different sectors, in order to turn the debate into practical action. Lively plenaries and interactive breakout sessions in four conference streams will explore the risks and opportunities for business, allow access to the very latest developments and provide an opportunity to help shape the debate through dialogue between policymakers, business leaders and prominent experts in the field. 21-22 November 2013. Edinburgh, Scotland, UK.
2014 National Mitigation & Ecosystem Banking Conference
The only national conference that brings together key players in this industry, and offers quality hands-on training and education sessions and important regulatory updates. Learn from & network with the 400+ attendees the conference draws, offering perspectives from bankers, regulators, and users. Submit proposals for panels and presentations online by October 1st! 6-9 May 2014. Denver, Colorado.
Conference on Ecological and Ecosystem Restoration
CEER is a Collaborative Effort of the leaders of the National Conference on Ecosystem Restoration (NCER) and the Society for Ecological Restoration (SER). It will bring together ecological and ecosystem restoration scientists and practitioners to address challenges and share information about restoration projects, programs, and research from across North America. Across the continent, centuries of unsustainable activities have damaged the aquatic, marine, and terrestrial environments that underpin our economies and societies and give rise to a diversity of wildlife and plants. This conference supports SER and NCER efforts to reverse environmental degradation by renewing and restoring degraded, damaged, or destroyed ecosystems and habitats for the benefit of humans and nature. CEER is an interdisciplinary conference and brings together scientists, engineers, policy makers, restoration planners, partners, NGO’s and stakeholders from across the country actively involved in ecological and ecosystem restoration. 28 July – 1 August 2014. New Orleans, LA.
Ecotrust Forest Management (EFM) is seeking a Chief Investment Officer (CIO) to lead the execution of all financial planning and investment analysis functions for the forestland investment funds managed by EFM. The CIO will oversee the investment process, including due diligence, presentation to the Investment Committee, and ongoing portfolio management, evaluating and recommending buy/hold/sell decisions on forestland properties while optimizing EFM’s desired mix of timber and non-timber income sources, such as carbon sales, conservation easements, and tax credits. He/she will participate in short and long term planning and analysis of the Manager’s forestland under management as well as forecasting of fund-level performance. This person will advance the development of forestland modeling tools and systems that support these processes. Finally, the CIO will be pivotal to developing new strategies for future funds and investment products.
The CIO is a key member of the EFM team with significant responsibility in the areas of investment performance and investment opportunity analysis. There are meaningful long-term growth and compensation opportunities in the firm for the individual who excels in this role.
If you have comments or would like to submit news stories, write to us at [email protected].
Forest Trends’ Fundraising Challenge
Forest Trends’ work doesn’t grow on trees – we rely on readers’ generosity to help keep them standing.
Now through November 22, (and for the cost of a typical lunch!), donations to Forest Trends’ Crowdrise campaign could leverage up to $1 million in matching awards through the Skoll Foundation’s Social Entrepreneurship Challenge. Help Forest Trends expand our vital services to communities and experts on the front lines of ecosystem conservation. $10 will go a long way!
Restoration vs. Renewable Energy: Amateurism Doesn’t Pay
Critics of renewable energy investments usually focus on the relatively high cost of the power they generate. New project proposals require sophisticated financial models that compare permitting, manufacturing, and operating costs against projected power generation rates and pricing over time. Once a project is in production, those initial projections are held up against actual outputs so that the models on which they were based get adjusted based on real data.
Environmental restoration proposals are rarely assessed using return on investment calculations. In fact, project developers may need only a before-and-after illustration and a willing land owner to receive funding for a new project. Restoration investments may face criticisms, but not due to their estimated output being more expensive than alternatives. Output is rarely measured using metrics that the public can understand and thus frequently not valued at all.
So why is it, asks Damon Hess of Sitka Technology Group, that the requirements for funding renewable energy are so much more onerous than those for environmental restoration? Public investments in renewable energy projects are meant to spur larger private investments and thus are held to a higher standard, he writes. Public investments in environmental restoration are meant to make us feel good about our commitment to “mother nature” and thus are given treated with kid gloves.
Waccamaw Wetland Mitigation Bank Helps Developers And Environmentalists Make Peace In South Carolina
A large gap in Lewis Ocean Bay Heritage Preserve on the outskirts of Myrtle Beach has been filled with the long-desired acquisition of a piece of old Horry County family land known as the Vaught Tract. The 754-acre addition brings the preserve, which holds 23 of the mysterious wetlands known as Carolina Bays, to 10,444 acres.
The addition is being hailed as a precedent in the way it was acquired. The new parcel was donated as a wetlands mitigation bank, meaning credits can be bought from it by private owners, businesses or government agencies to compensate for wetlands they must destroy when they build something. The state’s residents got more preserved green space “next to a very urban area” without expense to the taxpayers, and the bank will make it possible for some development to proceed.
“Not only are we adding to the already significant Lewis Ocean Bay with easements into perpetuity, but it also allows the sale of much-needed mitigation credits to local developers,” said state Rep. Nelson Hardwick, R-Surfside Beach, who chairs the House Agriculture and Natural Resources Committee and was instrumental in swaying the delegation’s vote.
Japanese insurance company Nipponkoa just announced carbon neutrality for FY2012, purchasing 50,000 tonnes of carbon dioxide equivalent (tCO2e) in offsets. Meanwhile, Seattle City Light, the first carbon-neutral public utility in the US, is feeling climate change’s heat as the snowpack that feeds their hydroelectric dams melts off earlier; they purchase 100,000 to 300,000 tCO2e in offsets a year.
This article was originally published in the V-Carbon newsletter. Click here to read the original.
16 October 2013 | Many advocates of Reducing Emissions from Deforestation and forest Degradation (REDD) projects have been looking hopefully towards the California cap-and-trade market as a source of offset demand from compliance entities. But those hopes are slowly fading as recent developments indicate that REDD may remain squarely in the voluntary market for the short term.
“We have an MOU [memorandum of understanding] to observe development of sector-based projects in Chiapas and Acre, but no agreement to accept those projects,” said Dave Clegern, a spokesman for the California Air Resources Board (ARB), referring to California’s potential linkages with states in Mexico and Brazil to source REDD credits. The ARB does not yet have a REDD rulemaking scheduled.
In February, California State Senator Ricardo Lara introduced a bill to restrict eligible offsets to those originating in the US and possibly Quebec. The bill did not pass the Assembly before the end of this year’s legislative session but could be reconsidered next year.
International offsets are limited to 2% of a regulated entity’s compliance obligation, anyway, increasing to just 4% in the third compliance period (2018–2020). And despite the safeguards proposed by the REDD Offsets Working (ROW) Group, REDD credits face opposition by a subset of environmental and indigenous groups, causing some to wonder if the uphill battle is simply too steep.
For now, California is focusing on domestic projects (it just issued its first tonnes) and on its recent agreement to link its cap-and-trade program with Quebec’s under the Western Climate Initiative (WCI) starting in January 2014. Read Ecosystem Marketplace’s coverage of REDD in California here and our story on the California-Quebec “prenup” here.
Here at Ecosystem Marketplace, we are busy writing this year’s State of the Forest Carbon Markets report based on data we collected from suppliers all over the world. Stay tuned for details to come on the launch!
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Insuring carbon neutrality
Nipponkoa Insurance announced last week that it has gone carbon neutral for FY2012, making this the first time a Japanese insurance firm has offset all direct and indirect carbon emissions attributed to its business activities. To counteract its 46,964 tonnes of carbon dioxide equivalent (tCO2e) in emissions, the company purchased 50,000 tCO2e of offsets, including those accredited under the J-VER (Japan Verified Emissions Reduction) Scheme from a reconstruction project involving the recycling of debris and rubber from the Great East Japan Earthquake, as well as Certified Emissions Reductions (CERs) from a wind power project in India and wood biomass boiler installation project in Japan. Nipponkoa expects to maintain carbon neutrality even after its planned merger with Sompo Japan Insurance in 2014.
Berkeley, California-based ICU Eyewear announced carbon neutral certification in accordance with UK-based retailer The CarbonNeutral Company’s CarbonNeutral protocol. The firm is offsetting emissions associated with its Eco product line – including those from manufacturing and corporate activities. To start, the offsets will be sourced from the Chifeng wind power project in China and the Fiscalini Farms methane reduction program in California. ICU’s Eco line produces glasses from recycled metal and reclaimed plastic from the company’s factory floors. The company is known for its affordability: even most of the carbon-accounted glasses are priced under $25.
Seattle City Light, the first carbon-neutral public utility in the US that serves about 1 million residents in the greater Seattle area, purchases 100,000 to 300,000 tCO2e offsets a year from Climate Action Reserve (CAR)-approved projects. The utility is motivated to purchase offsets because climate change is directly affecting its operations. City Light’s hydroelectric dams are fed by mountain snowpack, which is beginning to melt off earlier in the spring, threatening late-summer flow. “We want to do something about that,” said Corinne Grande, who leads the utility’s offset program. “Starting at home was a powerful motivator.” City Light produces 90% of its power from hydro but offsets its remaining emissions, including those from employee travel and equipment used in its operations.
The British Columbian city of Kamloops wanted to convert methane gas emanating from its landfill into renewable electricity, but instead it is collecting the gas and flaring it off. Why? One key reason is the drop in carbon credit prices from the anticipated $25 per tCO2e to $11 per tCO2e (as paid by Pacific Carbon Trust) – meaning carbon finance would no longer help as much in making a dent in the estimated $2.62 million project cost. The cost of the system to convert the gas to electricity to sell back to BC Hydro also climbed, causing the City Council to scale back its plans. Flaring off the gas is the second-best option but will still reduce the greenhouse gas (GHG) impact 25-fold from the current business-as-usual scenario.
Launched in October, the Mikoko Pamoja project will sell mangrove offsets in Kenya. The project will start by covering 117 hectares and including 3,000 people, and aims to raise around $12,000 a year. Part of the funds will be distributed for community education and health, while the remaining money will go toward planting new seedlings and protecting the mangroves. The people behind the idea, Professor Mark Huxham of Edinburgh Napier University and Dr. James Kairo from the Kenya Marine and Fisheries Research Institute, hope to expand it over time. The Mikoko Pamoja project is backed by the Earthwatch Institute, the World Wildlife Fund, Aviva and the Ecosystem Services for Poverty Alleviation programme. The project’s offsets are currently being verified by Plan Vivo.
Cambodia’s Oddar Meanchey REDD+ Project became the first in the world to earn the Climate, Community and Biodiversity (CCB) Standard’s “Triple Gold” designation. Oddar Meanchey benefits 13 community forest groups and more than 10,000 households by implementing a mixture of community water delivery, sustainable farming, and land tenure facilitation projects over a 50,000-hectare space. This effort has avoided more than 700,000 tCO2e between 2008 and 2011. It is now CCB and Verified Carbon Standard (VCS) verified. However, the project has struggled to find buyers.
The chair of the Regional Greenhouse Gas Initiative (RGGI) said he believes that the 9-state emissions trading scheme is “a perfect fit” for the coming carbon regulations for existing power plants under section 111(d) of the US Environmental Protection Agency’s (EPA) Clean Air Act. Speaking at the International Emissions Trading Association’s (IETA) Carbon Forum North America (CFNA) conference in Washington, DC two weeks ago, Collin O’Mara was hopeful that the EPA will allow states considerable flexibility in meeting the regulations, which are due in June 2014, so that RGGI states “don’t need to start from scratch.”
The coming carbon regulations for existing power plants have spurred speculation as to whether offset projects will be allowed under the rules. Many say the prospects are dim: any inclusion of offsetting would have to be approved by both the EPA and the Supreme Court, and the language of the New Source Performance Standards seems to prohibit emissions reductions that occur anywhere other than the source. But 111(d) also mandates the use of the most cost-effective and technologically feasible means of emissions reductions – which offsets might constitute in some cases.
Could New Jersey be on a path to rejoin RGGI? The State Assembly’s Telecommunications and Utilities committee recently held a hearing on climate change and energy issues, including the need for the state to return to RGGI. New Jersey Governor Chris Christie famously withdrew his state from the regional carbon trading program at the end of the first compliance period in December 2011, after a campaign led by the Tea Party-linked Americans for Prosperity. But RGGI supporters hope that the devastation wreaked by Hurricane Sandy in October 2012, as well as expectations that future storms will continually threaten the coastal state, will force Christie to reconsider his opposition to RGGI, although others believe that the governor is unlikely to reverse his stance.
Mexican President Enrique Pena Nieto floated the idea of a carbon tax that could raise up to $2 billion (26.6 billion pesos) and make renewable energy sources more competitive. The tax, however, would clash with an energy plan that bolsters the oil and gas industry, subsidies that support drivers and power producers, and Pena Nieto’s campaign pledge to cut electricity costs. Mexico could be the first developing country and the first major oil-producing economy to introduce a carbon tax. However, even members of the Institutional Revolutionary Party and the Green Party are skeptical that it will survive the legislative process.
