2 Legal Moves that Could Affect Water Quality Trading in the Chesapeake Bay

Following up on a previous review of the state of Chesapeake Bay water quality trading, come two different legal moves regarding the Chesapeake Bay. Lawyer up.

Photo source: Flickr chesbayprogram 

1. Agricultural and Homebuilding Groups Challenging the TMDL

The first legal move that could affect water quality trading was a day in court for agricultural and residential development interests wanting to block the Bay’s Total Maximum Daily Load (TMDL) to improve water quality. TMDLs establish a line-in-the-sand that is the basis for water quality trading programs. Without it, no trading. Oh, and no (or limited?) enforceable water quality rules. The two groups’ legal challenges both came back in 2011, with the agricultural groups filing suit in January and the homebuilders’ group filing suit in June. If I can boil down the arguments, they were that 1) the EPA exceeded their authority, and 2) the way the EPA spread the blame of where pollution came from and who had to clean it up was not accurate/fair. The EPA defended itself, and noted that

“…the Bay states asked the agency to set the TMDL, and the schedule for its creation was established in a court settlement with environmentalists [sued in 2009, settled in 2010]. Further, the officials argued that EPA is owed deference in areas where the CWA is not explicit, such as how to address the impairment of a multistate waterbody.” (source)

So what happened on that day in court (Oct. 4th, U.S. District Court for the Middle District of Pennsylvania)? District Judge Rambo heard arguments for four hours. Some key snippets from Baltimore Sun coverage:

Critics contend the EPA is using the plan to force states to regulate runoff from farms and other lands, which Congress never authorized the agency to do.

“If they can do it here, they can do it anywhere, on any scale,” said Don Parrish, a spokesman for the American Farm Bureau Federation… “We’re not saying we don’t want to clean up the water, or that states can’t do it,” he added. “We’re saying that EPA can’t do it and can’t force states to do it.”

—

Kent F. Hanson, a Justice Department lawyer for the EPA, said federal regulators worked closely with state officials in a years-long, open process to develop the pollution-reduction plan. While some states did resist and complain about the EPA’s handling of it, he noted that none joined in the farmers’ and builders’ lawsuit.

The ruling still hasn’t come down as of October 19th, but I’ll keep my eye out for it and update this when news comes through.

2. Environmental Groups Challenging the Use of Water Quality Trading

The second legal move says, we like the TMDL, we just don’t like water quality trading. Environmental groups Food & Water Watch and Friends of the Earth filed suit on October 3rd to drop water quality trading as an option for meeting Bay water quality improvements. What’s their beef with water quality trading? Their press release uses a lot of loaded words to indicate that trading makes them feel icky (see Spinning Water Quality Trading: Pros and Cons). More specifically, the lawsuit alleges that water quality trading:

…contravenes EPA’s authority and duty under the Clean Water Act (“CWA”),  33 U.S.C. § 1313(d)(1)(C), is arbitrary and capricious in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(C), and violates notice and comment required by the Administrative Procedure Act, 5 U.S.C. § 553.

[My non-legal take on] The core of their argument is that a point source using a water quality credit can violate their permit, and that’s what is illegal. No doubt the case will take time to get through the system, but it looks like some environmental groups have decided that this is the opportunity to take a stand against something repugnant… which reminds me of a great Freakonomics podcast: “You say repugnant, I say let’s do it.”

Round II of a Chesapeake Bay Water Quality Trading Update…

So it looks like there’s a few fundamental stumbling blocks for water quality trading in the Bay. Namely, that major stakeholders think the fundamental rules (TMDLs) are bunk, and other stakeholders want to strike trading off the menu. What if they both prevailed? I guess that would leave business-as-usual: States responsible for meeting water quality deadlines, and reliance on treatment technology (which wastewater treatment plants have said they’ve maxxed out). Oy. Good times in the Bay.

Spinning Water Quality Trading: Pros and Cons

I recently came across two sources using language to spin water quality trading as a good thing, and as a real baddie. The Pros come from a Washington Post editorial spinning water quality trading as a means to improve water quality, and the Cons come from a Food & Water Watch press release with really loaded language painting water quality trading as the worst thing since mortgage-backed derivatives. Let the spinning begin!

