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The 5-year, $307 billion Farm Bill was passed on May 22nd (vetoed and overridden). Here's what Ecosystem Marketplace says about the bill: The action has direct and indirect effects on environmental markets – for not only does the new Farm Bill govern large swathes of the ecosystem marketplace, but the relatively small portion of its funding earmarked for conservation [$4 billion] still represents the federal government's largest environmental outlay...
The new Act calls for the agricultural secretary to: "establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management activities."
The guidelines are to be used to develop procedures for measuring environmental services benefits, a protocol for reporting them, and a registry. Guidelines to help farmers, ranchers, and forest landowners participate in carbon markets are a priority – but the bill provides no funding for the initiative. [emphasis added]
Both Ecosystem Marketplace and The Economist note that the real loss in this Farm Bill is the lack of reform of commodity subsidies. The Economist slams the Bill as one giant income distribution mechanism, funneling tax dollars to rich farmers (average income: $230,000)
Here'a a summary of the conservation title, courtesy of American Farmland Trust
Meetings / Seminars
- 5/7-9 - 11th Annual National Mitigation & Ecosystem Banking Conference – day summaries for May 9th, May 8th, and May 7th
Projects
- Mapping – National Geographic/NatureServe’s LandScope, to be launched 2008, brings maps/data/photos/info about conserved/priority cons/planning areas, trends, etc. for US/states together to inform/target efforts on the part of land trusts/st & local gov/private landowners/etc.
- Mapping – Trust for Public Land launches Conservation Almanac--lists data (1998-2005) about conserved areas in each st, acres acquired, $s spent, LandVote ballot measures, profile of state policy/conserv programs. Helpful for st/regional cons stats.
- Markets – AgTrader, a Craig’s List for MD farmers launched
News
- CC – US FWS lists Polar Bear as threatened due to loss of habitat (sea ice), says won’t use listing to force regulatory action
- All things C – Ecosystem Marketplace’s V-Carbon Mail (5/2/08)
---CCAR launches Climate Action Reserve that provides standardized protocols for C projects, info on projects, and tracks credits.
---Bush - proposal of zero emissions growth by 2025
---Canada and Greece out of compliance w/Kyoto can’t trade in EU C market until they get their act together
---Sir Nicholas Stern (of Stern report fame in ’07) says he goofed and to minimize dangerous risks of CC, need to reduce emiss by 50% for world and 90% for US
- C - Ecosys M’place releases 2007 State of the Voluntary C Market. Interesting stats:
---65 mill tonnes of C credit transactions in vol mkt [42mill from OTC mkt, 23 from CCX transactions]
---ave pr of credit went from $4.10->$6.10/tonne from 06 to 07
---OTC mkt tripled to 42 mill tonnes C credit transactions (val of $258mill in 07)
---dominant projects in OTC: NRG efficiency, renew NRG, methane, forestry/land projects
- WQT – summary of MD’s newish (4/18/2008) PT-PT trading policy
- Leadership – TNC appoints Goldman Sachs’ green guru Mark Tercek as new president/CEO
- PES - Special Issue on PES in Developing and Developed Countries – May 2008 Ecological Economics, 65.4. Sven Wunder, Stefanie Engel and Stefano Pagiola (ed).
- Nonmarket val – UFORE analysis of Houston’s regional forests: store $721mill worth of C, gen $456mill of env bene/yr, save $131mill in res NRG costs.
- Nonmarket val – WSJ Natural Cap blog discusses bene-cost analysis for env policy; crux of debate – whether economists value future generations’ benefits enough (via disc rates)
Maryland Policy for Nutrient Cap Management and Trading in Maryland’s Chesapeake Bay Watershed
• This is phase I of the policy (PT to PT). Phase II is PT-NPS.
• Caps are Tributary Strategies nutrient limits (a concentration of TN or TP x a point source's design capacity/flow) & are written into NPDES permits
• Only allowed to buy credits to maintain cap… or if a new or expanded plant, to get offsets (& have to prove that you can get offsets for next 20 years)
• 3 trading regions: Potomac, Patuxent, Eastern/Western Shore Tributary Basins (including Susquehanna)
• Ways to get reductions: find reductions in your own plant, buy credits from other sewage treatment plants that are below their caps, pay for a little guy to upgrade their treatment, pay for a little guy to reduce their discharge to 0 (retire) or to connect all their discharge to a big plant, pay for septic system folks to connect to a treatment plant (but this only gets TN credits), spray poo (“land application of wastewater w/ pre-treatment & nutrient management controls”)
• A credit is a lb of N or P/yr delivered to the Chesapeake Bay
• Credits are valid for one calendar year & can’t be banked
• Major PT has to do Enhanced N Removal technology before they can trade, but this technology is paid for by MD taxpayers via “flush tax”
• Allows interstate trading
• MDE will initially maintain a database of credits generated & traded
• Appendix A has a nice list of all major PT sources, their design capacity (in MGD), their 06 flow – shows how close WWTPs are to their max capacity (@ which point, caps become a reality)
• MDE estimates use 9.5 lbs/yr TN/person and 0.23 lbs/yr TN/person
McGeorge Group Breakfast Session
Panel: Mark Sudol (ACOE), Craig Denisoff (Westervelt), Deblyn Mead (USFWS), Michael Bean (EDF).