At its CFNA Conference, IETA unveiled its California Emissions Trading Master Agreement (CETMA), which can be used by secondary market participants buying and selling allowances and offsets. California’s buyer liability provisions place the risk of offset invalidation on the buyers, but the CETMA shifts the exposure back to the seller – as the markets have typically operated. Flexibility is written into the 47-page agreement in anticipation of California and Quebec linking their emissions trading markets in January 2014.
Eileen Claussen plans to step aside as President of the Center for Climate and Energy Solutions (C2ES), the nonprofit group that advocates for practical policies and action to address energy and climate change. The organization was a key advisor to the state of California and the Northeastern states participating in RGGI during development of their cap-and-trade programs and formed the Business Environmental Leadership Council, a group of US companies supporting mandatory policies to address climate change. Claussen will temporarily stay on as president of C2ES, formerly known as the Pew Center on Global Climate Change, which she founded and led for 15 years while the organization searches for her replacement. C2ES aims to name a new president in the first quarter of 2014.
Washington Governor Jay Inslee wants to explore the possibility of an intrastate cap-and-trade program as part of the state’s efforts to meet its GHG reduction goals, adopted by the legislature in 2008. Washington was one of the five original members of the WCI, the cross-border carbon trading program that eventually grew to seven US states and four Canadian provinces. But Washington and its fellow US members of the WCI – other than California – eventually dropped out of the program amid the economic recession and political attacks against carbon trading. However, Inslee is a steadfast supporter of the cap-and-trade concept, playing a key role in the passage of legislation that would have established a national trading program to reduce GHG emissions as a member of Congress. The House of Representatives adopted the bill in 2009, but it failed to gain traction in the Senate.
After much heated debate among 1,400 delegates from 170 nations, the UN International Civil Aviation Organization agreed to a global deal on slashing airline emissions through a market-based mechanism, with the aim of achieving carbon-neutral growth by 2020. The deal is more like a roadmap for a deal: countries must agree on a market-based mechanism by 2016, and actual emissions reductions would go into effect in 2020. The global agreement precludes any regional programs and replaces the EU Emissions Trading Scheme’s (ETS) contentious emissions regulation of flights cruising in its airspace.
Australian Prime Minister Tony Abbott released a consultation paper and draft bills repealing the country’s carbon tax on Tuesday. He claims that the legislation will save households an average of AU$550 a year. Though the Coalition (Abbott’s party) has a comfortable majority in the lower house, Labor and the Australian Greens hold the upper house at least until July 1 next year and could block the legislation. Greens Deputy Leader Adam Bandt called Abbott a “climate change criminal” while Labor climate spokesman Mark Butler said his party is committed to moving from a fixed carbon price to a floating price ETS. Whichever way it goes, the 371 Australian companies subject to the carbon tax will have to continue to pay it under the current compliance period, which runs until the end of the financial year on June 30, 2014.
Last May, the European Commission banned industrial gas credits from the EU ETS, recognizing that this offset type creates perverse incentives for industry to overproduce GHGs, including the ozone-eating HFC-23. The ban, however, does not cover national emissions targets in non-traded sectors such as agriculture and transport. The Danish government initiated a voluntary commitment to close this loophole, and as of this week, 22 out of 28 EU member states have signed on. Hungary, Ireland, Italy, Lithuania, Poland, and Spain are the holdouts. Though it looks like only Ireland and Spain will actually need to purchase offsets to meet their emissions targets, groups such as the Environmental Investigation Agency in London worry that the refusal to institute the ban means that these EU states aren’t taking their environmental commitments seriously.
Norway’s Ministry of Finance signed an agreement with the Nordic Environment Corporation to purchase up to 30 million UN CERs and Emissions Reduction Units between 2013 and 2020, the second commitment period of the Kyoto Protocol. The announcement comes as a small respite to a market experiencing vast oversupply and a massive price drop of as much as 99% since 2008. The Norwegian government included credit purchases in its revised budget in order to lend “legitimacy” to the international carbon market.
UK-based IT company SFW Ltd announced its purchase of the GRETA (Greenhouse Gas Registry for Emissions Trading Arrangements) software from the UK government’s Department of Energy and Climate Change. GRETA has been used by 17 countries to manage allowances and verified emission reductions under the EU ETS. Its sale means the software may be reused by other emerging markets. SFW has maintained GRETA since 2009, updating the software to handle the new emissions limits set by the EU ETS and enhancing security controls.
Chief Technical Officer – American Carbon Registry
Based in Sacramento, CA or Arlington, VA, the Chief Technical Officer will oversee the ACR registration of California compliance and early action offset projects from listing through verification and offset issuance. The CTO is also responsible for ACR’s voluntary offset project registration as well as overseeing the development and/or approval of new carbon offset standards, methodologies and tools. Candidates should have a Master’s in the Environment, Forestry, or related field and at least 10 years of experience with environmental markets and five years of carbon market experience.
Program Assistant, Verification – The Climate Registry
Based in Los Angeles or New York City, the Program Assistant for Verification will support the day-to-day operations of the voluntary and mandatory verification programs of the Climate Registry’s GHG programs. The successful candidate will have a Bachelor’s degree in a relevant field, one to two years of professional experience, and an interest in climate change and/or corporate environmental management. The initial contract term is through May 31, 2014.
Based in Europe or Africa, the Regional Manager will play a key role in marketing and capacity building activities within Africa and contribute to the review and assessment of Gold Standard projects and methodologies. Candidates should have a Master’s degree in engineering, science or related discipline and at least five years of work experience within the carbon markets and/or other environmental markets.
Based in Paris, France or Lisbon, Portugal, the Analyst will support Climate & Energy Solutions’ work helping clients define, fund, or evaluate their GHG reduction projects. Candidates should have two to five years of experience and knowledge of the economics of low-carbon technologies and carbon finance. The position is for 6 to 12 months starting in 2014, with the possibility of converting to a permanent position.
Head of Climate Programme – World Wildlife Fund, Hong Kong
Based in Hong Kong, the Head of Climate Programme will be responsible for strategic direction of the program and providing expert analysis of climate change and energy issues specific to Hong Kong and Southern China. The successful candidate will have an MSC/PhD and at least 10 years of experience, much of that in a managerial role. Excellent oral and written communication skills in both English and Chinese are preferred.
Mitigation Expert and/or Carbon Markets Negotiator – US Department of State, Office of Global Change
Based in Washington, DC, the Mitigation Expert for Low Emissions Development Strategies and/or Carbon Markets Negotiator will support the department’s Office of Global Change within the Bureau of Oceans and International Environmental and Scientific Affairs. The successful candidate will have 7+ years of experience working on climate and energy issues and be able to craft proposals and policy recommendations with minimal guidance.
Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact [email protected].
Former US Secretary of State George Shultz has long been a lonely (but not lone) proponent of climate action within the Republican Party. Bill Shireman of Future 500 says that Shultz’s proposal could win support among young Republicans, leading to a climate solution that the right and left can both agree on.
14 October 2013 | Former Secretary of State George Shultz proposed that the U.S. adopt a “Climate Insurance Policy” to simultaneously bolster the economy and reduce the risk of global warming.
In a recent interview with reporters, Shultz suggested that Republican leaders follow a Reagan-era strategy that would drive innovation while also cutting carbon emissions.
Shultz’s approach would also deliver a political benefit to the Republican Party, which is struggling to redefine itself after losing two national elections to Democrats, and failing to capture a majority in the Senate, as most analysts had expected.
His plan would emulate the GOP’s leadership on ozone protection during the Ronald Reagan administration, which resulted in a “no regrets” approach that was beneficial to the economy, whether or not ozone science was borne out.
“There were ozone skeptics back then, just as there are climate skeptics now,” said Shultz. “But we all agreed that, if what some scientists feared were to happen, it would be disastrous. So we took out an insurance policy.” The Montreal Protocol quickly led to innovations that vastly reduced ozone depleting substances. “In retrospect, the non-skeptics turned out to be right, and the Montreal Protocol came around just in time.”
On climate, Shultz’s policy preference combines sound policy with deft political strategy. It would tend to reduce federal tax and spending levels over time, by shifting taxes from forms of prosperity that tend to go up, to forms of pollution that tend to go down.
Tax cuts or dividends would reduce taxes on income, profits, savings, or payroll under the proposal. The difference would be made up by a price on carbon or other pollutants. While the switch would start off revenue neutral, shifting taxes to pollution would lead to gradual reductions over time.
Carbon emission rates generally decline about 1% each year. A tax shift to carbon would drive an average annual tax cut of at least that amount, reversing historic trends.
The tax swap is supported by conservative economists, including Greg Mankiw of Harvard, Kevin Hassett of American Enterprise Institute, Luigi Zingales of the University of Chicago, and Arthur Laffer, father of the supply side economic theories associated with President Reagan.
Retailers and consumer product companies would also benefit. This puts more money in the pockets of WalMart moms. Prices for energy would go up just as much, but consumers could choose whether to use their dividends to buy the same amount of energy, and come out even, or shift their spending elsewhere, and save.
Economically, many economists believe the shift would help increase jobs, income, technology and innovation. It would smooth the transition toward natural gas and renewables, and away from coal. The dividend approach would also enable a higher share of tax cuts to go to coal states, where that sector’s decline has been steady.
Despite its economic and environmental benefits, selling a tax swap in the GOP won’t be easy. Carbon, unfortunately, has become an ideological litmus test on both the left and right. The hard left uses it to advocate economy-wide regulation – and the hard right resists the science because they fear the regulations the hard left thinks are needed.
The problem is, with no alternatives proposed, the regulatory approach is the only option offered.
Some GOP strategists argue that by offering a market-based solution on the climate issue, the party would lose a wedge issue that can mobilize the base against the Democrats. But as a lifelong Republican, I disagree. This is a one-time opportunity to achieve a long-term GOP priority: to drive taxes down and growth up. Why would we not take that?
More attractive than a carbon-focused approach might be a pollution tax shift that covers a “market basket” of contaminants, rather than just carbon. Unlike other taxes, pollution taxes are supported by a plurality of GOP voters.
According to Shultz, even if some GOP lawmakers remained skeptical, the party would seize the issue from Democrats, and regain its historical conservation leadership. “All of the most important federal environmental actions were taken by Republican presidents,” Shultz said.
The new GOP approach would appeal to young voters, including conservatives, who reject the idea that to grow the economy you have to damage the environment. This is not the coal age. This is three generations into the information economy. Environmental protection is fully compatible with economic growth. It’s expected – it’s assumed.
When forced to choose between the economy and environment, young voters split about evenly, giving a slight edge to the environment. A March 2013 Gallup survey of American adults showed more 18- to 29-year-olds saying environmental protection should take priority (49%) than those saying economic growth should take priority (45%).
Yet in terms of urgency, the economy needs help right now. People need jobs to put food on the table today. They need the environment to live for the long term. So 45% want political leaders focused on the economy as their top priority, while only 8% want them focused first on climate change, according to polls by the Conservative Republican National Committee (CRNC).
Republican climate “skeptics” use that data to argue that young voters don’t care much about the environment. Yet a majority of young conservatives under age 35 – some 30% of whom doubt climate change is real – still favor action on climate. They are simply not convinced government action will work.
But if nothing else is on the table, they favor government action. About 80% of voters under 35 support “President Obama’s climate change plan” – even though most have no idea what’s in that plan. But they favor action. If the GOP doesn’t offer an action plan, they won’t expend a lot of effort to figure out a better approach – they will take what’s on the table that the Democrats set.
The failure of the GOP so far to offer a climate policy of its own makes a big government approach a self-fulfilling prophecy. GOP leaders rightly worry that a Democrat-led climate policy will lead to more regulations, higher costs, and higher taxes. Strategic Republicans could seize the high ground on the issue, and offer a no-regrets alternative that’s good for the economy and provides insurance against the risk of climate change.
Bill Shireman is the coauthor of the upcoming book “Engaging Outraged Stakeholders: How-to Guide for Uniting the Left, Right, Capitalists, and Activists” and president and CEO of the Future 500. He is also coauthor of the book “What We Learned in the Rainforest: Business Lessons from Nature.”
Good land stewardship and energy efficiency both support our economy, but governments don’t pay nearly as much attention to the economic benefits of investment in environmental restoration as they do to investments in energy efficiency. Damon Hess of Sitka Technology argues that they should.
10 October 2013 | We invest public funds into environmental restoration and renewable energy with similar goals in mind: developing a sustainable economy and conserving common property resources. So why is it that when rating their quality, renewable energy projects are run through a professional combine while restoration projects receive a trophy just for playing?
Critics of renewable energy investments usually focus on the relatively high cost of the power they generate. New project proposals require sophisticated financial models that compare permitting, manufacturing, and operating costs against projected power generation rates and pricing over time. Once a project is in production, those initial projections are held up against actual outputs so that the models on which they were based get adjusted based on real data.
