Carbon Storage for Sale: USDA Grants Promote Markets for ‘Ecosystem Services’
- In September, the USDA’s Natural Resources Conservation Service announced its 2015 round of Conservation Innovation Grants. The agency awarded 45 grants totaling about $20 million for projects to improve soil health and to develop environmental markets.
- The environmental markets projects are part of a relatively new approach to conservation known as “payment for ecosystem services.” The idea is to be able to quantify certain seemingly intangible environmental functions, like carbon sequestration, and make it easier and more attractive for investors to buy and sell them in a bid to put more money into conserving natural resources.
- The payment for ecosystem services approach has gained many proponents since it was popularized in 2005, but also detractors.
There was a moment during the harvest season in 2012, after a devastating drought crushed the Midwest breadbasket, when it became apparent in the glance of an eye that Dave Brandt had out-farmed his neighbors.
The “Obi-Wan Kenobi of soil,” as the U.S. Department of Agriculture calls him, was a recipient of a $75,000 Conservation Innovation Grant (CIG) from a division of the USDA called the Natural Resources Conservation Service (NRCS). With the grant he turned his farm in Carroll, Ohio, into a demonstration area that agriculture specialists and farmers can come from far and wide to study. Because what Brandt is doing could revolutionize industrial farming.
Brandt doesn’t till his 1,100 acres, and he doesn’t use much fertilizer or pest control either. He plants cover crops — stuff like crimson clover, hairy vetch, oats, a little rye — the roots of which penetrate the soil, support a galaxy of microorganisms and worms, and keep a lot of excess heat off. During the 2012 drought, these techniques allowed what little rain came down on Brandt’s land to stay there instead of running off, like it did for many of his neighbors, and kept his soil cool enough to not roast the corn.
“Some of the conventional fields got as high as 140 degrees on the surface,” Brandt told Mongabay, referring to his neighbors, who till and don’t use cover crops. “Ours was about 96 or 97 degrees.”
Brandt stood there with Jason Weller, the chief of the NRCS, on a road where his corn stopped and his neighbor’s began. They looked at the corn on Brandt’s field. And they looked at the corn across the road. Both were parched, browning under the oppressive heat. But the soil on one side was superior to the other. Brandt’s neighbor got about 45 bushels of corn per acre that year. Brandt got 142.
This is the kind of agricultural innovation that’s starting to catch on among America’s farmers, and that Weller hopes will contribute to a new way of thinking about conservation.
Brandt’s idea was to educate people in the industrial agriculture sector, coach them through a new way to farm — or is it, perhaps, a return to an ancient way? Brandt uses far less herbicide than most farmers, thereby reducing the amount of pollution that flows off his farm and into the local water supply. He uses less fertilizer, which reduces the amount of nitrous oxide, a major greenhouse gas, that gets into the atmosphere. He doesn’t till either and that keeps carbon in the soil where it can nourish his crops. It also saves diesel fuel. Come harvest time, year after year, Brandt’s soil is healthy, his fields are full, and more money is going into his pocket.
As Weller told Mongabay, the CIGs aim to change the way Americans think about conservation in other ways, not just in agriculture. In September, NRCS announced its 2015 CIG grants. Forty-five grants totaling about $20 million were awarded in two main categories, soil health projects like Brandt’s and environmental markets. And they went to a range of recipients — individuals, non-profits, universities, state governments — who came up with innovative ways to conserve natural resources.
Over the past decade, NRCS has invested in almost 700 projects through the CIGs with about $250 million. The maximum grant is $1 million. Most of the investments the agency makes are matched by the recipient, dollar for dollar. There were about 300 proposals this year, Weller told Mongabay. “It was a really robust response,” he said. “Every year it gets more competitive. There are so many great ideas and really a lot of potential.”
About half of the recently funded projects focus on what Weller described as “the growth, development and maturation of environmental markets.” NRCS and many of the people and organizations it funds are pursuing a relatively new conservation strategy called “payment for ecosystem services.” Although NRCS doesn’t explicitly endorse this approach, many of the programs and research projects the agency funds pursue it. Essentially, the idea is to be able to quantify certain seemingly intangible environmental functions, like carbon sequestration, and make it easier and more attractive for investors to buy and sell them. Putting a dollar sign next to an ecosystem service, the theory goes, will get more people to care about it and put more money into the effort to conserve what natural resources the Earth has left.