Some notes: Banking industry has concern of in-lieu fees that are held by groups with a vested interest in keeping the $, but not a concern with in-lieu held by an agency directed to purchase the miti. Prior to 4 yrs ago, didn’t require no net loss of streams, but now, yes (if meets jurisdictional def). ACOE HQ has 6 employees (!). Proactive conservation banking – yes it’s possible, but no practical demand for it w/o regulatory handle—could be an opp to change law to create incentives to help species before they’re listed.
Technology & Tracking Session
Interesting ACOE Ecologist mapping project to identify key lands for WL mitigation from banker perspective (cheap land), ecological/regulators’ perspective. Regional FL interactive mitigation banking website – staff enter info in sys and is immediately avail online – similar to RIBITS.
Update from ACOE on RIBITS & ORM database (?). Basically, all ACOE districts are for the 1st time all using the same database mngt sys. Will be linking database to RIBITS (currently only avail in Norfolk & Mobile districts). ACOE has MOA w/ EPA, USFWS to link conservation banking to RIBITS.
Integrating Banking into Resource Planning Session
Department of Defense interested in doing mitigation offsite; has legal authority to buy credits in WL bank or to pay in-lieu fees; has Legacy Program – env grants to [buy land or easements?] to support mil readiness. DoD has contract with LMI to ID viable offsite mitigation in base buffer areas in a project in the Ches Bay. The 2 pot projects ID’d are related to nutrients/WQT: WWTP in FT AP Hill buys WQ credits; WWTP on base convinces adjacent landowners to do WQ BMPs, then base buys conservation easement & WQ gets credits (?).
EPA’s Green Infrastructure approach can help bankers with the watershed approach req by new Rules b/c GI ID’s priority cons areas. DOT did big grant to use GI to see pot conflict/ID miti opportunities on their projects.
Highlights from Q & A’s from the Day
Q: If Rappahanos final decision says have to mitigate for ditches, could we dig another ditch that has the same function?
A: In Supreme Court discussion, Scalia says a ditch is jurisdictional, so yes.
Q: Does RIBITS allow you to find onsite mitigation projects?
A: No. Audience member suggested that searching for conservation easement database could help.
Q: Regarding military knowledge of mitigation banking…
A: Military knows about, & is extremely interested in mitigation. Presenter saw a recent research paper that suggested the mil would be the largest buyer of mitigation (anyone have this source?).
As someone new to mitigation banking, I can say that I had a hard time remembering companies because they all sounded alike: "environmental", "mitigation", "solutions", "ecological". And so many use that heron logo...
[The color] Green is Out
From a Getty Images green marketing report
"Expect the future to be any color but green because right now everybody uses green (and darker shades are predominant). The environment comes in all colors, and visual clichés do not compel interest. Expect to see a backlash on all familiar environmental iconography. Innovators will embrace the mucky, the messy, the colorful."
Preliminary address highlights
Michael W Sole, FL DEP Sec of the Env – FL’s st legislature working on/passed WQT, cap & trade. FL wants to take a look new Rule – is going to mitigation banks 1st “bridling ourselves”?
Mark Rey, Undersec for Nat Res & Env, USDA – Farm Bill insiders’ view – some of the things the dept wanted (> conservation funding, reforms on commodity/subsidy payments, incr spending by no more $6bill, don’t pay for it with taxes) aren’t what the Senate & House put forth. Pres promises to veto it as is (no reforms, not as much cons funding as would like, paying for it with taxes/”budget gimmickry”). House & Sen conf committee rushing to change it right now. Interesting ecosystem market development: TIMOs/REITs’ interests now diverging with forest products manufacturing industry b/c landowners want to take advantage of selling ecosys services & the forest prod industry thinks this will incr fiber prices.
Ben Grumbles, EPL Asst Admin for Water – the new Rule is a BIG.DEAL. (likens importance to “no net loss”). Why he likes the new rule: advances the *science* of WL/str miti, > consistent/reliable standards, performance-based, market-based. Still maintain importance of avoidance/minimization/no net loss. EPA & COE working on potential legislation to amend CWA re: jurisdiction, & streamlining permitting process, extending general permit (?) from 5 to 10 years.