Environmental restoration proposals are rarely assessed using return on investment calculations. In fact, project developers may need only a before-and-after illustration and a willing land owner to receive funding for a new project. Restoration investments may face criticisms, but not due to their estimated output being more expensive than alternatives. Output is rarely measured using metrics that the public can understand and thus frequently not valued at all.
So why is it that the requirements for funding renewable energy are so much more onerous than those for environmental restoration? Public investments in renewable energy projects are meant to spur larger private investments and thus are held to a higher standard. Public investments in environmental restoration are meant to make us feel good about our commitment to “mother nature” and thus are given treated with kid gloves.
Let’s use Oregon as an example: From 2009-11, Oregon invested $100M/year via the Business Energy Tax Credit in renewable energy projects. Those investments led to additional private investments that by early 2013 had reached $9B according to the Renewable Northwest Project.
From 2011-13, the Oregon Watershed Enhancement Board reported spending around $150M in environmental restoration. That’s in the same ballpark as renewable energy. Yet there is no data on any private investment leveraging that spending.
Because environmental restoration funding never gets evaluated via return on investment, the private sector doesn’t leverage its public funding. Why would they without some quantification of the value? The costs of restoration are well known — riparian planting runs $10-15k/acre – but the returns are not. Metrics are esoteric and measurements non-standard, and thus monitoring data is typically wasted.
As long as environmental restoration is given a free pass when it comes to measuring results, it will be forever relegated to tenuous public funding and charitable contributions – not unlike sports. Until we monitor the output produced by an amateur planting program the way we monitor the output of a professional wind energy project, new turbines will continue to outpace trees.
8 October 2013 | California’s cap-and-trade program has been seen as a beacon of hope by those who support the inclusion of projects that save endangered forest and reduce emissions from deforestation and forest degradation (REDD). As the program moves forward, it is delivering on its promise to include forestry offsets from domestic projects, but it’s not clear it will be able to offer international offsets of any kind, let alone REDD.
At issue is opposition from two camps. The first opposes offsets from outside the state generally, on the grounds that external offsets are a threat to California jobs. The other camp opposes international REDD offsets specifically, arguing that international safeguards are inadequate.
Proponents, on the other hand, say they that safeguards proposed by the REDD Offsets Working (ROW) Group are more than adequate. Those safeguards limit accepted offsets to those from “jurisdictional REDD+” programs, which means they must come from states that, like California, are also reducing greenhouse gas emissions within their boundaries and have established protocols that the state of California accepts.
Protectionism or Protection?
International offsets have always made up a minor proportion of offsets permitted in the state’s cap-and-trade regulation, which restricts the use of international offsets to 2% of a regulated entity’s compliance obligation in the second compliance period (2015 – 2017) and 4% in the third compliance period (2018 – 2020).
In February, State Senator Ricardo Lara introduced Senate Bill 605, which aimed in part to “Limit the use of offsets, to the maximum extent feasible, to those offsets originating and achieved within the state.” At one point, the qualifier “to the maximum extent feasible” was stricken from the bill, but it has currently been amended to allow offsets from anywhere in the US and possibly within the Western Climate Initiative (WCI), which includes Quebec but not states outside of North America.
REDD “is the big elephant in the room,” in terms of whether or not it will play a role in supplying offsets to the California market, Belinda Morris, California director for the American Carbon Registry (ACR), said at the International Emissions Trading Association’s (IETA) Carbon Forum North America conference in Washington, DC last week.
The bill did not pass the California Assembly before the end of this year’s legislative session, but could be reconsidered in its new form when the legislature reconvenes in January. It is unclear if the bill, which passed the Senate this summer and does not have to be reintroduced, will gain further traction in 2014, but it remains a threat to the role of international offsets in California’s program, observers say.
“The international offset thing is going to come back,” says Emilie Mazzacurati, Managing Director of the consulting firm Four Twenty Seven. “The regulation could change on that ground.”
To date, development and approval of offset project types for the California program has focused on domestic protocols. The California Air Resources Board (ARB) already allows forestry, urban forestry, ozone-depleting substances (ODS) and livestock projects implemented in the US to be submitted by regulated entities to meet up to 8% of their compliance obligations. Later this month, the ARB is expected to approve the use of coal mine methane projects in the offset program, with the adoption of a rice cultivation protocol seen as likely next spring.
The ARB is “being very cautious because they want to get this right,” Mazzacurati says. “I’m not worried about that.”
REDD also faces opposition from other environmental organizations that want to see REDD banned completely, and many of them banded together in September to send a letter to ARB Chair Mary Nichols and California Governor Jerry Brown, among others, demanding that California reject these projects.
“It wouldn’t be surprising if we see a ramp up in opposition,” Mazzacurati says.
The Administrative Uptake
Those charged with helping to administer the program are moving forward, more or less. The Climate Action Reserve, for example, has written a Mexico forest protocol that will be adopted by its board this month that nests within the REDD framework, said President Gary Gero.
“We see that there is a potential for international forestry offsets for California, but there’s also a lot of complications,” he said. “There are a number of technical issues, legal issues and of course there are political issues. There are political complexities.”
Harold Buchanan, CEO of CE2 Carbon Capital, says those complexities may prove insurmountable.
“The complexity of getting international credits of these types into a state-based system is overwhelming, not to mention the lack of popularity,” he says. “There are certain constituencies that do like it, but frankly there are many, many more that see the problems and will pull out all the stops to stop the process. I don’t think it’s realistic.”
The ARB, in fact, does not have a REDD rulemaking scheduled at this time, said ARB spokesman Dave Clegern.
“We have an MOU to observe development of sector-based projects in Chiapas and Acre, but no agreement to accept those projects,” he said. “At this point we have just issued the first offset credits for domestic projects, and that is our primary focus right now.”
Scarce Supply?
The maximum allowable offset limit in the WCI program is 241 million tonnes (MtCO2e), but Olga Chistyakova, who follows carbon and energy for Thomson Reuters Point Carbon, says the REDD supply would constitute only a small portion of that sum.
“But [the potential exclusion] does set a bad precedent for REDD as a project type and as an accepted international forestry project type in a developed market cap-and-trade scheme so that’s something to watch for going forward,” she said.
Supply and Demand out of Sync
Supply and demand dynamics in the allowance market are also a factor in whether international offsets will be allowed into the program, with recent projections that the California market will be oversupplied.
Chistyakova says that California’s cap-and-trade program will have more allowances than needed through 2019, which will put significant downward pressure on allowance prices. Updated emissions data shows a steep decline in power sector emissions as California’s strong renewable energy mandate is leading emissions to drop 15% from 92 MtCO2e in 2013 to 78 MtCO2e in 2020. She now believes that California allowances will trade “pretty near” the price floors, with a forecast of $12.3/tCO2e in 2015 and $17.2/tCO2e in 2020.
“That puts a significant damper on the offset prices as well,” she said. “We do think that the current project pipeline will move forward, but new project generation and development may slow down as a result of this new finding.”
Because the market will be long with minimal demand for external abatement trickling in by the third compliance period, compliance entities will not seek to use their full 8% offset limit, according to Point Carbon. Offset demand will not be driven by compliance needs, but determined by whether companies view offsets as a key diversification product in their compliance strategies and whether they can manage the offsets risks well enough to get the highest quality offset for the lowest price.
“We do think that although the market is long, offsets will remain a compliance strategy, especially for the large buyers who may be able to take on the risks,” Chistyakova said.
The US state of California and the Canadian province of Quebec has formally signed an agreement that will link their cap-and-trade programs beginning in January. The linkage could be the first step toward creation of a broader carbon trading program in North America.
4 October 2013 | WASHINGTON, DC | California and Quebec have signed an agreement to link their cap-and-trade programs via the Western Climate Initiative (WCI), a decision that could pave the way for linkages to other trading programs, observers said.
Yves-Francois Blanchet, Minister of Sustainable Development Environment Wildlife & Parks, Quebec, announced the signing of the agreement by the two jurisdictions at the International Emissions Trading Association’s Carbon Forum North America conference in Washington, DC on Tuesday.
“The regulatory provisions of both systems were very similar and often identical,” he said. “We had to ensure that obstacles to the linkage were removed for both governments. One by one, we succeeded in tackling the challenges we faced.”
The Ministry of Environment Quebec spent significant time reading through the regulations for both jurisdictions to ensure they were identical where they needed to be identical, said Jean-Yves Benoit, Economist, Climate Change Office for the Ministry. For example, California and Quebec decided to hold joint auctions and make their compliance instruments completely fungible and had to figure out the currency exchange situation as their floor prices were set in US and Canadian dollars, respectively.
“In other areas, we could just differ,” he said.
Benoit jokingly referred to the agreement with California as a “prenup.”
“Like any marriage, we expect to be married forever,” he said. But the agreement outlines the responsibilities of each jurisdiction in the event of a divorce, such as how much notice one jurisdiction must give to its partner before ending the linkage and how incurred costs must be split.
Who’s Next?
Quebec’s regulations governing its cap-and-trade program allow for linking of its system with other provinces and states.
“The government that I serve is well aware that for a carbon market to be as successful as possible, it must include as many partners as possible,” Blanchet said. “We must welcome new partners and not only in North America. Let us keep our cap-and-trade program user friendly and attractive.”
“The collaboration shown by Quebec and California in the WCI framework is an excellent example of North American regional cooperation that is economically and environmentally beneficial for both partners,” Blanchet continued. “Now that (the linkage) has been created, we very much hope to see the WCI carbon market expand as soon as possible.”
California and Quebec are still waiting for fellow WCI members British Columbia, Manitoba and Ontario to move forward with trading programs, Benoit said.
The Regional Greenhouse Gas Initiative (RGGI), which is the regional carbon trading program in the Northeast US, is the most obvious next candidate for a potential linkage, said JP Brisson, Vice Chair of law firm Latham & Watkins’ Air Quality and Climate Change practice group. The WCI and RGGI were previously in discussions about a potential linkage, but those talks stalled as the oversupply in the RGGI program had allowance prices hovering near the floor.
But the RGGI states engaged in a comprehensive program review in 2012 that led RGGI officials to decide to reduce the 2014 emissions cap by 45%, a decision that has led to increased demand for allowances, a burst of trading activity in the secondary market and higher allowance prices since the decision was announced in February.
“I think as we see that cap having an impact on the market, from a policy perspective California will reconsider its decision to link with RGGI and hopefully going forward we may have a linking in the United States across the two coasts,” he said.
But future linking could take a different form with California, for example, deciding in 2015 to allow covered entities to submit RGGI allowances for compliance for up to a specified percentage of their compliance obligations, Brisson says.
“This form of linking between markets brings in fungibility, it brings in liquidity, it levels the playing field, but it does not require the two jurisdictions to spend as much time as Quebec and California have spent over the last year and a half to essentially harmonize their markets,” he said. “I think going forward we need to be more efficient at linking by considering other options.”
Cap-and-trade programs do not have to be identical to link, Brisson said. Quebec, for example, ultimately chose not to follow California’s lead in implementing buyer liability provisions, which hold the buyers of offsets responsible for replacing invalidated credits.
In contrast, California set holding limits that are lower than the compliance obligations of several covered entities, over the strong objections of industry, a policy that has migrated north of the border.
“That’s what I call the contamination of market flaws to Quebec,” he said. “Unfortunately, the good policies in Quebec are not coming down to California.”
“As we go forward, we need to identify those good market policies that we would like to see across markets and we need to push for those to be replicated,” Brisson added.
Crossing an ocean?
In July, regulators in Australia and California signed a memorandum of understanding (MOU) to cooperate in addressing climate change. In September, California and China’s National Development and Reform Commission signed a MOU committing to a joint effort to combat climate change, promote clean and efficient energy and support low-carbon development.
“But I would be very hesitant to anticipate that that would guarantee a link in any near-term horizon,” said Michael Mehling, president of the Ecologic Institute. “I think it’s an important and very useful step to share practices to perhaps keep that door open for linking in the future, but it certainly is no guarantee.”
Creating broader linkages is critical because California’s market during the first compliance period is only about one-tenth the size of the European Union Emissions Trading Scheme, with smaller markets more vulnerable to market manipulation and illiquidity, Brisson said.
“Linking with Quebec is just a small step in the creation of liquidity so hopefully additional markets can join,” he said.
The chair of the Northeastern US carbon trading program says his organization is ready to meet whatever regulations emerge from the US Environmental Protection Agency (EPA) for existing power plants. But offsets likely won’t be part of the program, analysts say.
2 October 2013 | WASHINGTON, DC | The chair of the Regional Greenhouse Gas Initiative (RGGI)Board of Directors says that RGGI, which is the regional carbon trading program in the Northeast US, is a “perfect fit” for the pending federal regulations for existing power plants in the country, which are due in June, 2014.
Speaking at the International Emissions Trading Association’s (IETA) Carbon Forum North America conference here, Collin O’Mara said the RGGI system had been a substantial contributor to the decline in greenhouse gas (GHG) emissions in the region, and argued for a place in helping states comply with upcoming rules for existing power plants under Section 111(d) of the Clean Air Act. That section allows the EPA to develop a program that gives the states great flexibility to reach these performance standards. (The US EPA also proposed New Source Performance Standards (NSPS) under Section 111(b) of the Clean Air Act for new power plants, but Section 111(d) focuses on existing plants.)