Photo source: flickr sparktography

Pros (source: Washington Post editorial 9/30/2012):

Cost-efficiency: “The potential of a trading system to reduce pollution and save money is too great for state governments to ignore… A farmer who can cheaply cut his runoff beyond what regulators require could be awarded credits and sell those to a nearby water treatment plant that would have to install very expensive equipment to meet its required cuts in pollution. The farmer makes money, the plant saves money and the EPA’s pollution cap is met efficiently. A May study from the Chesapeake Bay Commission… estimated that such a program applied across the bay’s watershed could reduce cleanup costs by as much as 36 percent — if properly executed.”

Verification and monitoring: “One answer to the critics is that all the transactions that occur under the trading program are subject to EPA approval, and the agency can reject any that would unreasonably foul local waters. Another is that trading could save many tens of millions of dollars a year. If a slice of that goes to monitoring and verifying claimed reductions in pollution, the system would have more integrity, and everyone could still come out ahead.”

Cons (source: Food & Water Watch press release 10/3/2012):

It’s not authorized in the Clean Water Act: “This “pay-to-pollute” trading program represents a dramatic departure from the successful industrial pollution controls established by the Clean Water Act (CWA)… However, the trading provisions of this plan are not authorized under the CWA and likely means that the Bay will remain polluted for decades to come…”

Unmonitored/unverified: “The TMDL, as finalized, allows for unmonitored “nonpoint” sources of pollution, mainly agricultural operations, to claim unverified reductions in nitrogen and phosphorus discharges and sell these alleged reductions to “point” source industries like power plants and wastewater treatment plants.”

Anti-financial services industry sentiment: “Why would we put Wall Street, the same industry that brought us the financial crisis, in charge of protecting the Bay? ….It’s essentially an entitlement program for the financial services industry and polluters.” (-Food & Water Watch Executive Director Wenonah Hauter) “We cannot rely on the worst polluters of the Bay and Wall Street traders to lead the efforts to revive this invaluable natural resource.” (-Friends of the Earth President Erich Pica) The Obama administration has been promoting water quality trading, which is favored by the financial services industry…”

IMHO this last point is an extreme hyperbole. The US financial services industry represents 15% of market capitalization of the S&P 500 or around $1.9 trillion annually. The tiny amount of water quality trading that might go on… even if it amounted to something in the ballpark of the annual sales of mitigation credits in the US… would amount to 0.10% of the financial services industry.

Fire Suppression and Ecosystem Services

I think the tide may be turning on perceptions of forest management and forest fires. NPR ran this story today on the legacy of fire suppression.

The idea that every fire is bad and should be put out runs contrary to centuries of evidence of ‘natural’ fires. A lightning strike. A fire runs its course. The Father of American Forestry, Gifford Pinchot, found evidence of frequent fires in tree rings:

On June 2,1900, Gifford Pinchot was riding horseback through park-like stands of ponderosa pine on the Mogollon Rim near Chevlon, Arizona. As he rode up onto a ridge he noticed a fire-scarred tree that appeared to have recently died. He dismounted, and taking a hatchet he chopped into one side… On the cut surface he could see the annual tree rings and the successive scars that had formed by the re-burning of the resinous scar boundaries each time a surface fire swept past the tree. He counted the tree rings between the scars, and then he estimated the dates of each fire. In all he counted 14 separate fires, the most recent in 1898 and the earliest in 1785. (Swetnam and Baisan 1994, p.11-12)

In a natural fire regime, yes there’s damage. But because fires are periodic, when they occur they are not the massive, raging beasts they are today. Forests looked different pre-fire suppression. Did you know that? Here’s a photo comparison as an example:

The photo above is from Klamath National Forest (Oregon). Photo from CA Department of Fish and Game, found at this link.

So now we have these massive tinderboxes of forests just waiting for a match. Possibly from a bored firefighter arsonist (for real).

An interesting thing though, is that the story never mentioned forest management like thinning as a solution. Maybe that will be another part in the five-part series. My 17-year old self thought cutting a forest was just awful, immoral even. What I didn’t realize until taking a Sustainable Forestry class is that leaving a forest alone… no harvesting, no thinning, no fires… is actually a kind of management. Or mis-management, because the result is an unnatural build-up of fuels and a forest ecology that doesn’t match  patterns from pre-European settlement.