George Dunlop, Principal Dep. Asst Sec of Army, Civil Works – a real character. WL miti used to be one size fits all, onsite, which “shackled” mitigation banking, this new rule brings an “opportunity concept” to mitigation. Also heard: semi-quote “compensatory mitigation in the 1990s was shackled by a neo-Marxist, neo-pantheistic system” (wha???). Entrepreneurs need & Rule provides: clarity, transparency, consistency, predictability, timeliness. Warns that “skeptics & saboteurs” will counterattack. Likened agencies/bureaucrats to amoebas – wanting to expand control.
Session: Business of Banking, Primer 102
Due diligence in setting up wetland mitigation banks – talked about what WL mitigation bankers think about when considering setting up a bank, including: Demand for credits (users), service area, who’s influential on the interagency review team, development trends in the area, competition, etc.
Financial assurances – a review of the process that mitigation bankers go through to provide required assurances (what’s required is that mitigation is constructed and has met performance standards). Sec 332.3(n) has specifics. Banker finds a Trustee, Trustee uses bonds, escrow/letter of credit, etc. Diff type of assurance situations, but basically the Trustee or bonder will ensure the work gets done if there’s an issue.
Sales & Marketing Strategies – back to basics: used framework of 7 Habits of Highly Effective People. Good planning and execution goes a long way in miti banking success.
Lunch Speakers
Mostly reiterating major points of new Rule. Corps/EPA have some training set – at joint May 08 national meeting, and an IRT member training in June 08 with training posted online.
Mitigation Laws and Cases of Interest to the Mitigation Banking Industry: what’s a jurisdictional water & legal tests of most recent guidance… and potential new legislation (Clean Water Restoration Act) to bring the def of jurisdictional waters back to pre-2001. Farm Bill item on tax incentives for conservation banking. Industry concerns re: standards of recovery credit trading. Water Resources Development Act of 2007 – establishes preference for mitigation banks; requires water resources projects (e.g. Corps projects) to meet new Rules [correct me if I’m wrong].
Capital Session
Can anyone out there capture the salient points? (Use comments feature)
Water Quality Trading Session
Overview of basics of water quality trading programs (can find full info in Toolkit for Permit Writers at www.epa.gov/waterqualitytrading). NRCS sees role for itself to help create/standardize models to help determine nutrient credits, reviewed NTT tool (Nitrogen Trading Tool, contact: Shaun McKinney). Overview of PA’s trading program.
Highlights from Q & A’s from the Day
Q: concerning pre-selling credits to a 3rd party (financier) for resale…
A: Banker thinks could be bad idea – creating new competition, but could structure the deal so the original banker retains marketing rights.
Q: Regarding financial assurances…
A: If you can’t work out a solution with the regulator & have to actually use your financial assurances, you’re not building trust with the regulator = bad for your business.
Q: Regulator interested in simplicity in dealing with financial assurances.
A: Banker resists this idea as limits financial opportunities; some states have different financial instruments…
Q: What happens when you want to do a conservation easement but the mineral rights are held separately?
A: Write in a contract a waiver of surface entry but allow access [via directional]…
Q: Regarding long-term management assurances…
A: This issue is huge. Banks give funds to [land trusts, etc] for long term management and might find out that’s not really happening. Suggested requirement for financial plan negotiated between the banker and the manager.
Q: Do gov agencies need financial assurances?
A: Yes, but they can self-insure.
Q: Concern about capital carpetbaggers in env markets…
A: Many of these investors have heart in it, but recognize the fear
Comment: Idea for National Miti Banking Industry to set up a clearinghouse of bankers to help match up funders with bankers.
New Rules – overview of major themes (see New Corps/EPA wetland mitigation regulations).
National Mitigation Banking Association Session – discussion about ensuring that new Rules are implemented & consistently. NMBA will watchdog. NMBA interest in expanding conservation banking beyond CA. NMBA interest in informing other potential legislation affecting the miti industry (conservation banking, WQT, Nat Resources Damage, C issues, stacking).
Highlights from Q & A’s during the Day
Q: Concern voiced over ACOE’s (lack of) motivation to efficiently administer WL miti banking review b/c of lack of OMB performance measures.
A: ACOE has proposed new perf measures to OMB.
Q: Concern voiced that ACOE/EPA staff stretched thin.
A: Acknowledged, trying to make more info avail online (RIBITS) that will increase public info & ensure continuity of records with staff turnover. Also more Interagency Review Team training so members can review efficiently, having the info they need.