“We do believe it’s a perfect fit for the 111(d) regime,” he said.
The RGGI states engaged in a comprehensive program review in 2012 that led RGGI officials to move to reduce the 2014 emissions cap by 45%, a decision made with an eye toward the upcoming EPA regulations. “That was one of the driving forces,” O’Mara said.
The tightening of the RGGI cap and the expectation that the EPA will give the states significant flexibility to meet performance standards, including possibly allowing states to prove that their trading programs are equivalent to the federal regulations, has led to renewed interest from other states in the RGGI program.
“We’re seeing a lot of interest from other states,” he says. “Because that system is in place, it’s a very attractive option for some states that are trying to figure out how to comply so that they don’t need to start from scratch. We’re having conversations with different states around the country that I won’t name.”
No Offsets Allowed?
Despite US President Barack Obama’s pledge that the states would be granted significant flexibility to meet the federal carbon regulations, however, most observers believe that carbon offset projects will not be eligible for compliance with the EPA rules.
“I don’t think they count,” says Brian Turner, Deputy Executive Director of the California Public Utilities Commission and former Assistant Executive Officer of Federal Climate Policy at the California Air Resources Board, the regulatory agency overseeing California’s carbon trading program.
In addition to the offsets component, California’s complex cap-and-trade program has numerous other elements that are critical to the state program, including its planned international linkage with Quebec’s program, he says.
“We’re going to have to cut all that out,” Turner says. “There are tremendous benefits to it. We get a carbon price throughout the economy. We get more revenues to do good things for our citizens and for clean energy. We have a broader market, a deeper, more liquid market. But in terms of showing compliance with EPA, we’re going to focus right in on those facilities and what’s happening to the electric generating units in our state. Are there emissions reductions there? That is the essential question we’re going to have to show EPA.”
Factors against the inclusion of offsets in the federal regulations include the NSPS language in the Clean Air Act, which would seem to prohibit offsets because those emissions reductions occur at sites other than the source, and the lack of enthusiasm for offsets expressed by EPA officials during industry consultations, says Jennifer Smokelin, Counsel for law firm Reed Smith.
In addition, the “Scalia risk” would work against any EPA attempt to allow offsets, she says, referring to the strict constructionist philosophy of judicial interpretation most closely associated with Supreme Court Justice Antonin Scalia.
“Anything that’s done from a 111(d) standpoint does not just has to pass EPA muster, but also has to be able to pass Supreme Court muster because there is going to be an inevitable challenge,” she says.
But there are factors in favor of the inclusion of offsets, namely that the language under 111(d) mandates the use of the best systems for emission reductions, incorporating the most cost-effective and technologically feasible options, which would include offsets, Smokelin says. States are also allowed a great deal of flexibility under the 111(d) provisions and should lobby on behalf of offsets, she says.
“Just because it hasn’t been tried before doesn’t mean that we shouldn’t be trying it now,” Smokelin adds.
The EPA has been the target of several lawsuits aimed at preventing the agency from moving forward with certain regulations, most notably the Cross State Air Pollution Rule, in which the agency’s attempt to develop new regulations to mitigate sulfur dioxide and nitrogen oxide pollution was flatly rejected by the DC Circuit Court. In June, the Supreme Court agreed to review the lower court’s decision, but the ruling has made EPA officials determined to develop a stringent, but flexible standard that is defensible in court, observers say.
“The more the EPA gets away from the traditional approach they used under Section 111(d), the thinner the ice,” says Frank Prager, Vice-President of Environmental Policy for utility Xcel Energy.
Can the EPA be stopped?
The US House of Representatives has tried on numerous occasions to thwart EPA’s efforts to regulate carbon emissions. But opponents of EPA regulation do not have the votes to stop the agency via the Congressional Review Act, which allows Congress to overrule federal rules issued by government agencies, much less the votes for an outright repeal of EPA’s authority to regulate GHGs, Turner says.
“We’ve got the opportunity to get this right,” he says. “I think this may be the law of the land.”
A dynamic similar to the healthcare reform efforts in the US, commonly known as Obamacare, could emerge in relation to the pending EPA regulations, in which some states will flatly refuse to establish state implementation plans to comply with the agency’s requirements. Texas, for example, has consistently rejected the EPA’s authority to establish GHG regulations and sued the agency over its GHG permitting requirements.
“If (the states) don’t submit satisfactory plans … it’s going to be up to the EPA to implement a program,” Prager says. “At some point, there has to be a federal backstop.”
But a state-level plan to comply with the federal regulations would be the preferred solution, he adds.
“From Xcel’s perspective, we would be quite concerned under any circumstance to have a federal solution imposed on us through the Clean Air Act,” Prager says.
When the state of South Carolina wanted to widen the Glenns Bay Road, they risked upsetting a critical wetland habitat. Here’s how mitigation banking made it possible for them to build the road and expand urban green space with a net plus to the environment – and no cost to local taxpayers.
2 October 2013 | A large gap in Lewis Ocean Bay Heritage Preserve on the outskirts of Myrtle Beach has been filled with the long-desired acquisition of a piece of old Horry County family land known as the Vaught Tract.
The 754-acre addition brings the preserve, which holds 23 of the mysterious wetlands known as Carolina Bays, to 10,444 acres.
The addition is being hailed as a precedent in the way it was acquired. The new parcel was donated as a wetlands mitigation bank, meaning credits can be bought from it by private owners, businesses or government agencies to compensate for wetlands they must destroy when they build something.
Ecosystem Marketplace is at the One Water Leadership Summit in Los Angeles this week where everyone is thinking about the water-energy nexus. Meanwhile, Australia’s newly elected government reduces funds for Murray-Darling buybacks and Coca-Coca enters into a partnership with the USDA to protect US National Forests.
This article was originally published in the Water Log newsletter. Click here to read the original.
Why are we talking about carbon and coal in a newsletter about water? Well, because you can’t make meaningful progress on one set of problems without tackling the other. The coal industry in China uses as much as 20% of the country’s water. The country’s water crisis is putting tremendous pressure on its energy supplies, and vice versa. In India, financing for coal power has dried up due to lender concerns about water risk surrounding those projects.
This is not a problem unique to emerging economies. This week, we’re reporting to you from the One Water Leadership Summitin Los Angeles, California – a state where water infrastructure accounts for the single greatest use of energy. With tremendous water infrastructure investments required in the USA and around the world in coming decades, it’s worth asking what that means in terms of increased energy demands.
The good news is that we have a choice between taking advantage of the energy-water nexus, or being trapped by it. A recent report from The Union of Concerned Scientists, for example, suggests that a shift to renewable energy sources in the United States could lead to a 97% drop in water withdrawals for power by 2050.
The trick will be to advance major change in two sectors – water and energy – not known for their quick metamorphosis. Here in Los Angeles, just about every presentation so far has referred to “innovation” – whether in regards to roofing Californian aqueducts with solar panels or micro-hydro installations in water piping systems.
A good start might be in the articles below. This month’s Water Log briefing brings you a host of news on projects like incentives for better land management in China, Arizona, Peru, and Nepal, or new opportunities for business in the US clean water space. Like energy and water, these cases offer a “two-fer” – an opportunity to achieve interdependent goals like poverty alleviation and environmental protection, or water risk mitigation and business opportunities.
On a final note, if you value our monthly briefings, consider a small donation to help us keep the lights on. As a non-profit, we’re committed to increasing transparency around environmental investments, and making sure everyone has access to that information free of charge. If you’d like to support that mission, keep in mind that just $150 gets you listed in our sidebar for a full year; we also offer tile ads in the news briefs or on our home page. Click here to donate or shoot us an email.
In The Colorado Delta, A Little Water Goes A Long Way
For years, scientists assumed the Colorado River delta – where a young Aldo Leopold once paddled his canoe through “a hundred green lagoons” abounding with life – was a dead ecosystem. For years, virtually no water was left for environmental health after seven US states and Mexico took their share. The Colorado, over-allocated by sixteen percent, hasn’t reached the sea in fifteen years. Nine-tenths of the original wetlands are gone. Much of the delta has become desert.
But a coalition of non-governmental organizations spanning the US-Mexico border think they can bring the delta back. “This as an ecosystem with high resiliency, and we have learned that with a little bit of water we can achieve significant restoration,” says Osvel Hinojosa, Pronatura Noroeste‘s Water and Wetlands program director. Using water rights markets, recaptured wastewater, and a groundbreaking new federal deal, the Colorado River Delta Water Trust is breathing new life into an ecosystem widely assumed to be gone forever.
Pennsylvania’s Nutrient Trading Bill Pledges To Reduce Cost And Improve Results, But Will It Work?
Ed Schafer and Harry Campbell both say they want to clean the Chesapeake Bay. They even seem to agree on the need to stifle the flow of animal waste into the Bay from farms. What they can’t agree on, however, is how Pennsylvania should structure its nutrient trading program, and specifically whether technologies like manure treatment should be recognized in that program.
Proponents like Schafer want to create a competitive bidding process designed to recognize the most effective method of reducing nutrients, and they claim Senate bill 994 will produce better ecological results than techniques being used currently while cutting the cost of Bay cleanup for taxpayers by up to 80%.
But opponents like Campbell argue this competitive bidding process allows for nutrient reduction strategies that don’t comply with state and federal regulations, which means they will generate credits that companies can’t use to meet their nutrient reduction requirements.
Incoming Australian Government Puts a Pinch on Funding for Buybacks in the Murray-Darling
True to their last-minute campaign promise, Australia’s newly-elected Coalition government says it plans to slow spending on water buybacks in the Murray Darling and shift to a greater focus on irrigation infrastructure upgrades, according to recent statements by Shadow parliamentary secretary for the Murray-Darling Basin Simon Birmingham.
The new plan spreads AUD $650 million (USD $609 million) planned initially for four years of buybacks – i.e. purchasing and effectively retiring water allocations in the Basin to return water to the river – over six years instead. That means AUD $174 in cuts in 2014-2014 and more than $200 million in each of the following years. Nevertheless, Birmingham says the Basin plan is on track to meet its full goals by 2019.
Conservation Innovation Grants Take on Ag Water Pollution
The US Department of Agriculture (USDA) announced earlier this month the recipients of 2013’s Conservation Innovation Grants. More than $8 million (out of a $13.3 million portfolio) went to projects targeting water quality and source water protection. There was a big focus on the agricultural sector, with a number of grants supporting research and demonstration on next-level nutrient management at universities across the country. Other funded projects ranged from plans for a Central Valley Habitat Exchange focusing on floodplain habitat credits in California (implemented by American Rivers) to research on bioreactors to manage agricultural pollution (Cornell). A number of grants were awarded to efforts addressing nutrient pollution in the Chesapeake Bay, including rolling out manure injection technologies (National Fish & Wildlife Foundation), agricultural drainage management (Virginia Polytechnic Institute & State University), and floodplain forest restoration (The Nature Conservancy).
With World Water Week and the ESP conference taking place in recent weeks, there’s been a bit of a deluge of new reports on all things water. Your Water Log editors have taken it on themselves to pick a few highlights: you might want to take a longer look at the following.
At the Ecosystem Services Partnership conference last month in Bali, the UN Statistics Division offered up a new set of guidelines for ecosystem accounting to assist decision-makers in going “beyond GDP.” The draft document introduces a framework for organizing, measuring, and understanding ecosystem data, and sets out an agenda for future research.
A pair of reports from the OECDsurveys the 34 OECD countries for progress in managing climate-related water risks, and sets out a risk-based approach to water security that relies on a hard-nosed assessment of acceptable costs and potential benefits in evaluating policy and investment options.
The World Business Council for Sustainable Development (WBCSD) launched their new report, the Business Guide to Water Valuation, with an eye to providing a private sector-friendly primer on the sometimes-foggy world of valuation. It’s designed to plug into WBCSD’s Corporate Ecosystem Valuation process and includes ten sector-specific case studies.
The 2030 Water Resources Group launched an online platform, “Managing Water Use in Scarce Environments“, cataloging cooperative projects between the public and private sectors on ‘water saving’ – a concept that the group also seeks to clarify (it’s a bit more than just reducing water use!).
Coca Coca & USDA Team Up On Watershed Protection in National Forests
A new agreement between the US Department of Agriculture and Coca-Cola will see the latter funding several million dollars (precise amount TBD) worth of restoration projects on national forest lands. The venture builds on two years of past partnership rehabilitating watershed functions in six sites across the country. Funded projects will continue to focus on areas where Coca-Cola sources its water supplies; the company has committed to replenishing its water use in full by 2020. Funds will be administered through the National Forest Foundation and the National Fish and Wildlife Foundation. “We need to look creatively at ways to leverage our resources or attract outside resources,” said Agriculture Secretary Tom Vilsack. “Water stewardship is a key focus because … it’s in every product,” added Bruce Karas, Coca Cola’s vice president of environment and sustainability for North America.
