Making a farm, ranch or forest enterprise work financially isn’t easy. One of the main barriers, which I discussed in my last blog post, is the price of land. Rising land values, and subsequent property tax increases, can price out existing landowners and prevent new landowners from starting enterprises, especially in rapidly urbanizing areas.
But society needs working lands for more than just food and fiber crops, so it behooves us to conserve them. When managed holistically, working lands can provide a wide variety of benefits—collectively known as “ecosystem services” or “nature’s benefits“— to people, communities and businesses. By implementing the right management practices, landowners can help, among other things, steward the flow of soil nutrients, control erosion, purify water, and regulate the climate by sequestering carbon.
To give a concrete example of one of these ecosystem services, take water flow. Preventing a farm, ranch or forest from being converted into impervious surface—coupled with urban drainage systems such as curbs, gutters and drainpipes—protects a watershed’s natural hydrology. This helps to properly manage stormwater runoff and minimize damage from flooding events.
Unfortunately, landowners are rarely compensated for providing these services; they are often considered “free.”
Fortunately, a variety of incentives, markets and practices—known collectively as “measures“—exist, and are emerging to maintain working lands while addressing the threats they face, like urbanization. These include:
Many landowners already have experience with a number of these measures, such as government cost-share programs. However, some are relatively new measures, including Payments for Watershed Services (PWS), which are a type of economic incentive whereby landowners or land managers are typically paid by downstream beneficiaries to sustainably manage or restore land specifically to provide one or more watershed-related ecosystem services (quantity, quality, or flow).
A few case studies can help illustrate how landowners are beginning to capture value from these measures.
Billion-Dollar Savings and Clean Water
We can look to New York City for an example of regulatory-driven PWS transactions that minimize the cost of meeting a water quality regulation or offsetting future development impacts.
New York City has been drawing its drinking water from the Catskill Mountains (about 100 miles to the north) for almost a century. In 2007, the Environmental Protection Agency (EPA) announced the results of a several-year review of the city’s ongoing program to maintain clean drinking water supplies with forest and open space conservation in the Catskills, rather than the construction of filtration plants.
The EPA concluded that as long as the city agreed to set aside $300 million over the next 10 years to acquire land and restrain upstate development that causes runoff and pollution, the agency would exempt New York from having to build an $8 billion filtration plant.
Additional Revenue and a Boost to Biodiversity
An investment firm called Beartooth Capital provides a great example of payments made to generate public benefits. Beartooth, founded in 2006, makes and manages investments in ranchland across the Western U.S. They search for degraded properties and find ways to fix flaws and restore rivers, creeks, wetlands, and agricultural land. They then sell these properties to a range of agricultural and recreation buyers. Along the way, they also help local communities and nonprofit partners (like community land trusts) achieve important goals and conservation outcomes.
For instance, at one of their investment properties in Central Idaho, Beartooth worked with a wide array of local, state, national, and non-profit partners to improve the spawning habitat for wild Chinook salmon, steelhead and trout.
Shortly after Beartooth bought the ranch, The Nature Conservancy of Idaho purchased a conservation easement. Funding for the easement came largely from a fund established to mitigate the impact Idaho water users have on endangered species. Over $500,000 in additional funding was secured to complete several riparian and irrigation improvement projects to benefit the fishery. The results have been impressive. After two years, Idaho Fish and Game counted more than 60 salmon spawning sites on and above the ranch; no more than two had been counted before.
“Our model of investing in Western ranches in unusual, but our commitment to conservation and community supports our financial goals,” says Carl Palmer, co-founder of Beartooth Capital. “We’ve developed valuable partnerships in the conservation field and those partners help us identify priority projects and potential funding sources.”
By earning revenue for managing ecosystem services, landowners can create cost-competitive business models that earn them additional income beyond the sale of traditional products (corn and cotton, for example) and also incentivize them to provide benefits like clean water that we all depend on.
Ashoka’s “Nutrients for All campaign is a movement to encourage leading social entrepreneurs and innovators to look at nutrients as the core deliverable and to design direct nutrient interventions at each stage of the agricultural and food value chains—in ecosystems, farming, food production, and wellness.
The campaign includes a series of Google+ Hangouts that will take us on a journey to understanding the role of each sector and actor in building a “Nutrients for All” world. Join us as we feature stories and conversations between thought leaders, experts, innovators, and media gurus from a wide range of fields, culminating in the launch of a global search for new ideas and innovations in April of 2013.
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