As Wellers put it, “How do we identify new ways to address resource management challenges on farm and range land in a way to really accelerate the identification and incorporation and broadcast of new approaches to conservation?”
One NRCS grantee in the environmental markets category this year is Ducks Unlimited, a Tennessee-based organization that seeks to protect waterfowl habitat. Ducks Unlimited received over $200,000 to scale up an ambitious project funded by a previous CIG in North Dakota’s Prairie Pothole Region, a swathe of grassland and shallow lakes that extends north and west from Iowa into Canada. Ducks worked with Climate Trust, an Oregon-based non-profit, to create the first-ever transaction involving grassland carbon credits in a voluntary market.
The two organizations worked with landowners to put roughly 11,000 acres of North Dakota prairie under easement, allowing non-owners to use the land for other purposes, like duck hunting. They quantified the environmental benefit of protecting that land and made it clear to landowners that, essentially, by not developing their land for intensive agriculture or housing, they had still done something that was worth money to someone.
That someone turned out to be General Motors. Chevrolet bought tens of thousands of CO2 emission credits, part of a commitment the company had made to reduce its carbon footprint.
“It was a success on a number of fronts,” Billy Gascoigne, Ducks Unlimited’s environmental markets specialist, wrote in an email to Mongabay. “We like to emphasize we protected working rangelands.” So the land isn’t totally wild and free, but it hasn’t been converted to industrial agriculture or strip malls either.
“These are some of the largest sources of soil carbon that we have in the U.S.,” Peter Weisberg, a program manager at Climate Trust, told Mongabay. “When you till that land in order to prepare it to be cropland, you lose a lot of that carbon. So we provided up-front financing for landowners to know that the carbon will be worth something when their land is under easement, and then worked with Ducks Unlimited to try to find value to repay that investment.”
Climate Trust won a new grant this year — $1 million, the NRCS’s maximum award. Its proposal was to create what it is tentatively calling the Working Lands Carbon Facility.
“It’s a fund that finances carbon projects,” Weisberg said. Over the past 20 years, Weisberg explained, Climate Trust has used grants from private foundations and public institutions like NRCS to research and fund innovative conservation projects. Now, having demonstrated that many of those projects can work, it wants to invite investments from new private and individual investors who are usually skittish about nascent products and commodities.
The projects that Climate Trust will seek to invest in fall into three distinct categories, Weisberg said: anaerobic digesters at livestock facilities that make renewable energy out of manure; grassland-conservation projects that stop grasslands from being converted into cropland, which would release a lot of stored-up carbon from the soil; and innovative forest conservation projects that can sequester more carbon in the trees.
“All of those activities generate carbon offsets” that countries or companies are increasingly purchasing to meet their greenhouse-gas emission targets, Weisberg said. “What we’re doing that’s unique is we’re investing in projects in return for ownership of the carbon offsets that they’ll generate over a 10-year period.”
Building environmental marketplaces and encouraging investors to put their money into carbon-based products is an important aspect of the payment for ecosystem services approach to conservation. The goal is to prove that conserving various kinds of natural resources is valuable to someone, somewhere, and to attract new capital to innovative projects that protect rather than exploit them.
This approach was popularized in a 2005 United Nations-backed report. “The human species, while buffered against environmental changes by culture and technology, is fundamentally dependent on the flow of ecosystem services,” the report notes.
Take water, for example. The water in a river is valuable to, say, salmon, which rely on certain depths and temperatures for cues on where and when to reproduce. Salmon, in turn, are valuable to human beings.
But a salmon river can be contaminated by something like an aging wastewater treatment plant. This is exactly what happened to the Rogue River in Oregon. A plant in Medford was discharging too-warm water into the river, hurting the salmon. The city considered upgrading the plant by installing refrigerators to cool the wastewater, an expensive endeavor. Instead, it took a different approach — the Portland-based nonprofit the Freshwater Trust, with a CIG from the NRCS,worked with farmers and others to plant trees along the river and its tributaries. The trees cast shade over the river, cooling the water.