Measuring Eco-Compensation Cost-Benefits in China’s Miyun Reservoir
With water levels and pollution problems growing in the Miyun reservoir (Beijing’s largest) China’s Paddy Land-to-Dry Land (PLDL) program began paying farmers to switch from rice to corn production, compensating them for foregone income. Four years later, according a study published in the Proceedings of the National Academy of Sciences, the program has sharply reduced fertilizer runoff, increased reservoir levels, and improved local livelihoods. An average investment of $1,330 per hectare translated into $2,020 in water quality benefits; overall the ratio of benefits to costs for upstream and downstream parties is estimated at 1.5.
Monterrey Water Fund Launches With $5M in the Pot for Watershed Protection
A new water fund in Monterrey, Mexico launched this month with $5 million to finance reforestation, soil restoration, and other efforts in the San Juan River watershed. The Monterrey Metropolitan Water Fund is the latest established with the aid of the Latin American Water Funds Partnership, a collaboration between The Nature Conservancy, bottling company FEMSA, the Inter-American Development Bank and the Global Environment Facility. It enjoys broad support: the fund boasts as partners 23 companies, 16 government institutions, 16 civil society organizations, and 4 universities. “This Fund will focus on four key objectives: help mitigate flooding, improve water infiltration, raise awareness about water, and work alongside the government to attract resources in favor of the watershed,” said Juan José Guerra Abud, Secretary of the Environment and Natural Resources, at a launch event.
In Arizona, Incentives for Irrigation Improvements Pay Off
For 150 years, farmers in Arizona’s Verde River basin have drawn their water from the same system of irrigation ditches. Some years, the entirety of the river would be diverted into the ditches for long stretches, and often not even fully used. Irrigators in the area for the most part don’t like the idea of dewatering the Verde, but managing water levels in ditches required the ditch company boss to go out and manually adjust the gates. And with no provisions in Arizona recognizing environmental flows as a ‘beneficial use’ of a water right, farmers were concerned they’d forfeit the right to any water they didn’t use. A new effort backed by The Nature Conservancy (TNC) helped the community find a clever solution: TNC pays for automated gates that allow irrigators to control ditch levels from a cell phone. The upgrade helps farmers limit their diversions, and maintain minimum flow levels in the Verde. If they meet flow targets, they get an another payment, which will likely fund additional irrigation upgrades.
Source Water Protection Project in Nepal Pays Women in Cash, Food, and Opportunity
A source water protection project in western Nepal backed by the World Food Project’s Livelihoods and Assets Creation Programme is compensating local residents for watershed protection, through an approach that develops skills, reduces food insecurity, and is creating new opportunities for women in the village of Paira. The project funded work on cattle exclusion from streambanks, bank stabilization, and installing clean water taps. In exchange for their labor, villagers received cash and food. One woman, Dhaulidevi Bohara, says she earned NPR5,100 (USD $48.60), which she used to purchase school supplies for her children and other necessities, as well as 150 kilograms of rice and 15 kilograms of lentils.
“I am usually dependent on my husband’s income to run the household, but this project has helped me get some work experience and earn some money…This project has given me so much,” she says. “I got employed, I learned different work skills and I received an equal wage as that of a male co-worker, which has really helped me and my family.”
A new piece at the Agriculture and Ecosystems Blog details a compensation program, or rewards for hydro-ecosystem services scheme (RHES) as the authors call it, developing in Peru’s Caí±ete River Basin. Researchers supporting the project estimate that water availability to farmers int he lower basin is worth around $0.0017 to $0.0417 per m3, with values rising along with scarcity. That’s more than users currently pay for access; the good news is that 86% of commerical and domestic users polled said they’d be willing to contribute to a water fund. One local challenge is a lack of clear title to land in many cases. That makes it difficult to monitor effects of the project on people’s moving to the basin to participate in the project, or away from it to avoid land use restrictions.
The project’s appeal extends beyond this watershed: it’s an official pilot site for the Peruvian govenrment’s efforts to back such projects, and lessons learned in the Caí±ete will likely be integrated into a new law promoting compensation projects. “There is huge replicability potential,” says Marcela Quintero of the International Center for Tropical Agriculture. “This basin is representative of all 53 basins along the Peruvian coast, so if this RHES scheme works, it can be applicable to any of those watersheds.”
With municipalities hit with sticker shock by the estimated costs of continued water quality compliance, even while local spending on clean water at an all-time high, water quality could be big business for the private sector, according to the latest issue of Green Economy. A US Conference of Mayors report earlier this year estimates the market for clean water in the US at $1.7-$3.7 trillion per annum. Ratepayers are beginning to balk, which means the time is ripe for the private sector to step in with cost-effective solutions to problems like nutrient pollution from sewage treatment, stormwater, and agricultural runoff. The piece details a few of these, including water quality trading, competitive procurement processes, and public private partnerships. As former Governor Edward Shafer puts it, ““This is changing the investment community. How can we deal with private sector investment on critical issues, instead of taking tax dollars and making decisions on risk not opportunity?”
The WaterSmart Innovations Conference and Exposition
The WaterSmart Innovations Conference and Exposition, presented by the Southern Nevada Water Authority and numerous forward-thinking organizations, is the largest urban-water efficiency conference of its kind in the world. Last year, WSI drew more than 900 participants from 34 states and the District of Columbia, as well as seven foreign nations. This year, as it has for the last five years, WSI will feature featured a full slate of comprehensive professional sessions and an expo hall highlighting the latest in water-efficient products and services. The event also will feature several affordable pre-show workshops (which are not included with the WSI registration fee) on Tuesday, October 1. 2-4 October, 2013. Las Vegas, USA.
2nd International Conference on Ecosystem Conservation and Sustainable Development
Environmental degradation, particularly climate change, is augmenting the impact of natural disasters, thus seriously affecting food security ensured through the sustainable production of agricultural crops, livestock and fisheries. Sustainable development is a certain compromise among environmental, economic, and social goals of community, allowing for wellbeing for the present and future generations. Designing appropriate policies and strategies that lead to conservation of natural ecosystems and biological diversity and ecologically sustainable development in the era of climate change is not an option but a necessity. ECOCASD 2013 will be a rendezvous of those researchers and academicians working on cutting edge areas of ecosystem management and sustainable development and is a platform to share innovative ideas on ecosystem conservation, climate change adaptation and mitigation and sustainable development. 3-5 October 2013. Kerala, India.
The SER2013 World Conference on Ecological Restoration: Reflections on the Past, Directions for the Future will bring together more than 1,200 delegates from around the world interested in the science and practice of ecological restoration as it relates to natural resource management, climate change responses, biodiversity conservation, local and indigenous communities, environmental policy and sustainable livelihoods. 6-11 October 2013. Madison WI, USA.
Land and water has always been the immediate surroundings of peoples in all existences and continents. It has always been the base on which Man depends on for his existence. Land serves as home, a nutrient-filled and agricultural base, a thoroughfare, a religious base, et cetera. Water is all important beginning with the human body made up of water, water also serves as nourishment, used for cooking and the rivers, streams and oceans are home for very many habitats necessary for life. Wars have been fought to protect and preserve land and water space meaning that they are fundamental resource for human survival. Prevailing civilizations and epochs are chronicled with the effects these constituents have on human life. The conference therefore would like to explore these great connections from the humanities, science and social science perspectives. The hope of the conference is to discuss the interconnectedness or relatedness of these three theatres of life for existence/ living and chart a model or value system for the preservation of the resources and sustainable use by the human society. Deadline for Abstracts is October 6th! 3-6 November 2013. Contonou, Republic of Benin.
Presenting solutions for balancing the benefits of conservation with the costs, managing infrastructure, developing robust supply models and watershed management plans, water reuse, resource management, green infrastructure and more. 30 March – 2 April 2014. Denver CO, USA.
Ecosystem Marketplace is a project of Forest Trends a tax-exempt corporation under Section 501(c)(3).The non-profit evaluator Charity Navigator has given Forest Trends its highest rating (4 out of 4 stars) recognizing excellence in our financial management and organizational efficiency.
California’s cap-and-trade program took a step forward as the state’s Air Resources Board (ARB) delivered its first issuance of compliance offset credits for five ozone depleting substance destruction projects. The ARB will continue to issue credits twice monthly starting in October.
25 September 2013 | The California Air Resources Board (ARB) has issued its first batch of compliance carbon offset credits eligible for use in the state’s cap-and-trade program for reducing greenhouse gas emissions. Entities can purchase these credits to offset their carbon emissions and meet their emission reduction obligation that is required in California’s cap-and-trade system.
“The first compliance offset issuance marks a major milestone for the California program,” said Belinda Morris, the California director of American Carbon Registry (ACR), a nonprofit organization that develops carbon offset standards and methodologies and is an Offset Project Registry (OPR) for the state’s cap-and-trade program. “ARB has now set the stage for a steady flow of additional early action and compliance offset projects to be approved for ARBOC issuance this year.”
ARB issued over 600,000 of these ARB Offset Credits, or ARBOCs. And 300,000 of those were issued to the Environmental Credit Corp, (ECC) a North American carbon offset project developer. The credits are for an ECC ozone depleting substance (ODS) destruction project. The other credits were issued to ODS projects as well including three registered with the offset registry, Climate Action Reserve, another OPR for California’s cap-and-trade program. These credits come from early action initiatives, or from projects that voluntarily reduced their carbon emissions and are now generating credits for compliance in the cap-and-trade program. The offsets were developed under the Ozone Depleting Substances Protocol.
According to ARB director, Mary D. Nichols, the offset credits were approved after a rigorous verification program. Offset projects must undergo ARB-approved protocols in order to be used as an offset credit and only credits issued by the ARB are considered compliance credits.
For covered facilities, up to 8% of their compliance obligation can come from carbon offsets.
Beginning in October, ARB will issue compliance credits on every second and fourth Wednesday of every month.
Already a major player in the voluntary carbon market, the Walt Disney Company is planning to expand its offset purchasing program to cover indirect emissions related to its operations. Disney has pledged to continue supporting new offset projects, particularly in the forestry sector, and has used the funds generated from its double-digit internal carbon prices to pay above-average prices for the credits.
13 September 2013 | The entertainment giant that runs the “Happiest Place On Earth” is wild about carbon offsets, so much so that the Walt Disney Company will expand its already substantial voluntary offset purchasing program to account for indirect emissions generated by its operations, an effort to be financed by a $11-14 per-tonne internal carbon price the company charges its business units, according to sources close to the program.
In 2009, Disney announced a series of long-term goals to reduce its environmental impact, including a goal of zero net direct greenhouse gas (GHG) emissions, a target that will likely be updated in the next year, says Bob Antonoplis, assistant general counsel for The Walt Disney Company. The multi-media company challenged its business units to reduce their direct emissions through energy efficiency, fuel savings and fuel substitution initiatives and turns to the voluntary carbon markets to offset what it cannot reduce internally.
Disney’s voluntary offset program has covered these Scope 1 direct emissions and the company is planning to expand its offset purchasing in the “near future” to include its Scope 2 emissions, which cover indirect emissions from consumption of purchased electricity, heat or stream, Antonoplis says.
“We’re going to be expanding our program as we fold in our Scope 2 emissions, which will obviously increase the amount of projects that we’ll be involved in,” he told participants in a Climate Action Reserve (CAR) webinar on Thursday.
Since establishing its environmental goals, Disney has since become a major buyer in the voluntary carbon markets. “It was clearly driven by the overall goal that we set for ourselves,” he says. “That’s why we are participating at the scale that we are and then when we fold in our Scope 2 emissions, we’ll be at an even higher scale.”
As part of this effort, Disney established its Climate Solutions Fund, the name given to its internal carbon pricing program. The costs of carbon offset projects are charged back to individual business units at a rate proportional to their contributions to the company’s overall direct emissions footprint. Charging the business units for their GHG emissions raises the capital that is used to invest in third-party emission reduction projects.
When the internal carbon pricing mechanism was first pitched to Disney management, the then European price of $15 per tonne (/tCO2e) was used as the benchmark, Antonoplis says. But the price charged to the company’s internal units has been much lower in practice, varying in the US $11-14/tCO2e range, he says.
By comparison, the average price for voluntary offsets on a global basis was $5.9/tCO2e in 2012, with an average price of $6.7/tCO2e in North America last year, according to Forest Trends’ Ecosystem Marketplace’s 2013 State of the Voluntary Carbon Markets report.
Disney’s four cruise ships pay “a significant chunk” into the fund, while its less energy-intensive movie studio and television divisions are responsible for lower payments, according to Antonoplis.
Forest Lovers
The folks who choose offset projects for Disney have a particular affection for forestry projects.
“We like projects that have co-benefits and side benefits in addition to just pure GHG benefits,” he says. “We’re really drawn to forestry projects and we’re really drawn to reforestation projects in particular that have watershed protection, habitat rehabilitation as well as a GHG component. A bulk of our money is spent on forestry projects.”
