Dollars for Water and Water Quality Keep Forests as Forests

A key component of the Endowment’s Theory of Change is to provide new value streams to forest landowners. One way we approach this is through our Healthy Watersheds through Healthy Forests Initiative. A path that we are pursuing in this arena is developing "payments for ecosystem services," and more specifically, payments for watershed services.

In this scenario, forested landowners who maintain a healthy, working, sustainable forest that protects water quality and that helps moderate water flow, such as flood protection, would be paid for those services, preferably by downstream water users.

The Endowment is funding four pilot projects in the East to better develop this concept, with an eye toward making payments for watershed services a commonplace activity. If successful this approach could potentially:

• help conserve millions of acres of forested watersheds (an estimated 180 million American’s drink water that originates in a forested watershed);
• generate new sources of income for owners of forested watersheds, helping them maintain and better manage their properties); and
• reduce drinking water costs for the public (the cleaner the water coming into treatment facilities, the cheaper it is to treat it.)

One pilot project is underway right in the watershed where the Endowment’s headquarters is located. To tell you more about this program, we asked John Tynan, Deputy Director, Upstate Forever, and the Endowment’s grantee, to describe their efforts.

Peter Stangel, Senior Vice President, the Endowment

Saluda-Reedy River Watershed
In early 2011, the Endowment committed to match a $6,000 grant that Upstate Forever
(www.upstateforever) received through the Land Trust Alliance (LTA) to explore the feasibility of establishing a Clean Water Credit program in the Saluda-Reedy Watershed. 　The overall objective of our efforts was to assess if water and wastewater utilities in the watershed would compensate owners of forest and agricultural properties for conservation efforts or improved management practices because of the nutrient reductions that these activities provide.

The Saluda-Reedy is well positioned for this type of pilot project as it is at risk for forest cover loss, is facing increased regulation for nutrients, has been the focus of significant research and conservation implementation, and is an EPA priority watershed. 　Upstate Forever began by estimating the amount of phosphorus (the critical nutrient in the watershed) that may enter the watershed from each property. 　This will serve as a prioritization tool for the implementation phase of the project.

Finding Partners Support from the Endowment and LTA also allowed us to facilitate discussions with the core stakeholders in a Credit program. 　The largest wastewater discharger, one of the significant water utilities, and the state permitting agency, have all been supportive of the concept and committed to working through an iterative process to develop a functional system that will result in funding for conservation or improved land management and, in turn, reduced nutrient inputs to the watershed. 　

We are now researching existing nutrient trading program protocols throughout the country and plan to propose a project framework to the stakeholders in early 2012. 　We have also initiated a related project to identify possible pilot phase landowners. 　This related project is a 319 grant awarded from South Carolina Department of Health and Environmental Control that involves　outreach to and one-on-one work with local landowners to implement practices that will reduce nutrient runoff into Walnut Creek, a tributary to the Reedy River.

Small Grant Leverage Bigger Pots of Money The grant provides $370,000 in cash and is matched with $250,000 of private contributions (through cost-share or "payment for ecosystem service" funds). An integral and innovative component to the $620,000 project is the incorporation of payments for ecosystem services. 　Current cost-share models, such as the Environmental Quality Incentives Program (EQIP) Program offered through the Department of Agriculture’s Natural Resource Conservation Service, only provide funds to agricultural landowners for the initial cost to establish a Best Management Practice (BMP) on site.　

Traditional programs do not compensate landowners for lost revenue from the land placed into a BMP (for example, revenue might be lost because trees in a riparian buffer are not cu, to preserve their ability to hold soil and filter nutrients) despite the fact that the lands set aside continue to provide water quality benefits to the watershed.　 One component included in our 319 grant will allow us to provide yearly payments for ecosystem services to landowners to compensate for lost revenue as a result of BMP installation as well as for the ongoing ecosystem benefit that the BMP provides.　

It is Upstate Forever's hope that successful, on-the-ground improvements will result both from the 319 grant and the ongoing Clean Water Credit program funded by the Endowment and LTA, providing significant funds for improvement of the watershed and protection and improved management of workings forest and agricultural lands.

Written by: Peter Stangel and John Tynan
Approved by: Carlton Owen, the Endowment