“They calculated the chilling capacity of these trees — how many miles needed to be planted that would have the same chilling effect as the refrigerator would have.” Weller told Mongabay. “They entered into a 20-year contract with the farmers. So the city, instead of paying for construction, is instead paying farmers to manage these trees, to keep these trees intact and provide for buffers along their fields. That’s an example of low-tech green infrastructure that has freebie benefits — it’s providing buffers, preventing sediment from flowing out of fields into the river. It’s providing habitat. And it’s improving the recreational experience for fishermen on the river.”
Prior to the rise of the payment for ecosystem services approach, most conservationists thought about conservation as protecting nature from humans. The underlying idea was that humans damage the environment, whether they mean to or not. Since the Industrial Revolution, that damage has accelerated, and conservationists in the old days carved off what they could of the Earth’s remaining wilderness and biodiversity to protect it as best they could, with legislation, parks, careful management, a fence if necessary. As evidence mounted that this traditional approach to conservation is failing to prevent massive wildlife decline and ecosystem degradation, the payment for ecosystem services approach sought to integrate conservation actions into human activities, rather than keep the two separate.
But if the new approach has many enthusiasts, it also has its share of detractors. Bill Adams, a professor of conservation at Cambridge University in England, is one of them. In 2009, Adams co-authored a paper in the journal Conservation Biology that cautioned against abandoning traditional conservation in favor of the payment for ecosystem services approach. In an interview with Mongabay, Adams outlined some of the possible drawbacks to focusing entirely on payment for ecosystem services:
“If you’re interested in conserving all kinds of biodiversity, then you may want to conserve more things than just the things that have economic value. So you might discover that slugs have no economic value, for example. In which case you say, ‘Ok great, that’s cool, whales are good, slugs are not good. Don’t need slugs.’ And the conservationist says, ‘Wait! Slugs have a right to exist. Slugs are beautiful. Slugs are diverse.’ But [with the ecosystem service approach] you say, ‘Eh, I don’t see the economic value.’ And that’s the risk.”
George Monbiot, the famed conservationist and columnist for the Guardian, warns against the rapaciousness and corporatization of nature that he sees underlying the ecosystem services approach:
“It diminishes us, it diminishes nature. By turning the natural world into a subsidiary of the corporate economy, it reasserts the biblical doctrine of dominion. It slices the biosphere into component commodities … Rarely will the money to be made by protecting nature match the money to be made by destroying it. Nature offers low rates of return by comparison to other investments. If we allow the discussion to shift from values to value — from love to greed — we cede the natural world to the forces wrecking it.”
But many of the people working on new approaches to conservation, including those who spoke to Mongabay for this story, say that the old ways no longer work, and fresh thinking is vital if we want to continue conserving the world’s valuable and dwindling resources and wildlife.
It’s possible, they argued, to put a dollar value on preserving or extending a natural environment by not exploiting it. Don’t develop your land, was the message to North Dakota landowners — let’s find a way for you to make money by conserving it. Ultimately the idea is to allow humans to continue withdrawing resources from the planet, but — by appealing to our wallets — in a way that doesn’t kill off entire ecosystems within a few years, provides habitat, and supports wilderness that’s useful to humans and nature alike.
Is money the crucial factor? Is it no longer possible to preserve an area of nature — to keep something wild and free of human impact — simply for its natural beauty and intrinsic value? We need a financial incentive now? What if we pay people to preserve nature and they find ways to abuse the market, and end up doing more harm then good?
Adams suspects it would happen. “If you reward people for the amount of carbon there is in the ecosystem, then logically they will try to maximize the amount of carbon.” The problem, he said, is that they might do it in ways that are not actually beneficial to ecosystems or biodiversity, he said. As an example, he suggested that in seeking to capture more carbon in a forest, people could be tempted to uproot the trees already there and plant new ones that capture more carbon. This would increase the ability of the forest to hold carbon but it would lead to a whole range of new problems with biodiversity and monoculture, he said.
Nevertheless, as Weisberg explained, “it’s no longer about carving off beautiful places and calling them conserved. When environmental problems become people problems, people are willing to pay to fix them.”
“We’re not criticizing the way conservation has been done historically,” he concluded, “we’re trying to bring it to a larger scale. In order to do that we need ways for conservation projects to generate cash flow and become investable.
Wellers hopes the NRCS innovation grants can lead the way on the environmental markets that make those investments possible. Though the amount of money is relatively small, the grants have seen some positive, even groundbreaking successes.
“What’s exciting is that some of these markets are coming to life … We want to take this to the next level,” he said.