With the help of a $3.5 million donation from Disney, Conservation International was able to develop a reduced emissions from deforestation and forest degradation (REDD+) project in the dwindling Alto Mayo Protected Forest in Peru. The project, which Antonoplis calls “fantastic,” has generated 3 million tonnes of emissions reductions (MtCO2e) so far, and delivered a host of benefits for the local populations.
“We’re big supporters of REDD and we’re active in both California and Washington, DC on trying to get REDD into our regulatory programs,” he says.
In 2012, Disney’s direct GHG emissions footprint was 867,353 tCO2e and the company retired 433,677 tCO2e in carbon credits generated by the Peru project to help meet its indirect GHG emissions goal.
Antonoplis is particularly proud of the Cuyamaca Rancho State Park project, for which Disney helped finance the reforestation of 1,075 acres of forest land, which was decimated by the Cedar Fire of October 2003. This was a particularly pricey endeavor compared to other offset projects such as dairy methane, livestock or ozone-depleting substances projects, he notes.
“Even though it was ‘expensive,’ it was just a wonderful project,” he says.
The company has purchased a smaller percentage of carbon offsets from other projects such as energy efficiency, livestock gas capture and landfill gas, with landfill projects in particular an extremely cost effective way to capture methane, which has a much higher global warming potential than carbon dioxide.
“You get a lot of bang for the buck in engineering costs,” Antonoplis says. “It’s cheaper to do them and it keeps the price down.”
Demand will likely continue for lower-priced landfill methane projects via the Chicago Climate Exchange’s offset registry program because of the significant price differential that exists between CCX projects and the higher-priced CAR credits, says Molly Peters-Stanley, associate director of Ecosystem Marketplace.
“Not everybody pays as much for voluntary offsets as Disney does,” she says.
Disney’s preference is to fund new projects rather than purchasing older offsets and to work with long-time NGO partners such as Conservation International, the Nature Conservancy, the Conservation Fund and World Wildlife Fund, with 80-90% of its credits acquired through these relationships.
“They’re friendly contracts to negotiate and we each have kind of a reputational stake in the project working,” Antonoplis says. “It enables us to easily enter into agreements to fund these projects.”
Location of the projects is often a consideration for the company in choosing offset projects. Disney has financed several reforestation projects with the Nature Conservancy in China because of major construction on the upcoming Shanghai Disneyland and its existing theme park in Hong Kong, he says. The company also wanted to engage in projects in California because it is headquartered in the state. But Disney also has projects in Peru and the Lower Mississippi Valley, where it does not have operations.
“We don’t only pick projects based on geography,” he says. “But all things equal, we do like projects in our neighborhood.”
Voluntary Buying Going Strong
The entertainment giant’s offset purchasing strategy assumes that a vibrant voluntary market exists, Antonoplis says. “Obviously that is the case and it’s worked very well to our benefit,” he says. “It’s been a successful program for us.”
In 2012, voluntary actors contracted 101 MtCO2e for immediate or future delivery, a 4% increase over 2011, while the volume purchased domestically in North America increased by 1% to about 30 MtCO2e, according to the Ecosystem Marketplace report.
Ninety percent of offset volumes were contracted by the private sector, where corporate social responsibility (CSR) and industry leadership were the primary motivators, Peters-Stanley says.
For Disney, CSR was “clearly our motivation,” Antonoplis says.
Despite being based in California, the company’s offset purchasing is not motivated by compliance mandates because its operations in the state fall well below the 25,000 tCO2e threshold to be covered under California’s cap-and-trade program. “That kind of frees us up from not having to worry about the offset component of the cap-and-trade program,” he says.
CAR was the most popular offset standard in North America in 2012, with a 30% share of the market, in large part due to preparations for California’s compliance program, which officially launched in January 2013, Peters-Stanley says. Removing compliance-related transactions from the equation, the Verified Carbon Standard (VCS) was hands-down the leading standard for voluntary activities in North America, she says.
“If it weren’t for the voluntary market, the vibrancy of the standards such as VCS and [the American Carbon Registry] and CAR of course, we wouldn’t be comfortable playing in this area,” Antonoplis says. “The vibrancy of the market and the verification standards and the ability to get these projects off the ground and going has really worked well for us.”
The UK’s Department of Environment, Food and Rural Affairs has released a green paper on nationwide biodiversity offsets, although the paper has met with criticism from environmental groups arguing offsets should only be used as a last resort after other options have been exhausted. In the US, a land swap in Minnesota between the government and an environmental investment firm could create the country’s largest wetland mitigation bank.
This article was originally published in the MitMail newsletter. Click here to read the original.
12 September 2013 | Greetings! In the US mitigation world, we have a few big headlines this month. A land swap between Ecosystem Investment Partners and Minnesota state and county government would create the country’s largest wetland mitigation bank in St. Louis County. Pennsylvania just got its first commercial bank, while Connecticut finally has an in-lieu fee program. And Restoration Systems is getting into the conservation banking game, with a new partnership with Common Ground Capital recently announced.
Last week, the UK Department of Environment, Food and Rural Affairs (Defra) released a green paper on using biodiversity offsets nationwide, asking for public comment. The proposal is based on two years of pilots and extensive review of offset program design, including an Ecosystem Markets Task Force recommendation noting that offsets could restore and protect 300,000 hectares in the UK over the next two decades.
Still, the green paper’s been met with a wave of bad press. Environmental groups say that offsets could equate to a “license to trash,” and that Defra’s creating a “market ripe for abuse.” But at the less hyperbolic end of the spectrum, many of the greens’ concerns – that offsetting should be a last resort after options to avoid or minimize impacts are exhausted, and that offsets should take place as close to the original impact as possible – are widely-accepted principles of effective offsets, and discussed in Defra’s green paper. (The mitigation hierarchy itself is actually already embedded in the National Planning Policy.)
Defra says it’ll only move forward with offsetting if the mechanism can be shown to deliver net gains for biodiversity, streamline planning, and not put economic burdens on business. The consultation period will end on November 7th.
Happy reading,
—The Ecosystem Marketplace Team
If you have comments or would like to submit news stories, write to us at [email protected].
In The Colorado Delta, A Little Water Goes A Long Way
For years, scientists assumed the Colorado River delta – where a young Aldo Leopold once paddled his canoe through “a hundred green lagoons” abounding with life – was a dead ecosystem. For years, virtually no water was left for environmental health after seven US states and Mexico took their share. The Colorado, over-allocated by sixteen percent, hasn’t reached the sea in fifteen years. Nine-tenths of the original wetlands are gone. Much of the delta has become desert.
But a coalition of non-governmental organizations spanning the US-Mexico border think they can bring the delta back. “This as an ecosystem with high resiliency, and we have learned that with a little bit of water we can achieve significant restoration,” says Osvel Hinojosa, Pronatura Noroeste’sWater and Wetlands program director. Using water rights markets, recaptured wastewater, and a groundbreaking new federal deal, the Colorado River Delta Water Trust is breathing new life into an ecosystem widely assumed to be gone forever.
UK Government Seeking Comments on Biodiversity Offsets Plan
The UK Department of Environment, Food and Rural Affairs (Defra), recently released a document for public comment on how they expect to implement biodiversity offsets. This consultation paper stems from priority recommendations made in the Ecosystems Market Task Force report, Realising Nature’s Value, which was published in March 2013. Through the proposed program, net biodiversity gains are expected by providing an opportunity for farmers and landowners who create or restore wildlife habitats to sell conservation credits to developers who need to offset their environmental impacts. The current proposal builds on lessons learned from other countries and six pilot projects currently underway in England.
The program is being presented to the public as a means for achieving environmental goals and economic development in rural areas. So far, the proposed program has received support from industry and environmental groups although some claim that biodiversity offsets are a license to destroy wildlife. The consultation will last for nine weeks and conclude in early November.
Offsets for the Great Barrier Reef: A Double-Edged Starfish?
A $40 million conservation trust fund directed towards the Great Barrier Reef is being proposed by the Australian government to manage the negative effects of Crown of Thorns starfish and runoff from agriculture. The money for the proposed trust fund would come partly from biodiversity offsets payments, resulting from the environmental approval process for projects that adversely affect the reef under the Environment Protection and Biodiversity Conservation Act and the associated Biodiversity Offsets Policy. Projects already approved under the Act will require some AUD $185 million in offsets – so this could mean a big source of finance for the Great Barrier Reef.
Therein lies the worry for some: that this arrangement will result in approval decisions for development projects based on cash flow needs, and it will result in government disinvestment in conservation initiatives. There’s also some concern over lack of clarity around methods used to calculate offset requirements.
A five-megawatt solar project in England, Tavells Lane Farm, has demonstrated that solar panels and biodiversity can mix well. While this farm used to be a brownfield used as a quarry-cum-landfill site, today solar panels and chamomile flowers have covered the grounds. Research by independent ecologists commissioned by Lightsource Renewable Energy, the developer of the site and the UK’s largest solar energy firm, has confirmed that leaving areas of land passive and fallow for solar farms boosts local biodiversity. Lightsource believes that the moving and turning of the ground during the installation phase, followed by five months of inactivity has created the perfect habitat for the flowers without any planting or seeding. According to this developer, solar farms can be excellent habitat in the sense that once the panels are installed, the property is for the most part. It’s a bright spot of news in an often-contentious relationship between renewable energy and wildlife protection. The full study will be released this autumn.
The town of Gramalote in Colombia has become one of the first examples in the world where natural ecosystems have played a central role in the town’s relocation planning process. This is a town that has been destroyed by heavy rains and mudslides three times in the last two centuries. After the 2010 mudslide, 6,000 of Gramalote’s inhabitants had to be relocated to nearby villages. Today, the new Gramalote is being designed on a site that was chosen based on the most robust models available for understanding ecosystem services in tropical and mountainous conditions, including FIESTA/WaterWorld, Costing Nature, and Tremarctos. Actual construction is expected to begin in 2014 and inhabitants will move in 2015.
Textile Industry Not Happy About India’s Biodiversity Tax
The Indian central government through the Biological Diversity Act (2002) and Rule (2004) has imposed a tax on industries where they have to pay 2% amount of their annual income to the state biodiversity board. Funds will then be invested in environmental conservation activities lead by civic entities. However, industry groups and state governments are resisting the central government tax. The textile industry for example, said that the Act did not apply to them because they use ginned cotton instead of raw cotton. In the State of Madhya Pradesh, the industry minister, Kailash Vijayvargiya has asked industries not to comply until the State cabinet sings its approval. At stake is the potential for collecting Rs 5,000 per year from businesses.
Restoration Systems and Common Ground Capital Announce Partnership
Wetland and stream banking firm Restoration Systems LLC announced this month that it will partner with Edmond, Oklahoma-based Common Ground Capital LLC (CGC). The partnership sets the ground for Restoration LLC, which manages more than 50 banks around the US, to expand its activities in the conservation banking world. CGC has already begun developing Prairie Chicken conservation banks across 86,000 acres of habitat in Kansas, Oklahoma, and Texas.
“I’m excited about having an experienced partner in Restoration Systems to complement our valued relationships with our landowners. We are building a responsible business that implements large-scale conservation projects while delivering meaningful net benefits to the habitat and the wildlife we seek to protect, preserve or restore in the future,” said Wayne Walker, Principal of Common Ground Capital, in a press statement. “We are having great success restoring prairie ecosystems in Texas and think our land management skills and financing will contribute to CGC’s efforts across Southern Plain states and beyond.” added George Howard, Restoration Systems’ Co-Founder and CEO.
The 2014 edition of the State of Green Business report is going to tackle a new topic: natural capital. GreenBiz and Trucost say the report will include a new Natural Capital Leaders Index. Trucost has developed a methodology allowing comparison for both direct and supply chain impacts across sectors, broken out into carbon, water, and waste impacts. The index will capture companies that have “effectively have decoupled the growth from environment impact,” says Richard Mattison, Trucost’s CEO. “In other words, while they’re growing their revenues, their environmental impact and their dependency on natural capital — and therefore their risks of that natural capital not being available, or being degraded — are minimized. So, really what we’re doing is we’re highlighting resource-efficient businesses.”
‘Mountains to Markets’ Project Aims at Biodiversity-Friendly Products in Pakistan
A new GEF/UNDP project in Pakistan, ‘Mountains and Markets’ will build both demand and capacity for biodiversity-friendly products in the country. IUCN Pakistan and the Pakistan government’s Climate Change Division inked the deal last week during the GEF Global Environmental Facility Steering Committee meeting. The project will support voluntary certification of biodiversity-friendly non-timber forest products (NTFP). Biodiversity threats in the region are exacerbated by limited opportunities for sustainable livelihoods; the projects aims to establish 50 biodiversity community enterprises and invest in collaborative forest management approaches, access to technical and financial services, and other capacity building.
