Scaling up? SER 2013 presentation - Eric Nost from ericnost
Thanks for coming. I’ll be sharing just a slice of some recent research which is part of a larger NSF-funded project on stream mitigation banking here in the US.
The message I hope yall can take home today is this: efforts to concentrate on watershed needs and processes in ensuring greater ecological returns from restoration may not be so easily implemented when it comes to mitigation markets. Outcomes are likely to differ from region to region, however. PES promoters regularly call for spatially-explicit approaches to restoration, but on the ground their efforts run into resistance from the entrepreneurs at the heart of these markets. Their concerns are both economic and ecological.
I’ll make the argument by taking us through how restoration sites in the Oregon market are planned for, chosen, and evaluated, ending with a discussion of what the case may suggest for other markets.
We’ll start here. Welcome to the HML restoration site in exurban PDX.
It’s one site in a regional market for aquatic ecosystem services, providing several. The wetland you see stores and delays water, for instance, mitigating flood impacts for downstream homes.
The stream, OTOH, provides habitat for salmon that migrate into the foothills of the Coast Range.
And so on January 25, 2012, the Oregon Department of State Lands (DSL) authorized the sale of mitigation credits representing this salmon habitat to the Tualatin Hills Parks and Recreation Department (THPRD). Now, it’s absolutely worth taking just a second to make sure we’re on the same page about how mitigation markets work. In US markets for wetland and stream ecosystems, federal environmental regulatory agencies – ACOE, EPA, in conjunction with state agencies like DSL - permit developers to compensate for unavoidable resource degradation by paying entrepreneurs (or, “mitigation bankers”) who speculatively restore ecosystems. At HML, DSL is the banker, but usually it is private industry.
DSL did not sell the Half Mile Lane (HML) property itself to THPRD. Instead, it sold credits - measures of both the quality and quantity of habitat created after the agency replaced a culvert and performed other restoration there.
THPRD wanted these credits so it could tell regulators that it had adequately compensated for a trail bridge it is building that will degrade habitat elsewhere in the watershed.
The idea is to ensure some kind/degree of equivalence between resource impact and resource restored, in order to accomplish a no net loss of function and acreage. This is the art and science of assessment.
HML is operated by DSL, but it is a testing grounds for the WP, TNC and other cons developing what they see as more rigorous assessment methods and protocols for Oregon’s market and beyond. HML embodies 3 big moves in market-based environmental governance. While it’d be nice to go through all of them, given the growing number of calls for watershed approaches to how sites are chosen and evaluated - here at the conference, for instance - I want to focus on this last point. We can chat later about any of them.
Indeed, mapping and modelling landscape interactions at existing and possible restoration sites is increasingly recognized as an important component of site evaluation. The idea is that a site like HML’s ES are spatially dependent, or contextual - relative to what’s going on up and down the watershed. Think of it like this: if you restore a wetland in the middle of nowhere and no one’s around to benefit from how it retains flood waters, does it provide an ES? For many, the answer is no.
The international think-tank for ecosystem services accounting, TEEB, for instance, note that the specific provision of services depends on the site. The work of the wetland at HML to store and delay water matters because there are homes in the 100 year floodplain downstream that benefit.
Cons bio and head of NCP, Gretchen Daily concurs. She calls for focusing on the right places in the landscape that leverage high ecological returns on investments.
HML’s position, for instance, allows it to slow down and cycle the increased runoff from logging, quarrying operations.
Such calls from conservationists have in fact made it into policy. In 2008, ACOE and EPA put out a new rulemaking formalizing many aspects of the mitigation market nationally. The rule called for states and regions to implement strategic approaches to restoration siting, rather than sites being chosen opportunistically, in reference to cost or availability or interest..
And to bring it back to DSL, the value of a wetland means its opportunity to provide an ecological function/service based on where it is.
So not only is landscape ecological assessment and prioritization on the minds of conservationists and of official interest to the feds, it’s central to DSL, and in the rules in OR. But it’s one thing to be on the books and another to be in force on the ground. The question is: how does restoration siting actually play out in OR?
There are three moments to it, but they are moments that put the interests of regs and cons against those of private entrepreneurs. In the short-term, at least, entrepreneurs’ work is made difficult in 3 ways by regs and cons’ new metrics and approaches. In the rest of this talk I’ll walk us through these 3 moments and 3 difficulties to siting.