Here’s a short list of the damage to ecosystem services from fire suppression:

• Reduction of water quality from increased sedimentation from catastrophic fires
• Reduction of water supply (in some areas)
• Loss of habitat (for example, the endangered Red Cockaded Woodpecker’s favorite home is longleaf pine forest with frequent low level fires)
• Potential loss of sequestered carbon

Holy Moly, there’s a lot of PES out there

See on Scoop.it – Nature + Economics

Why am I not in Portland? There are about a gazillion abstracts of academic studies, policy applications, corporate investigations, navel gazing, you name it, re: ecosystem services at the Ecosystem Service Partnership conference going on in Portland Oregon right now through August 4th. So I’m not there, BUT I will make this offer to folks out there: if you’d like my thoughts on a project during the conference, Skype me: [eerrrtt… offer expired]. Just mention that you’re at the Portland conference and I’ll accept your Skype request.

If you want to know what’s going on in the world of ecosystem services, take a gander through this list of abstracts. Some that pricked up my ears:

-Vital Graphics on Payment for Ecosystem Services: Realising Nature’s Value

-Using Economics to Value Ecosystem Services in Site Design [The Sustainable Sites Initiative™ (SITES™)]

-The 21st century utility: accounting for natural capital [“while utilities like Seattle Public Utilities can borrow money (by issuing municipal bonds) to build a filtration plant, they are unable to borrow against a major restoration project that would improve the health of the watershed asset and reduce the need for costly built infrastructure”]

-Addressing Ecosystem Impacts in LCA-based Ecolabels

-Green vs. Grey Infrastructure Analysis: Using Incentives to Connect Forests, Water and Communities

-Incorporating ecosystem services into hotel management strategies: A case study analysis of Bahías de Huatulco, México

-ES in DC: How to Talk to Washington Politicians

-Optimum Land Management for Species Protection Given Alternative Land Uses: Conservation Reserve Design within US Military Installations

-Automated Identification of Remediable Wetlands for Water Filtration and Biofuel

-Enlisting Ecosystem Services: Quantification and Valuation of Ecosystem Services to Inform Military Base Management—The Case of Ft. Lewis

-Prioritizing Natural REsource Management Planning Using Ecosystem Service Valuation: Case of Tennesee Valley Authority

-Incorporating Ecosystem Services into Socioeconomic Impact Analysis: A Practical Framework

-Valuation of water in hydroelectric generation [Iran]

-A Payments for Ecosystem Services Approach to Align County Payments with the U.S. Forest Service 2012 Planning Rule

-Recommendations on Developing Successful Ecosystem Services Projects to Support Military Training: Soliciting Ideas from Landowners, Conservation Stakeholders, Regulators, and Investors

-Framework for characterizing environmental sensitivities through the application of ecosystem services [ExxonMobil]

As well, if I were a global researcher, I’d take this as a starting point for finding out about PES programs globally. There are projects in here from the Netherlands, Bulgaria, Trinidad and Tobago, China, Uganda, and more.

See on www.espconference.org

Dow US ACE public notice and ecosystem services approach

See on Scoop.it – Nature + Economics

Part of the Dow-TNC $10 million partnership on ecosystem services is a project to estimate the value of coastal marshes in protecting against natural hazards/storm surges. “Understanding the value of protecting and restoring these marshes as natural infrastructure will allow Dow to include them in coastal risk assessment decisions alongside gray infrastructure options like existing and proposed levees.” Another project is to study “the location of the Brazos River’s “salt wedge,” which can impair access to freshwater during times of drought and low flow.

In light of those ecosystem services projects, what do you make of this public notice to install a sand berm armored with gravel across the Brazos River temporarily – “installed as needed, during threats of saltwater intrusion, and naturally removed/dissipated by storm action.” How would this change post-ecosystem service analysis?

See on www.swg.usace.army.mil

Texas Hold-Em

Remember the BP Deepwater Horizon oil spill? Well BP wishes you didn’t. They’d rather you think, “BP = Olympics.” Warm fuzzies.

Over in the Gulf, BP’s big money was up for grabs for early restoration projects. $1 billion is on the table right now, and that’s just a down-payment of what could be $50+ billion. In April, $60 million of that got allocated to projects in Louisiana, Mississippi, Alabama, and Florida (see projects on ES-8). But where was Texas? Officials wanted to take more time to evaluate the 172 project proposals submitted. Some of the proposed projects sound like great restoration projects (coastal/oyster/dune/reef restoration). The least-sexy award goes to a project that will buy a toilet in a state park (no kidding).

Why am I writing about this on a blog about the intersection of nature+economics? I’ve heard the New Zealand term ‘lolly scramble’ used to describe the tragedy of the commons. Meaning, when you’ve got a common pool resource (a bunch of candy, owned by no one) that’s up for grabs, the natural response is to grab as much as you can until it’s all gone.

There’s a similar thing happening with BP’s money. Call it a pinata scramble.

