Ecosystem Service Tradeoffs in the Implementation of the Bay TMDL

Transcription

1 Ecosystem Service Tradeoffs in the Implementation of the Bay TMDL Lisa A. Wainger 1 and Jay Messer 2 1 University of Maryland Center for Environmental Science 2 Retired; formerly of US EPA Office of Research and Development ACES, December 12, 2012

2 Major Project Contributors EPA ORD Jay Messer, Rob Wolcott, Andy Almeter, Rick Linthurst RTI George Van Houtven, Ross Loomis, Robert Beach, Marion Deerhake, Dallas Wood Abt Associates Isabelle Morin, Viktoria Zoltay

3 3 Issue Statement 1. TMDLs for tidal waterbodies are being developed throughout the US 2. Efforts in tidal waterbodies require substantial pollution reduction efforts and states are seeking to manage costs 3. Potential to leverage water quality goals to produce multiple ecosystem services - if policies can be aligned.

4 Chesapeake Bay TMDL in a Nutshell Total Maximum Daily Load (TMDL) developed to restore aquatic habitat in estuary Roughly 40% reduction in nitrogen, phosphorus & sediment from 1985 loads States distribute load allowances to source sectors

5 Gray vs. Green Options and the Provision of Ecosystem Service Co-Benefits Gray options Wastewater treatment plants Stormwater detention ponds Ecosystem Service Indicators Reductions in nutrient and sediment inputs Benefits to Stakeholders Improved recreational opportunities and aesthetics Septic upgrades Green options Wetland restoration Reforestation Riparian buffers Bioretention Water storage* Freshwater fish habitat* Animal habitat* Waterfowl habitat* GHG mitigation* * Bonus Ecosystem Services Flood and drought mitigation Hunting, fishing and birding Reduced risk of climate change

6 Most Cost-Effective N reductions Reasons to consider co-benefits Locations far from the waterbody have some of the more cost-effective BMPs Ecosystem service analysis can help to integrate local priorities and clarify beneficiaries

7 Optimization Framework to Examine Costs & Benefits of Policy Options Available Projects (gray + green) Costs & Performance by project* Ecosystem Services Quantification & Valuation by project Constraints TMDL target loads by basin Scenario-specific constraints MILP Optimization Model Set of Reduction Practices Costs of Compliance Monetized Ecosystem Services Quantified Ecosystem Services

8 Ecosystem Services by BMP

9 Annual Costs and Load Reductions for Agricultural BMPs Costs include: Installation and operation & maintenance (O&M) Land costs (county-level avg. rental rates) Nutrient/sediment removals - CBWM and other sources BMP Total Annual Cost per BMP Acre ($/acre/yr) Total Nitrogen Removal Efficiencies (%) Total Phosphorous Total Suspended Solids Forest Buffers $ % 30 45% 40 60% Grass Buffers $ % 30 45% 40 60% Wetland Restoration $ % 12 50% 4 15% Livestock Exclusion $ % 24% 30% Cover Crops $ % 15% 20% No-till $ % 20 40% 70% Reduced Fertilizer Application $37 15% 0% 0%

10 Value of Reduced Greenhouse Gas Emissions and Carbon Sequestration Services from BMP Application ($/ac/year) Annualized Value a, $ BMP Application From Cropland From Pasture To Forest $31.98 $60.39 $29.71 $44.50 To Wetland $36.55 $49.67 $36.55 $36.57 To Grass Buffer $3.52 $16.64 $0 $0.02 To Natural Revegetation $27.23 $49.21 $28.88 $39.88 To No-Till $1.59 NA To Reduced Fertilizer Application $0.53 $2.50 NA a 90-year period; 3% discount rate Based on Adams et al (FASOM), IPCC 2006

11 Policy Scenarios Unconstrained Base Case BMP use and trading are unrestricted (except N,P and sediment targets to tidal waters must be met) 1:1 NPS:PS trading ratios and no baselines Standard rental rates represent the opportunity cost of agricultural land 10% transaction cost is applied to any PS-NPS trades.

