REQUEST FOR PROPOSALS: ECONOMIC ASSESSMENT

Transcription

1 PROJECT TITLE Economic Assessment for Ecosystem Service Market Credits from Agricultural Working Lands CLIENT Noble Research Institute (NRI) RFP RELEASE DATE Thursday 12 April 2018 DEADLINE FOR PROPOSAL SUBMISSION PROJECT START DATE PROJECT COMPLETION DATE Friday 11 May 2018 at 5:00 pm US CST Upon Award of Contract, estimated week of 25 May August 2018, with Interim Deliverables TABLE OF CONTENTS RFP Section Page Number 1.0 Introduction Necessary Background Statement of Work Priorities Deliverables Itemized and Total Budget Statement of Qualifications Proposal Deadline and Submission Information Proposal Deadline and 7 Project Timeline 5.2 Proposal Submission 7 Information 6.0 Proposal Review and 7 Evaluation Process 6.1 Proposal Review Process Proposal Evaluation Process 8 1

2 1.0 INTRODUCTION The Noble Research Institute (NRI) has embarked on an ambitious new effort to advance ecosystem service markets that incentivize farmers and ranchers to improve soil health systems benefiting society. The new program will be farmer- and rancher-oriented, focusing on maximizing sustainable agricultural production systems and creating sound social, economic and environmental outcomes that benefit farmers and ranchers, their families and communities, and society at large. The program mission is to advance ecosystem service markets that incentivize farmers and ranchers to improve soil health systems that benefit society. Theory of Change: A voluntary farmer- and rancher-based ecosystem services program can help to improve soil health and soil health outcomes to benefit society. According to the Intergovernmental Panel on Climate Change (IPCC), the agricultural sector accounts for roughly a quarter of global greenhouse gas (GHG) emissions. With the support of ecosystem markets, agriculture can mitigate 89 percent of its GHG emissions by incentivizing farmers and ranchers to retain and increase beneficial soil carbon storage. The activities that improve soil health and soil carbon can also improve water quality, reduce nutrient run-off, conserve water and therefore reduce water use, and generate additional ecosystem service benefits for society. By addressing past and current challenges engaging the agricultural sector in ecosystem service markets, this new Program will help to scale farmer and rancher participation in order to scale beneficial outcomes for society. 1.1 Necessary Background The NRI convened a diverse multi-sector group of experts over the course of 2017 and early 2018 to explore and assess the potential to successfully scale a program to generate and sell ecosystem service credits from working agricultural lands. The NRI Soil Carbon Markets Working Group assessed the challenges, obstacles, risks and successes of voluntary and compliance carbon offset markets and other ecosystem service market opportunities (e.g., water quality and quantity) for the agricultural sector to date. The review included financial and economic challenges, farmer engagement strategies and obstacles, protocol development and implementation issues, issues of permanence and additionality, challenges and successes related to agricultural GHG and nutrient measurement, monitoring and verification (MRV), and issues and costs associated with project aggregation, sampling and verification approaches. Based on this appraisal, a Steering Committee of the NRI Soil Carbon Markets Working Group (hereinafter referred to as the NRI SC) identified the need for a new Ecosystem Services Market Program (hereinafter referred to as the Program) to scale activities to improve soil carbon and soil health and to monetize soil health outcomes and attributes associated with agricultural sector practice changes [see To scale farmer and rancher engagement, the program must be farmer- and rancher-oriented and focus on maximizing sustainable agricultural production systems and sound economic and environmental outcomes that benefit farmers and ranchers, their families and communities, and society at large. Scaling farmer and rancher engagement requires that early adopters and innovators, who are typically leaders in their communities and to whom other farmers look for 2