Two new tools from Restore America’s Estuaries (RAE) are designed to help coastal managers assess their own “blue carbon” opportunities.A briefing document, Coastal Blue Carbon as an Incentive for Coastal Conservation, Restoration and Management: A Template for Understanding Options, explains the science, management, and market mechanisms behind blue carbon. Wetlands’ carbon sequestration capabilities can make forest carbon look like pretty small beer; but land managers may as yet be unaware of ways to capture blue carbon values. RAE is leading a technical working group developing wetland carbon protocols under the Verified Carbon Standard (VCS). A video on evaluating blue carbon opportunities is also available.
Some news and notes from the wetland mitigation world this month:
Pennsylvania welcomed its first-ever commercial mitigation bankrecently, with the approval of Resource Environmental Solutions LLC’s Upper Susquehanna River Mitigation Bank Phase 1. The Bank covers the Upper Susquehanna River sub-basin.
A land swap between St. Louis County/the Minnesota Department of Natural Resources and Ecosystem Investment Partners would create the largest wetland bank in the US in St. Louis County, MN. EIP would acquire and restore 22,000 acres of drained swamplands in exchange for upland forest property – precise acreage and location TBD. The Conservation Fund is acting as a broker. The deal’s expected to be approved by the county this week.
There’s a new in-lieu fee program in Connecticut,with the National Audobon Society acting as a partner to the Army Corps of Engineers. Previously, only permittee-responsible mitigation has been possible in the state.
EVENTS
Third Meeting of the Global Partnership for Business and Biodiversity
The third meeting of the Global Partnership for Business and Biodiversity, organized jointly with the Canadian Business and Biodiversity Council (CBBC), will provide a platform to strengthen the engagement of business and the private sector, as well as the mainstreaming of biodiversity into sustainable development (Decision XI/22), aligning with the ongoing consultations on the Sustainable Development Goals (SDGs), developed at the UN Conference on Sustainable Development (Rio+20). The meeting’s objectives include: provide businesses and other stakeholders with concrete information and case studies related to CBD COP decisions and sector-specific issues, thereby encouraging and facilitating mainstreaming of biodiversity in their general activities; provide businesses and other stakeholders with a forum for feedback and recommendations for future CBD COPs; and strengthen the Global Partnership by bringing together national and regional initiatives. 2-3 October 2013. Montreal, Canada.
WILD10, the 10th World Wilderness Congress (WWC), is the most recent in what has become the longest-running, international, public conservation project. It is a two-three year process of collaboration between many groups, governments, experts in all fields, community representatives, businesses, scientists, artists and more. Clearly, wild nature is under threat all over the world, and human society needs to change if we are to solve the issues in front of us. There are also good stories to tell, ones that tell us who we are, and where we need to go. We can do it! What makes the WWC…and WILD10…different and effective? First, it is not just a “conference,” rather it is a process of collaboration aimed towards practical results for wild nature and people; using a positive, inclusive approach to problem solving; emphasizing intergenerational solutions; recognizing that culture is equally as important as good policy, effective resource management, and state-of-the-art science; and involving a great diversity of people and professions who understand the importance of wild nature to a healthy and prosperous human society — from tribal communities to heads of state, Nobel Laureates to local activists, scientists and artists, and more. When the 10th WWC actually convenes, part of it may look like a conference, but if the process works then it is much more, and the practical results and outcomes will be matched by a sense of inspiration, hope, and action. 4-10 October 2013. Salamanca, Spain.
The annual Biodiversity Institute Symposium this year will tackle the subject of Biodiversity Resilience. Factors leading to the loss of resilience in social-ecological systems are the focus of many excellent on-going research programmes and symposia. However, this two-day symposium aims to highlight the other side of the resilience research agenda – namely factors that promote and lead to resilience of biodiversity. The symposium will showcase ongoing research that examines the biotic and abiotic processes and mechanisms responsible for biodiversity resilience (ranging from genomics to landscape-scale), through to policies and management that ensure resilience of biodiversity now and in the future. 2-3 October 2013. Oxford, UK.
Responsible Business Forum on Sustainable Development
The Responsible Business Forum on Sustainable Development will bring together business leaders, NGOs and policy-makers from around Southeast Asia to discuss commitments and policy recommendations to increase sustainability across seven sectors – agriculture & forestry, palm oil, consumer goods, mining, financial services, building & urban infrastructure and energy.The forum will discuss the transformational journey to the green economy and offer practical ways to accelerate business solutions and policy frameworks for a more sustainable world. 18-19 November 2013. Singapore.
The inaugural World Forum on Natural Capital will be the first major global conference devoted exclusively to turning the debate on natural capital accounting into action. It will build on the enormous private sector interest shown at the United Nations Earth Summit in Rio in June 2012 and the many developments that have taken place since. The World Forum on Natural Capital will bring together world-class speakers, cutting edge case studies and senior decision makers from different sectors, in order to turn the debate into practical action. Lively plenaries and interactive breakout sessions in four conference streams will explore the risks and opportunities for business, allow access to the very latest developments and provide an opportunity to help shape the debate through dialogue between policymakers, business leaders and prominent experts in the field. 21-22 November 2013. Edinburgh, Scotland, UK.
2014 National Mitigation & Ecosystem Banking Conference
The only national conference that brings together key players in this industry, and offers quality hands-on training and education sessions and important regulatory updates. Learn from & network with the 400+ attendees the conference draws, offering perspectives from bankers, regulators, and users. Submit proposals for panels and presentations online by October 1st! 6-9 May 2014. Denver, Colorado.
Conference on Ecological and Ecosystem Restoration
CEER is a Collaborative Effort of the leaders of the National Conference on Ecosystem Restoration (NCER) and the Society for Ecological Restoration (SER). It will bring together ecological and ecosystem restoration scientists and practitioners to address challenges and share information about restoration projects, programs, and research from across North America. Across the continent, centuries of unsustainable activities have damaged the aquatic, marine, and terrestrial environments that underpin our economies and societies and give rise to a diversity of wildlife and plants. This conference supports SER and NCER efforts to reverse environmental degradation by renewing and restoring degraded, damaged, or destroyed ecosystems and habitats for the benefit of humans and nature. CEER is an interdisciplinary conference and brings together scientists, engineers, policy makers, restoration planners, partners, NGO’s and stakeholders from across the country actively involved in ecological and ecosystem restoration. Dedicated session proposals are due August 30th! 28 July – 1 August 2014. New Orleans, LA.
The Director of Conservation oversees all aspects of conservation planning, applied science, land protection and stewardship and community and partner relations for the Alaska Program of The Nature Conservancy. Provides scientific leadership and support for TNC’s conservation planning work and establishes overall conservation priorities within the context of the strategic plan for Alaska. Supplies strategy, technical and program support to Conservancy field operations. S/he serves as the principle contact to government agencies, other conservation organizations, and the academic community. Serves as a core member of the Alaska Leadership Team. The Director of Conservation also assists the State Director in representing Alaska issues in regional and global programs of The Nature Conservancy.
Senior Program Officer for Climate Change Adaptation
World Wildlife Fund (WWF) – Washington DC, USA
World Wildlife Fund (WWF), the world’s leading conservation organization, seeks a Senior Program Officer for Climate Change Adaptation. Under the supervision of the Managing Director, plans, manages, communicates and implements activities to promote climate change adaptation and disaster risk management, including providing technical support to WWF US programs and WWF field offices to conduct vulnerability assessments and guidance on mainstreaming climate change and disaster risk considerations into conservation strategies.
If you have comments or would like to submit news stories, write to us at [email protected].
In The Colorado Delta, A Little Water Goes A Long Way
For years, scientists assumed the Colorado River delta – where a young Aldo Leopold once paddled his canoe through “a hundred green lagoons” abounding with life – was a dead ecosystem. For years, virtually no water was left for environmental health after seven US states and Mexico took their share. The Colorado, over-allocated by sixteen percent, hasn’t reached the sea in fifteen years. Nine-tenths of the original wetlands are gone. Much of the delta has become desert.
But a coalition of non-governmental organizations spanning the US-Mexico border think they can bring the delta back. “This as an ecosystem with high resiliency, and we have learned that with a little bit of water we can achieve significant restoration,” says Osvel Hinojosa, Pronatura Noroeste’sWater and Wetlands program director. Using water rights markets, recaptured wastewater, and a groundbreaking new federal deal, the Colorado River Delta Water Trust is breathing new life into an ecosystem widely assumed to be gone forever.
UK Government Seeking Comments on Biodiversity Offsets Plan
The UK Department of Environment, Food and Rural Affairs (Defra), recently released a document for public comment on how they expect to implement biodiversity offsets. This consultation paper stems from priority recommendations made in the Ecosystems Market Task Force report, Realising Nature’s Value, which was published in March 2013. Through the proposed program, net biodiversity gains are expected by providing an opportunity for farmers and landowners who create or restore wildlife habitats to sell conservation credits to developers who need to offset their environmental impacts. The current proposal builds on lessons learned from other countries and six pilot projects currently underway in England.
The program is being presented to the public as a means for achieving environmental goals and economic development in rural areas. So far, the proposed program has received support from industry and environmental groups although some claim that biodiversity offsets are a license to destroy wildlife. The consultation will last for nine weeks and conclude in early November.
The California Air Resources Board (ARB) is scheduled to sign off on a proposal to shift the invalidation risk away from forest owners to the buyers of offset credits from approved forestry projects next month. The regulators are aiming for consistency, but at least one major emitter is concerned that making buyers responsible for the risk will make it more difficult to purchase forestry offsets.
9 September 2013 | The California Air Resources Board (ARB) will have a lot on its plate at its October board meeting, including the anticipated addition of a coal mine methane protocol for use in the state’s cap-and-trade program. One proposal that has flown under the radar would shift the risk of invalidation for forestry offsets away from forest owners to regulated emitters that submit the credits for compliance.
The so-called buyers’ liability provisions featured in the cap-and-trade regulations allow the regulators to invalidate credits that are found to be faulty or fraudulent and require regulated entities to surrender replacement offsets for compliance. Currently, forest owners are responsible for the invalidation risk, but the buyers bear the risk for the other project types eligible for the California program. In amending its regulations, the ARB is aiming for consistency in its rules governing the invalidation risk, a spokesman said.
The buyers’ liability provisions have been the bane of existence for market players since the ARB insisted on including them in the trading system, despite significant pushback from industry players who argued that no compliance program has ever featured such provisions and that they would only serve to stifle offset transactions. That prediction proved true in 2012, as the provisions were cited by market participants as one of the key reasons that pre-compliance activity in the North American market remained flat despite the scheduled January 2013 launch of the program, according to Ecosystem Marketplace’s 2013 State of the Voluntary Carbon Markets report.
General support exists for the ARB’s efforts to ensure uniformity of the invalidation rules across all project types, according to stakeholders.
“By bringing consistency to the program and having it at the buyer level, it will probably actually lead to more project development,” says Gary Gero, president of the Climate Action Reserve (CAR). “I think probably on an overall basis it’s a good thing for the forest carbon sector because forest owners will be willing to have projects move forward if they’re not going to be the ones who have to replace invalidated credits.”
“It makes sense for the ARB to bring the invalidation rules in line for these projects because the invalidation rules are actually a good idea,” says Julian Richardson, CEO of Parhelion Underwriting Ltd, an insurer offering policies to cover the invalidation risk for California-bound offsets. “The ARB had the benefit of learning from Kyoto and the (European Union Emissions Trading Scheme). It’s that learning that has led them to write the invalidation rules and it’s one of the ways they ensure robust and rigorous environmental integrity in the offset system.”
The larger compliance entities generally have robust risk management staffs and strategies and should be able to manage what is essentially just another element of risk with relative ease, Gero says. “I think for the large buyers this is not a sea change,” he says.
Chevron Pushes Back
At least one major emitter has expressed concerns about the proposed shift. In comments submitted to the ARB in early August, oil major Chevron states that the ARB’s proposal to shift the invalidation risk for forestry projects raises a number of serious issues.
“ARB’s existing rule places responsibility with forestry owners because forests are a unique type of offset,” says Lloyd Avram, Chevron’s manager of state government affairs. “The forest owner has control over the forest and can manage it in accordance with the requirements or choose not to do so.”
Chevron declined a request for a follow-up interview.
“We are concerned that by changing the invalidation risk to the covered entity that uses the offset, ARB is adding unworkable burden and risk to forestry offset buyers which will ultimately discourage use of this important resource to reduce greenhouse gases (GHG) under ARB’s cap-and-trade program,” he says in the comments.
The proposal would result in a significant change in risk transfer for existing transactions that were negotiated and priced based on the current regulations, according to Avram. At a minimum, the ARB should not enforce the amended provision retroactively, he says.
“Applying the change to previously negotiated or listed projects would introduce further uncertainty to the nascent offset market, a particularly vulnerable time for any market,” he says. “Changing rules after a market has begun punishes early market participants that have already made investments and undertaken significant risk to create a market that furthers the program’s objectives – contrary to AB 32’s directive to encourage early action to reduce GHG emissions.”
AB 32 is the common name of California’s Global Warming Solutions Act, the legislation that set the target of reducing the state’s GHG emissions to 1990 levels by 2020 and paved the way for the trading program.