Q: Questions regarding stream miti.
A: ACOE *already* requires miti for impacts to streams, Rule doesn’t make this a new thing. Next big step is to develop guidance on quantifying debits for impacts & credits for restoration.
Q: Several questions/discussions regarding stacking
A: ACOE, EPA clear there should be no double-dipping. Comment from audience: USDA Secretary previously announced that farmers who receive $ from Farm Bill programs (CRP, etc.) can also receive payments for ecosystem services. Basic argument for stacking: if an impact is required to mitigate for several diff types of impacts (WL, habitat) on one piece of land, a mitigation site should be able to mitigate for several diff types of impacts. Basic argument against: if it’s acre per acre-type mitigation, you just can’t sell the same acre twice. Concession: if mitigating based on function, and can show/document “uplift”, maybe could stack. Stacking WL and WQ – probably not. If bank were “double-dipping”, ACOE would stop the bank from selling any more credits.
I will be attending the National Mitigation & Ecosystem Banking Conference: Banking on the Environment this week and will post summaries and comments nightly.
Conference info: www.mitigationbankingconference.com
Projects
- Regional ecosys market – non-prof NW Nat Res Group receives EPA targeted w’shed funds for market-like projects in Nisqually w’shed, WA. Includes promoting sust cert of ag/forest products, creating wq trading credits from sust ag/forest mngt, conservation easements.
- GHG offsets – EDF focusing on CA working lands; pilot test with rice farming mngt practices & will market credits.
News
- All things Mitigation - Ecosystem Marketplace’s Mitigation Mail
---Ecosys Marketplace 1st of series of articles on new WL miti rules. Past pres. of Nat Miti Banking Assn thinks new WL regs will triple priv WL miti banks from 500 to 1500 in 3-5 yrs. > transparency – required docs have 2B posted online. New timeline (<1 yr) for the Corps to approve miti. Skepticism: that WL f(x) can be maintained w/ miti, can str really B restor?, unintended conseq: miti occurs away from urban areas (hi pr land)
---Ecosys services standards in Farm Bill – House version would have USDA in charge, with input from DOI, DOE, Commerce, DOT, EPA, ACOE; Senate version – build standards framework w/ collabor stakeholder process. Supposed to decide 4/18.
---2007 ELI Report Miti of Impacts to Fish and W’life Hab: Est Costs and ID Opps – 1st ever annual cost compens miti from fed programs is ~$3.8bill ($2.9bill-404 permits, $370mill-HCPs, $417mill-hydropower miti, rest-nat res damage miti). Could target those $s to st w’life action program priorities.
---Charlotte Co interested in buying scrub jay habitat for new miti bank
---WA ag comm protesting taking ag land out of production for WL miti bank, suing; bank says it’s ag land b/c includes native seed/plant nursery
---New Forests launched $100mill Eco Products Fund – invest in forest-based C, biodiv, water ecosys services (SE Asia, Pac Is, Latin Amer). Selling biodiv credits to palm oil manu in Borneo.
---New CA Sandhills conserv bank
---OR Willamette valley WL miti credits expensive: $65k-90k
---private co Canopy Capital buys 1mill ac Guyana rainforest in hopes of future ecosys service compens – 16% of profits would go to the co, 80% (!) to local comm., 4% to research instit
- WL Miti – Science article (Stokstad, vol 320:5873) on Final Rule WL miti - presents sci as alarmed/ troubled/ worried about some aspect of WL/str miti, w/ minor defense from the Nat W’life Fed & ACOE rep's quoted saying things along the lines of this is pretty good/ we're addressing that concern
- C – cap&trade won’t break the bank says EDF. Evidence from 5 major studies = if reduce 60% by 2050, would slow eco growth by 0.03% yr. @ odds with industry study – lose mill’s jobs.
- C – new Google-type search plants 2 trees for every 1,000 searches (offsets 1 ton GHG)
- Biofuels – NYT Op ed about biofuels as darling/baddy, stresses don’t throw baby out w/bathwmg but refocus on those with env bene & no subsidies.
- Woody biomass – article re: as housing market slows, mills slow, wood waste decr -> decr S for biomass NRG plants. Chip prices are up 50% since last year.
- Drinking water – Forest Service Forests, Water, and People Assessment highlights priority private forests in the Northeast and Midwest that are imp for drinking water
- Flood retention svcs – Google earth to include flood threat on mapping
- Misc – new Water Footprint calculator. Basic version – if you live in the US and are not a vegetarian, your footprint will be large; scales up with income.
- Certif – NBC Nightly News highlighted sust logging on FSC-cert forest.