12 Policy Scenarios (cont.) Selected Trading-Related Policies Precaution in NPS-PS trading Higher trading ratios Higher transaction costs (e.g., from higher monitoring costs) Agricultural policies No agricultural land conversion beyond a 100-ft stream buffer Higher opportunity costs of agricultural land (higher rental payments)

13 Two Ways to Optimize 1. Least Cost = Minimize Costs of Meeting TMDL 2. Least Net Cost = Minimize Net* Costs of Meeting TMDL ($Project Implementation) ($Ecosystem Service Co-Benefits) * Does not include $ benefits for estuarine water quality improvements

14 Marginal Cost Curve for N in the Susquehanna Basin Cost ($/lb) $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ N Reduction (millions of lbs) US EPA 2011 EPA/600/R-11/001 Ag Urban Point

15 Total Costs and ES Co-Benefits for Least-Cost Solution Sensitivity to BMP Costs and BMP Effectiveness 1,400 $1.4B 277 1,200 BONUS ECOSYSTEM SERVICES $ millions $ Millions 1, COSTS - Urban Stormwater BMPs COSTS - Agricultural BMPs COSTS - Point Sources $205M 127 $233M Base 25% transaction costs 2:1 NPS:PS No Constraints 25% BMP Transaction Cost 2:1 Credit Ratio

16 Acres of Agricultural & Urban SW BMPs for Least-Cost Solution Sensitivity to BMP Costs and BMP Effectiveness 8,000 8,000 7, Thousand Acres Thousand Acres 6,000 5,000 4,000 3,000 Urban Stormwater BMPs Ag Working Land BMPs Ag Land Conversion BMPs ,712 2,000 1,000 2,090 1,991 0 Base 25% transaction costs 2:1 NPS:PS No Constraints 25% BMP Transaction Cost 2:1 Credit Ratio

17 Total Costs and Bonus ES for Least-NET-cost Solution Sensitivity to BMP Costs and BMP Effectiveness Compared to same scenario of Least Cost solution: Base case: Costs increase by 42%; bonus ES increase by 187% 2:1 credit ratio: Costs increase by 2%; bonus ES increase by 14% $ Millions $ millions 1,600 1,400 1,200 1, BONUS ECOSYSTEM SERVICES COSTS - Urban Stormwater BMPs COSTS - Agricultural BMPs COSTS - Point Sources $290M $305M $1.5 B No Constraints 25% BMP Transaction Cost 2:1 Credit Ratio Base % transaction costs :1 NPS:PS

18 Monetized Ecosystem Services by Scenario Least Cost vs. Max Benefits (Potomac Basin) $60 $50 Least Cost Max Benefits Air Quality $Million $40 $30 $20 Duck Hunting Non-Waterfowl Hunting $10 $0 Base Case LC Restricted NPS LC Base Restricted Case LNC NPS LNC Carbon Sequestration & Reduced GHG Emissions

19 Quantified Ecosystem Services by Scenario Least Cost vs. Max Benefits (Potomac Basin) Miles or 100 acre-feet Least Cost Max Benefits Brook Trout Stream Segments Improved (Stream Miles) Water Storage in Rural Wetlands w/ High Flood Prevention (100s acrefeet) Water Storage Urban Wetlands (100s acrefeet) 0 Base Case LC Restricted NPS LC Base Restricted Case LNC NPS LNC

20 Conclusions Achieving ES Co-Benefits in TMDLs 1. Substantial ES benefits & cost saving from promoting offsets by agriculture 2. Urban green BMPs produce valued co-benefits, but capacity to offset grey options appears limited 3. Precautionary trading ratios generate mixed results Increase costs and co-benefits if trading occurs. 4. Maximizing net benefits is often equivalent to minimizing costs produces same benefits for no increase in costs 5. When costs do increase - they are relatively modest and partially offset by additional co-benefits Wainger, L.A., G. Van Houtven, R. Loomis, J. Messer, R. Beach, and M. Deerhake. (in press). Agricultural and Resource Economics Review.