In the first moment, ecologically-trained consultants to bankers work in the office with several online mapping utilities to gage how ecological processes occur across the landscape and affect the site where bankers have chosen to do restoration.
Here’s one of the key mapping utilities consultants use, called Oregon Explorer. Hydric soils are the orange/yellow, but we also see the 100 year floodplain downstream of the HML. Consultants have to answer questions about landscape context by using OE to, for instance, draw a 2 mile radius circle around the site to see how many other similar habitats the site is connected to in the area, or what sources of ecological stress are nearby, like the quarry. The key point here is that the assessment of a banker’s site is relational to the site’s surroundings – but these are things which the banker has no or little control over.
Whatever their score, bankers then have to take their numbers to the agencies and staff judge the offsite stressors and risks consultants find in their assessment, approving, modifying, or denying an entrepreneur’s choice of where to do restoration.
Agencies also categorize wetlands. Some kinds of wetlands in the landscape mosaic are more market-worthy than others. For instance, DSL has written farmed floodplain wetland sites off the map in a recent rule. Based on a series of reports on long-term success and failure, DSL doesn’t think they restore a lot of the storm water retention services that the wetlands in urban areas - where the majority of impacts are - provide. They didn’t meet watershed needs. In the rule, a farmed wetland is seen as not hydrologically degraded and so restoring it wouldn’t bring back hydrological functions. Bankers disagree on ecological grounds: these kinds of wetlands have been tilled, tiled, and plowed. They think those are precisely the sites that need to be restored in the landscape.
Now, when bankers finally do get their bank approved, they get credits to sell. What non-profit conservationists want to see happen in the market is that when a banker brings a site to the market, the amount of credits they can sell would depend in large part on the location of their project.
These are “priority areas” - habitat sites mapped by state environmental agencies, and collated by TNC.
The idea is that if they were doing restoration in a priority area bankers would get the full amount of credits they normally would and receive less if they were not in a priority area. But potentially restorable properties in priority areas are on average slightly more expensive than elsewhere, and this could cut into bankers’ profits. Perhaps more crucially, it drastically cuts into their potential range of sites to choose from, when finding a site tends to be more luck than anything anyway. And bankers also wonder how priority areas were chosen, often noting that their sites have plenty to offer as important.
The point is that this sort of watershed plan, something called for in the 2008 federal rule, makes some places obviously more valuable than others to do restoration, and that’s a big shift. It may make the market more like any other traditional market, but now working outside a priority may not earn bankers as many credits as it would have. To be clear, this isn’t yet implemented, but it’s very much on the table because of the federal rule.
So we can start wrapping up. We can pull out 3 points of difficulty in the market:
1) The priorities aren’t necessarily what bankers see as priorities, and even the idea of prioritizing is limiting, at least right now, in comparison with current practice.
2 The categorization of wetlands in the landscape isn’t how bankers would address watershed needs..
3)They’re asked to account for offsite processes they have little control over
Because of all this, bankers are hesitant about starting new projects. No private entrepreneur has done a project with the new landscape focused metrics and rules yet.
But this isn’t simply because bankers don’t get the gospel of landscape ecology. Bankers’ considerations are both economic and ecological - it’s sometimes bad for business, sometimes not what they see as the right ecological priority. So how have regs and cons been able to put forth such a strong vision of their own in the first place? Markets around the country vary and a lot of discretion about which watershed plans to choose and metrics to use is left to regional, district, or state staff. In a place like OR, with strong institutional momentum behind planning/zoning, regulators are more willing to make and point at maps and say, do resto here. With better data collection and availability, they’re also just more able to. Regs and cons’ ability to come out with a strong plan very much reflects the Oregon context..
The conclusion to takeaway is that in spite of calls from TEEB, Gretchen Daily, and others, efforts on the ground to improve the assessment and consideration of watershed/landscape needs in restoration run into resistance when implemented in restoration markets. The causes stem from both differing economic and ecological viewpoints, but this resistance will differ from place to place. What’s implied is that in some places, there may be other approaches to addressing watershed needs within a compensatory mitigation framework that are more effective than relying on private entrepreneurs, who have economic and ecological hesitations. We don’t have to look any further than HML - DSL’s own bank - for an example, and similar approaches exist nationally. But that’s going to have to be the topic of another talk.