3 guidance and new practice adoption, are embraced and included in Program participation. Early adopters are integral to Program success, and their exclusion from participation in offset credit market efforts has perversely penalized them for their leadership and stymied efforts to engage additional farmers and ranchers. Flexibility and innovation are required in the design and implementation of protocols and a Program that meet the needs of farmers and ranchers who are managing biological agroecosystems on a daily basis. Producers must respond to weather and climate variability, pests, weeds and disease outbreaks that may require immediate attention and may result in adjustments to scheduled or planned activities, inputs or management practices. The Protocol Development: The NRI and industry partners released an RFP (see for the development of an initial protocol to quantify soil carbon, water quality and water quantity attributes and monetize them in the form of credits within the ecosystem services market. That RFP sought to overturn current carbon offset market protocols which are largely academic and have not scaled agricultural offset opportunities and marry them with water quality and water use market protocols which lack harmonization or standards. The NRI is currently reviewing submitted proposals received on the 6 April RFP deadline. The targeted award date is April 20 th. The Protocol Development Consultant Team awarded the contract will need to demonstrate knowledge of past lessons and challenges experienced with agricultural protocols in ecosystem service markets including carbon offset and water quality and nutrient trading markets and must explicitly identify in proposals how specific obstacles will be addressed and overcome in the protocol to be developed. The Consultant Team will also need to demonstrate an understanding of natural resource constraints and consumer and supply chain demands being placed upon farmers and ranchers, and how the protocol will help to address multiple competing demands while monetizing the ecosystem services resulting from improved soil health. The initial focus of the Program will monetize soil carbon and water quality and quantity ecosystem service attributes of healthy soil, but the Program will expand over time to include additional environmental and ecosystem service attributes from working agricultural lands, such as biodiversity and habitat conservation. The focus of the protocol development process at this stage of the Program is limited to development and field testing of the protocol to monetize soil carbon, water quality and water quantity attributes and outcomes working with ranchers within the Southern Plains areas, but the stated intent is to expand protocol use to additional US geographic areas and more diverse agricultural production systems. The Business Plan: Simultaneous with protocol development work as described above, the NRI SC has contracted the development of a business plan for a fully functioning national Ecosystem Services Market-based Program, within which the described protocol will be utilized. The business plan will fully cover the business case and market analysis of the ecosystem service credits to be monetized by the Program, including an assessment of credit supply (technical potential and likely/reasonable potential over various timescales) and credit buyers, in order to more fully describe market size and scope; and inform potential pricing for the ecosystem services credits. The organizational and management structure to oversee the Program will also be further detailed in the business plan. It is envisaged that the work product 3

4 from the appointed economic assessment consultant team will duly inform the business plan development. The awarded Economic Assessment Team can expect to work closely with the protocol development and the business plan consultants. 2.0 STATEMENT OF WORK The Economic Assessment Team is to develop several prioritized economic assessments to inform the total aggregated value of ecosystem services provided from privately owned, working agricultural lands. For purposes of this exercise, privately held working lands are defined as agricultural production systems, to include commodity crops, specialty crops, tree/nut/stonefruit/vine orchards, range and pasture and silvopasture systems. All forested lands and urban agriculture landscapes are to be excluded from this analysis). The intended geographic scope is U.S. only, comprising the agricultural working lands of the lower 48 states. In addition, as with the protocol development, this RFP is to focus solely on the economic attributes of a fully optimized soil health landscape; one that stores and builds soil carbon and provides the benefits of enhanced water holding capacity and clean water (surface/ground). While focused as described, the RFP should be as broad as possible to take into consideration as many benefits and risks as possible, both on-farm and downstream off-farm. The goal is to, build a resilient biological system that ultimately reduces the economic risks of farmers, ranchers and communities due to harsh climatic conditions thus protecting our supply of food, feed and fiber is the ultimate goal. Due to the broad nature and complexity of environmental ecosystems, NRI s desire is to focus on the primary drivers that influence a buy/sell relationship in an open market system. For definition sake, suppliers are defined as private agriculture landowners (farmers/ranchers/absentee landowners), capable of producing quantifiable, verifiable, stackable and measureable environmental ecosystem outcomes; those being greenhouse gases, i.e., carbon (storage and gains through sequestration), reduced nitrous oxides from enhanced nutrient management impacts, methane reductions from livestock production systems and water quantity and quality benefits. Buyers are defined as entities seeking to reduce their environmental and GHG footprint due to either shareholder pressure, corporate social responsibility, license to operate, or real or perceived consumer demand, many of whom have established public commitments to reduce their direct (in-house) and indirect (i.e., supply chain) footprints, and who may thus have a need or a desire to purchase either compliance or voluntary offsets or achieve in-setting (supply chain) targets associated with global sustainability goals. With respect to water, additional buyers could be characterized as water users/providers, such as municipalities, utilities, state water resource boards, insurers and re-insurers, etc., where risk, cost reductions, and natural (vs engineered) solutions with associated social, community and rural benefits are driving motivators. Financial institutions are another type of buyer as they look to reduce risk across not only at the buyer/seller level, but also across the broader landscape of related social impacts (community, health and wellbeing). It should be recognized that policy and market demand surrounding both water quality and quantity is local and regional in nature and should be treated as such. Therefore, an assessment of policies, regulation, and market demand at both the national and regional level should be conducted in order to obtain a clear understanding where opportunities and 4