Reforestation, improved forest management, avoided conversion and urban forestry projects are currently eligible for California’s cap-and-trade program. The ARB is also expected to develop regulations to allow reduced emissions from deforestation and forest degradation projects into the program although the timeframe is still unsettled.
The ARB has given plenty of notice that it is preparing to make the invalidation change for forestry projects, but while the goal of consistency is a noble one, changing the rules after the fact does create uncertainty for project developers, according to another market participant.
“I think it’s problematic that they are changing it midstream, but I don’t necessarily see it as problematic on the face of it,” the participant says. “If people had been developing their projects with that in mind, it wouldn’t be as much of a negative impact as them thinking it was going to be a different way and then having it change after they’ve already started project development.”
Insurance to the Rescue
The shift may be problematic for medium-size entities that are seeking to reduce their risk as much as possible by purchasing golden California Carbon Offsets – which require the seller to replace invalidated offsets with allowances or replacement offsets – or insurance to address the invalidation risk, Gero says.
“That makes them think a little bit harder about forest carbon, but they’re already thinking hard about the risks associated with the other project types because that risk is already on them,” he says.
Parhelion, a specialty insurer focusing on the climate finance sector, is ready to step in to insure forest carbon projects against the invalidation risk if the ARB implements the change, Richardson says. Earlier this year, the insurer began offering a policy to insure against invalidation of livestock and ozone-depleting substances (ODS) offsets that are transitioned from credits originally issued by CAR to California’s compliance program.
The company initially decided not to offer the coverage to forestry projects because the structure of the invalidation risk as it currently applies to forestry would not have triggered demand for the product from developers or buyers as it would for the other project types. “Therefore, we didn’t feel it was a priority sector for us,” he says.
However, the insurer is already fielding inquiries from forest carbon project developers and buyers about its intentions to expand coverage of the invalidation risk if the ARB goes through with the change, Richardson says.
Although it is unclear what the final rules will say, Parhelion does not anticipate major differences in the policies it would write for forestry projects compared to the ones it is working on for livestock and ODS projects. The insurer has yet to finalize policies for those two eligible offset project types, but Richardson hopes the first policy will be issued by the end of the year.
Permanence Comes First
Forest owners are already facing a number of uncertainties about their forest projects, not the least of which is that they are on the hook for maintaining that forest carbon for 100 years, Gero says.
“I think that by removing the invalidation risk from the forest owner, that’s one less thing that forest owners and project developers have to worry about,” Gero says. “Of course, it’s one more thing that a buyer of credits does have to worry about.”
Shifting the invalidation risk to the buyer is “probably the right thing to do,” but landowners interested in participating in California’s program are far more concerned about the impact of the permanence requirements on their ability to manage their lands than they are about the invalidation risk, says Chandler Van Voorhis, Managing Partner, project developer C2I.
“(The invalidation risk is) an issue that comes way down the line as a landowner is looking at it,” he says. “It’s not a big hurdle.”
The permanence requirements for forestry projects are particularly complicated considering that the cap-and-trade program is only scheduled to run through 2020 at this point, stakeholders say.
“The issue of 100 years has always been a challenge,” Van Voorhis says.
For the sake of forest owners, a signal should be sent as early as possible about the future of the program beyond the scheduled 2020 conclusion, Gero says.
“Forest owners don’t go into these projects lightly and they need to have a great deal of certainty that the projects are going to generate credits,” he says. “I think having that kind of signal will foster even more forest owners to come in.”
This week is World Water Week and a coalition spanning the US-Mexico border is a perfect example of this year’s theme-water cooperation. The group is thinking outside the box to restore the Colorado River delta – using water rights markets, recaptured wastewater, and a groundbreaking new federal deal – that’s breathing new life into an ecosystem widely assumed to be gone forever.
6 September 2013 | The Colorado River hasn’t reached the sea in fifteen years.
The two-million acre delta where a young Aldo Leopold once paddled his canoe through “a hundred green lagoons” abounding with life (“At each bend we saw egrets standing in the pools ahead…Fleets of cormorants drove their black prows in quest of skittering mullets; avocets, willets, and yellow-legs dozed one-legged on the bars; mallards, widgeons, and teal sprang skyward in alarm…”) today is a vast, empty mud flat.
After all, the free-flowing river itself disappeared at the Morelos Dam a hundred miles upstream, where the meager portion of water left to Mexico after seven US states took their share was then funneled into irrigation canals or off to the residents of the city of Mexicali. No water passed through the dam, much less was left over for the environment: the Colorado is already over-allocated by sixteen percent. Nine-tenths of the original wetlands are gone. Much of the delta has become desert.
But in the 1980s and 1990s, something unexpected happened. During El Nií±o years, sometimes the Colorado ran high, and then water would be released through the dam to prevent flooding upstream. In the aftermath of these floods, the landscape looked palpably healthier. As a team of scientists wrote in the Southwest Hydrology Journal, “riverbanks once choked with saltcedar and other salt-tolerant shrubs have sprouted new cottonwood and willow trees following each flood event. The floods wash salts from the riverbanks and wet the soil, allowing tree seeds to germinate and grow. The trees grow in stands…that correspond to the high water mark of each flood.”
The delta was more resilient than it seemed.
To the east of Morelos Dam, a concrete canal crosses the border. It runs for 75 miles, from the Wellton-Mohawk Irrigation District in Arizona into Mexico’s Sonoran Desert, draining agricultural wastewater from farmlands.
At the mouth of the canal, another startling thing happened. As water began flowing in the late 1970s, a vast wetland appeared. La Ciénega de Santa Clara today has grown from 500 acres to perhaps forty times that size, hosting thousands of songbirds, waterbirds, and fish.
To the astute observer, the message was clear: in the delta, a little water goes a long way.
A Water Trust
In 2008, a coalition of non-profit groups hailing from both sides of the border, including the Sonoran Institute, Pronatura Noroeste, and the Environmental Defense Fund, decided to act on that knowledge, and tap a new source for restoring water to the river: the market.
They created the Colorado River Delta Water Trust (CRDWT), which buys water rights on the open market and effectively retires them, restoring the water to the river (a mechanism known as “instream buybacks” or “water buybacks”).
“We purchase irrigation water rights in the Mexicali Valley from willing sellers, usually farmers,” explains Osvel Hinojosa, Pronatura Noroeste’s Water and Wetlands program director. Under Mexican law, the water right can be separated from the land and the water redirected to uses in other places. Now, instead of irrigating agricultural fields, the water is once again irrigating plantings of native trees and inundating riparian areas to encourage native vegetation growth.
Their biggest goal, though, has been to secure enough water to maintain a small base flow, which means the portion of stream flow in a river contributed by groundwater or other subsurface sources. Baseflows are the sustained background levels present even during dry periods.
No one has ever bought water on behalf of the environment before in Mexico, though similar mechanisms have worked in the United States and Australia. Nor has a water ‘buyback’ mechanism like this ever been carried out across national boundaries, with conservation groups pooling resources to save the river that links their countries. The CRDWT is doing something almost entirely unprecedented, both in conservation finance and in successfully cooperating to restore a transboundary basin.
Working through water markets lets the coalition act quickly, explains Hinojosa. “We saw great potential to reach an allocation of up to 60 million cubic meters per year, and particularly water with very good quality.” Pronatura Noroeste already used treated wastewater and agricultural drainage to feed marshes and estuaries in the delta, but to bring back forests in the riparian zone (i.e. the area along the banks of the river), they needed cleaner water, and the best place to get it was to simply buy it on the market.
The Sonoran Institute estimates that in the long term, the lower Colorado needs 50,000 acre-feet (61.7 million m3) (one acre-foot, or AF, represents the volume of water needed to flood an acre of land to one foot deep, or about twice as much water as a household in the US West uses in a year) for baseflows annually. Buying these rights on the Mexican market will probably cost between US $12-15 million.
Through the market, the water trust has secured about 3200 AF to date and invested about US $1 million. Their goal is to triple that in the next five years.
The buybacks are just one arrow in a quiver. The coalition stays busy: it’s also worked to secure another 6080 AF (7.5 million m3) per year of treated wastewater from the Las Arenitas Waste Water Plant to restore flows in the Hardy River, a tributary of the Colorado. CRDWT has participated in binational negotiations between the US and Mexico to ensure that the agricultural wastewater flows that maintain the Ciénega de Santa Clara wetlands will continue. They’ve protected 25,000 acres (10,000 ha) of mudflats and estuarine habitat in the delta, plus another few thousand along the Hardy and the Colorado rivers, in the El Doctor wetlands, and in riparian corridors. The idea is to create a network of restored sites: if that can be done, much of the habitat functionality for wildlife will return.
Piece by piece, they’re reassembling the delta.
“This as an ecosystem with high resiliency, and we have learned that with a little bit of water we can achieve significant restoration,” says Hinojosa.
Minute 319
It seems the higher-ups are listening. Last November, the CRDWT became a key partner in an agreement between the US and Mexican governments that aims to reconcile management of the Colorado River to certain environmental realities.
Minute 319, as the agreement is known, does a few important things. First, it spreads the effects of drought and flush years more evenly between the two countries. Previously, Mexico’s entitlement was more or less locked in: every year the US was required to send about 1.5 million AF (1.85 billion m3) of water to Mexico annually, except in cases of “extraordinary drought,” which were never defined in the original 1944 treaty between the two countries. Now, there’s a process for revising that allotment downward to reflect drought, and in turn Mexico, which lacks its own storage capacity, can keep its ‘extra’ water in wetter years behind the Hoover Dam for later use.
And for the first time, the two countries have agreed to set aside some water for the environment. Minute 319 dedicates a total of 158,000 AF (1.95 billion m3) over a five-year period: a third will support base flows, the rest a one-time ‘pulse’ flow, to mimic both historical background levels and the large springtime floods that existed in the Colorado in the years before the dams were built.
The Colorado River Delta Water Trust is responsible for securing a third of that water through its water right buybacks.
To deliver the rest, the US has agreed to contribute US $21 million to help pay for infrastructure improvements and environmental projects in Mexico, where irrigation infrastructure was badly damaged in a 2010 earthquake. These conservation projects and irrigation efficiency improvements are expected to create enough water savings for the pulse flow, so existing water entitlements won’t be cut.
An initial pulse flow of 105,000 AF (129.5 million m3) is scheduled tentatively for 2014, and no later than 2016.
“The environmental component was an essential part of the negotiations,” says Hinojosa. “It opened the door and set the table for binational collaboration in more difficult topics, such as shortage criteria, joint investments in infrastructure, and storage of Mexican water in the US.”
“Local communities are the cornerstone of this process”
Within the Mexicali Valley, support runs just as high. “We have been working with these communities for seventeen years, to get them involved and excited about the restoration of the Colorado River delta,” Hinojosa points out.
Restoration projects are creating jobs, for one thing. The Mexican Federal Government provides funding for a temporary employment program in the Valley, which pays about a hundred people each year to clear invasive salt cedar and plant cottonwood, willows, and mesquite in its place.
Locals welcome these jobs, and the water trust’s investments in restoring a natural landscape that many older residents still remember.
“A farmer sold us recently 20 water rights (200,000 m3 or 162 AF per year),” says Hinojosa. “His story is similar to many of the transactions we have done. He moved to the Mexicali Valley in the 1950s, and obtained from the government the land and water rights as part of an ejido [a form of communally held land common in Mexico]. He formed a family and was able to send his children to college in Mexicali, and eventually the family moved to the city. He finally retired and the family is not interested in continuing the farming activity, and placed the water rights in the market.”
“Usually, these water rights are purchased by other farmers in the region, but also by the cities of Tijuana and Mexicali, and then the water goes outside the Valley. Since with our activities, we are keeping the water in the district and for programs that create local benefits, we receive the support from the sellers and the farming community.”
The river stirs to life
These days, the Colorado River basin is locked in the worst drought in a century. But sometime soon – whether in a year or three – the river will be connected with the sea once again during the planned pulse flow.
Long-absent local birds and marine species are expected to come back, along with the 300,000 migrating waterbirds that have historically stopped in the delta for the winter. A wealth of habitats stretching over 60,000 hectares – the forests, marshes, lagoons, mudflats and estuaries that Leopold once explored – will appear once more on the landscape.
Minute 319 is a five-year agreement, and the coalition is already thinking about the next round of negotiations. Hinojosa says at the top of CRDWT’s priorities is demonstrating that their efforts are working, and to learn as much as possible about the ecological recovery process in the delta so they can craft an even better deal next time.
The CRDWT is also exploring new funding sources to ramp up their buyback activities: they’ve moved beyond traditional foundation support to a partnership that channels money from a US buybacks program, Bonneville Environmental Foundation’s Water Restoration Certificates, to purchasing water rights in the delta. They’re also working with the Redford Center, on a public fundraising campaign called Raise The River launching this week.
“There are huge opportunities,” says Hinojosa. Not only for the Colorado River: “This process can set a precedent of international cooperation for the dedication of environmental flows and restoration.”
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