Get the booty! Photo source.

All the states went for the money (save Texas). Hopefully, the objectives of the money – to restore the Gulf – are not forgotten in the scramble.

Speed blogging through July

Back from an extended hiatus travelling for fun, for learnin’, and for work. The learnin’ part was a 2-week Enviropreneur fellowship sponsored by the Property and Environment Research Center which is a libertarian-style organization that advocates for market solutions for environmental problems. A couple of intriguing examples include the positive effect of for-profit game ranching on white rhino populations in South Africa, and a proposal to Save Rivers, Destroy Trees (not always, not everywhere… but read more here for a compelling case).

To get back in the groove of blogging, here’s a bit of speed blogging from my backlog of 792 stories on Google Reader:

• Shareholders demand sustainability: “Advocacy group Ceres says of the some 110 resolutions is tracked in 2012, 44 proposals resulted in US companies making commitments to confront environmental and social risks in their operations and supply chains.”
• Coca-cola is improving its water efficiency by 35%
• Burning Our Rivers: a report on the water footprint of electricity generation
• Water quality trading – it’s not just for TMDLs, urges industry group to EPA.
• A quick run-down about why businesses were involved in the Rio+20 Summit and what they got out of it, including a nice compilation video of quick interviews with NGOs and business execs.
• Well I’ll be! Texas Army Corps of Engineers Galveston District investing in ecosystem services: “…we have initiated a comprehensive study of the upper Texas coast from Sabine to Galveston in collaboration with the Texas General Land Office that will look for opportunities for large-scale ecosystem restoration projects to protect not only habitats, but the Texas coast from storm surge and erosion.” Their partners include a county flood control district, multiple port authorities, and the Nature Conservancy.
• An NYT piece about the greening of professional sports.
• I know this is business-as-usual for Environmental Impact Statements for endangered species, but I still find it interesting to see what kind of projects impact species: road-building, mining, airports/ports, wind energy development, and more.
• Want to learn a lot about carbon markets and get paid (modestly)? Ecosystem Marketplace is hiring a Carbon Markets Research Assistant. Apply by July 30.
• Wolf hunting allowed in MT, while 3 are sentenced for wolf poaching in WA
• A west Texas op-ed says they’d rather deal with endangered species issues voluntarily because “those advocating extreme conservation measures bear little or none of the costs or consequences they so enthusiastically would impose upon landowners.”
• ..and on that note, there’s a nice, lighthearted piece reviewing the ideas in an Scientific American article about endangered species triage – the idea that given monetary constraints, which species do you want to save?
• Voluntary Candidate Conservation Agreements with Assurances (CCAAs) on the lesser prairie chicken may be working – at least according to some optimistic results from a range-wide aerial survey conducted by the FWS. Final results are forthcoming. The l p chicken is a candidate species –  it’s in the ‘maybe’ pile re: endangered listing.
• Another candidate species – the greater sage grouse – is also getting some voluntary investments from energy companies out West. Apparently, by protecting sage grouse on private rancher land, in the hopes of precluding the need to list the species as endangered. New bumper sticker: “Save the species. It’s cheaper!”
• More demands for species protection under the ESA: 10 species in FL, 53 reptile and amphibian species
• Your 2 cents: open comment period (through Sept) on a Habitat Conservation Plan for endangered Indiana bat from impacts from wind farm development in OH.

If you’re hungry for news on a more regular basis, check out my Scoop.it page on Nature+Environment.

I’ve quickly come to love Scoop.it for its ability to be my online searchable ‘clipboard’ with a nice visual reference and ability to make notes on what I thought was interesting about the article/report. It’s also waaaay better than Pinterest for this purpose b/c it’s more geared for articles than pretty things.

Stumbling through a Chesapeake Bay Water Quality Trading Update

Water quality trading can get you where you want to go, cheaper. That’s the basic finding of Nutrient Credit Trading for the Chesapeake Bay, a report released May 10th by research firm RTI International. More on that later, but the report got me thinking: what’s new in water quality trading in the Chesapeake? I used to be involved in this subject area back in 2006-2008 and at that time everyone thought that big things were going to happen… any day now. Well, it’s a few years later and it seems like modest things have happened.