5 challenges exist when quantifying the value and viability of water markets in a buy/sell relationship. Consequences, both intended and unintended will undoubtedly occur. While quantifying the value of intended consequences is key, alternatively, identifying and understanding the risk associated with unintended consequences is also prudent. For example, while building greater water holding capacity in working lands soils that can build resilience to and reduce the risk from drought and flooding, there are impacts to using alternative sources (e.g., aquifers) for water. But does greater soil water holding capacity on working lands affect the hydrology or stream flow of a given landscape or region? Do potential benefits offset the unintended or potential negative consequences? Are there associated potential consequences to reduced flooding impacts due to improved water holding capacity that may have negative ecosystem consequences in some areas? 2.1 Priorities As with any determination of value, one can build the value from the bottom up or the top down or a combination of both. NRI will leave this to the consultant to determine the best approach and methodology. The purpose is to establish the sum of the market potential from which to begin valuing the parts and determining cost/benefit for the related parts. One key aspect the steering committee will assess from the RFP submission is the ability of the consultant to create the economic roadmap NRI will need to accurately assess all key components. In addition, NRI would like to stay focused on the macro-economic drivers of the market impacting both buyers and sellers. As this quantification becomes known, we can then focus on the micro drivers in a second work stage (to follow). 2.2 Deliverables Work Stage Work Products Start Date End Date 1 A report that addresses: a) The aggregated value of ecosystem services provided from privately owned, working agricultural lands focused on the macro-economic drivers of the market impacting both buyers and sellers. b) The spectrum of potential demand for the ecosystems services credits driven by corporate commitments relating to carbon and water A PowerPoint deck summarizing the report. 25 May August Expansion of report to include micro drivers of the market impacting both buyers and sellers. TBD TBD 5

6 3.0 ITEMIZED and TOTAL BUDGET (Proposal Page Limit for Budget: 2 Pages) Applicants should include an itemized and a total budget as part of the proposal. The budget should be broken down by Work Stages, should include additional line items as appropriate, and should specify whether items are fixed-cost expenses or time-and-expense items. A budget narrative should accompany the itemized budget to describe how the budget covers each element of work contemplated and any additional costs associated with the proposal and the proposed budget. NRI appreciates that some elements are less definitive and thus may be difficult to budget. NRI expects applicants to use their best judgement and best offers and to describe how they will approach the work overall, how they will approach and carry out each element proposed in the work, and expound as appropriate on overall budgeting and budgeting for individual elements and work stages. 4.0 STATEMENT OF QUALIFICATIONS (Proposal Page Limit for Qualifications: 2 Pages) Applicants should include in the proposal a statement of organizational and staff or partner qualifications to develop the Economic Assessment, to include: Past and current activities or expertise in assessing the market potential of agricultural ecosystem services or work done in general in the agricultural ecosystem impacts and/or carbon/water markets sector. Relevant qualifications, experience and expertise of staff that will lead the economic assessment development process, including relevant individual expertise in soil carbon, water quality, and water quantity, including with regards to market development or participation or other activities as relevant. Experience with review and assessment of policies and regulation at both the national and regional level. NRI encourages applicants to develop and describe innovative, collaborative, team-based approaches to achieve the work, and to describe how the needs of NRI as described in the RFP can best be achieved, including how past and current challenges scaling agricultural and landbased ecosystem services can be overcome. Consultant should identify in the proposal a designated Point of Contact (POC) and phone and coordinates where the POC and all project leads can be reached. 6

7 5.0 PROPOSAL DEADLINE AND SUBMISSION INFORMATION 5.1 PROPOSAL DEADLINE The proposal submission deadline is 5:00 pm US CST on Friday 11 May The NRI POC for proposal submission is Sean Penrith, Gordian Knot Strategies. Proposals should be submitted via to in one contiguous PDF format. The consultant awarded the RFP will be expected to complete the economic assessment within 90 days of the contract award date. 5.2 PROPOSAL SUBMISSION INFORMATION The proposal should not exceed 15 pages in length (total) and may be accompanied by an additional one-page cover letter. Page margins for the proposal must be no smaller than 1 on all sides and font should be no smaller than 12 points. Total page limitations by section are as follows: Cover page not to exceed 1 page Proposal not to exceed 15 pages total Scope of work not to exceed 10 pages Timeline of activities not to exceed 1 pages Budget not to exceed 2 pages Statement of Qualifications not to exceed 2 pages Proposals exceeding stated page limitations will not be considered. 6.0 PROPOSAL REVIEW AND EVALUATION PROCESS The NRI Steering Committee (SC) will conduct the review and evaluation of all submitted proposals received by the deadline. