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New Markets for Environmental Services Hold Promise for Rural Communities
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Anacortes, WA oil refinery at nightImagine the Pacific Northwest with five times our current population! That is what’s predicted for the next 100 years. 

With all those new people, environmental problems will probably continue to worsen. And laws protecting the environment will become even more stringent than they are today. 

Most of that growth will occur in and around existing population centers. Yet we know that making up for the environmental degradation caused by growth cannot really be accomplished within the urban areas themselves. So it seems inevitable that efforts to mitigate for the environmental footprint of growth will continue to focus on rural areas and will intensify in the years ahead. 

It’s worth considering what this means for the future of Washington’s rural communities. 

About two-thirds of Washington’s private lands are engaged in active agriculture or forestry. These industries remain the economic mainstays for our rural communities. So pressures from the region’s growth highlight a dilemma: Will the expense of complying with intensifying environmental regulation drive our state’s private farm and forest landowners out of business? If so, rural communities face some big changes and tough economic times. Or will society value the environmental services provided by farmers and foresters and find the means to pay for those services? In that case, we could see a resurgence of rural prosperity linked to preservation of the rural character, values, economies, and environment that our region needs and treasures. 

But if society is to pay rural landowners to produce environmental values that make up for the inevitable damage from growth, where will the money come from? 

ConservationOne answer is that we are already buying environmental services from our landowners—albeit in a limited way. Current conservation cost-share and technical assistance programs available through our conservation districts and the USDA/Natural Resources Conservation Service are, in effect, payments to landowners for producing environmental services. So are the public moneys going for salmon recovery projects on private lands, for supporting bird habitat on active farms, or for protecting farmland from development. The U.S. Environmental Protection Agency, the U.S. Fish & Wildlife Service, the National Fish and Wildlife Foundation, and many other federal or federally funded agencies also administer voluntary, incentives-based conservation programs. Washington State’s Departments of Natural Resources, Fish & Wildlife, Ecology, and Office of Conservation and Recreation, and Conservation Commission among others, are also in the business of purchasing environmental services. And so are many, perhaps most counties and other local governments, in one degree and form or another. 

Then consider the fact that development is already paying heavily to mitigate for its impacts. Just in the Puget Sound area, and just for public transportation-related projects alone, some $350 million is now spent annually for environmental mitigation. Add in non-transportation expenditures, private mitigation, and extend those figures statewide, and we could already be spending two or three times that amount. Many suspect that the actual replacement effectiveness of wetlands mitigation projects could be as low as 50 percent. Suppose we amended the rules so that even a small percentage of those millions could be paid, instead, to farmers or foresters willing to manage their operations to improve environmental performance while keeping the land in production? We might greatly improve our cost-effectiveness and provide valuable new markets for our farm and forest landowners.

The world market for carbon sequestration is another example. Carbon markets already pay some farmers for using conservation practices like direct seeding. Their reductions in carbon emissions help other industries mitigate for their own emission of greenhouse gasses that contribute to global warming. In the years to come, this market is likely to broaden to other agricultural and forestry practices and will almost certainly strengthen.

Or consider water quality trading. The Federal Clean Water Act is now placing “total maximum daily load” limits on pollution contributions to key local water bodies. Municipalities, private industries, and other point sources of pollution are looking for less expensive ways to make up for their impacts—ways that are less expensive and more effective than hugely expensive new technologies and pollution control infrastructure. One of their best opportunities is to pay landowners to reduce the pollution involved in their farm or forestry activities—often a terrific bargain for both.

The purchase and transfer of development rights also provide such a market. These programs pay farm and forest landowners to forgo development and to keep their land in natural resource production. They prevent the environmental benefits of farming and forestry from being lost and the impacts of sprawl from worsening.

And private industry is also involved. Both consumers and investors are increasingly concerned about the environmental impacts of the companies their dollars support. Many large corporations have programs that purchase conservation stewardship elsewhere to make-up for the unavoidable impacts of their primary activities. This reduces their environmental footprint and increases the appeal of their products and of their stocks. 

All of these possibilities are referred to as “ecosystem services markets.” Interest in them is growing. They are being explored by key federal agencies, by the state’s environmental planners, by leaders in the new Puget Sound Partnership, and by many of our counties, cities, and other local governments. New proposals are on the horizon.

Rural communities and farm and forest landowners need to be involved. That is because there are questions yet to be answered. For example:

  • Can landowners be paid for environmental services in traditional farm or forestry activities without removing significant portions of the land base from natural resource production?
  • Can such markets take advantage of lands that are only marginal for farming or forestry but highly valuable for environmental services and avoid removing high quality land from production—often with less environmental benefit?
  • Will such markets make farmers more dependant on government—or less so?
  • Is there a willingness/commitment by the public to seriously facilitate markets and assure payment for these services over time? Is there a risk that lands, once committed to these new purposes, will be difficult to later restore to traditional activities?
  • Can such programs be funded consistently over time? Or will the willingness to pay for ecosystem services evaporate and the expectations and performance standards they create evolve, instead, into costly environmental regulations?
  • Will such a system be open and fair? Will it be the result of an open, well-understood marketplace and non-compulsory, arms-length transactions that accurately value the services provided and properly drive the price paid? Or will there be indirect regulatory pressure?
  • Will such a system benefit only a few, or can the benefits be spread, even if unevenly, as broadly as possible across the industry so that support for the system does not become divisive in the political arena?
  • What other kinds of current support will our farmers and foresters be expected to forgo as a condition of obtaining opportunity to participate in such a marketplace?

Securing the right answers will not occur without active involvement by our private farm and forest landowners and by organizations with rural roots. If such organizations do become involved and if these new programs are well designed to serve the needs of the landowners we hope will use them, than these new ecosystem services markets could help secure a stable and prosperous future for our state’s rural communities.

American Farmland Trust