First, the big news from the RTI report:

The study projected that nutrient credit trading could reduce projected costs for upgrading sewage plants by between 20 and 50 percent. Communities required to control their stormwater pollution might see as much as an 80 percent cost reduction if they are instead allowed to pay farmers to adopt conservation practices that would capture nutrients before they can reach waterways. (May 2012 press release)

Here’s my favorite graphic from the study, which shows differences in costs in achieving Significant Point Source load reductions, depending on whether you want the point sources to get there on their own (grey infrastructure), by trading amongst point sources, or paying nonpoint sources to reduce nutrient loads. They also look at differences in potential cost savings based on the geographical area in which trading could occur.

The study’s principal investigator noted on a May 10th webinar:

In order for this to work, you need a well-defined enforceable cap and what we mean in this case is the TMDL. The TMDL in the mechanism that is going to force the individual actors to either meet their individual requirements or purchase the credits from somewhere else to meet them and that’s going to be driving the trade. -George Van Houtven, RTI International

Good old demand. In water quality trading, as in other environmental markets, demand comes from the enforcement of regulations. Sure, there’s potential demand, modeled here in a 2010 study by the Pinchot Institute and WRI:

…but what about actual demand? It should be there. The Bay-wide TMDL went into effect about a year and a half ago. Bay folks have been talking about water quality trading for over a decade, but basin-wide I don’t think it’s happening.

As for the states, all have finalized water quality trading policies, except WV – which has guidance, and NY. I ran across some news that trading has occurred in Pennsylvania (2011 auction, several auctions planned for 2012). Virginia’s had point-to-point source trading for a number of years, but I can’t tell what is happening now. The ‘Virginia Nutrient Credit Exchange Association’ website looks a bit dusty. Maryland has a trading program, and their registry lists certified credits, but no trades completed:

So that’s just a slice of what’s happening related to water quality trading in the Chesapeake. I’ll keep an eye out for new developments, including finding out about what the $5 million in Conservation Innovation Grants are going towards in the Bay.

Addendum: the blog Spitting in the Ocean touches on a lot more issues related to economics and water quality in the Chesapeake Bay. Check it out.

Paying for Ecosystem Services, Part 6: Avoided Grey Infrastructure Costs

$8 million in savings, how does that sound? The nonprofit Freshwater Trust just signed a contract that puts them on the hook for helping the City of Medford, Oregon meet its temperature reduction requirement for the Rogue River.

Flickr: eutrophication&hypoxia link

The city could have spent $16 million to build cooling towers and holding ponds, but instead is able to spend half that purchasing credits that represent water temperature reductions from the modeled effects of riparian tree planting on about 30 miles of river.

Recent guidance issued by the Environmental Protection Agency and Oregon  Department of Environmental Quality allowed the City of Medford to consider offsets generated by stream restoration projects as a compliance alternative to traditional, engineered solutions such as a cooling tower.

Even Obama loves the idea:

A while back, I heard a story about the Rogue River in Oregon. Every year, the Rogue is filled with salmon swimming upstream to spawn. But because factories [actually, I think it’s the City’s wastewater treatment plant] were allowed to – allowing warm water to run back into the river, the temperature was becoming too high for the salmon to survive. So to fix the problem, the town could have required the company to buy expensive cooling equipment, but that would have hurt the local economy. Instead, they decided to pay farmers and ranchers to plant trees along the banks of the river, and that helped to cool the water at a fraction of the cost. So it worked for business; it worked for farmers; it worked for salmon. And those are the kinds of ideas that we need in this country -– ideas that preserve our environment, protect our bottom line, and connect more Americans to the great outdoors.

(March 2012 speech at the White House Conservation Conference)

Sources: Sustainable Business Oregon, Freshwater Trust Press Release

Up on the Soapbox

I’m up on the soapbox on Ecosystem Commons, talking about communicating ecosystem services nature’s benefits. Check out the post here.

…adding to that train of thought, here’s another example of communicating nature’s benefits.

Freshwater scarcity even effects hockeCRASH!$*(*&^#&#^.      Photo by gordonhunter

Last year, the National Hockey League launched a “Gallons for Goals” campaign where they “pledged to restore 1,000 gallons of water to a critically dewatered river for every goal scored during the 2011-12 regular season.” I like the personal connection they communicate:

“Many of our players grow up skating on frozen ponds. Freshwater scarcity affects their opportunity to learn and play the game outdoors.”

-Bernadette Mansur, Senior Vice President NHL Green and Executive Director of the NHL Foundation

Bonneville Environmental Foundation provided the water restoration credits which helped the Deschutes river, Oregon. Are they the only water restoration credit game in town? Or are they the best at communicating water footprinting and offsetting? Look at this beauty:

Yummy graphics. Love it.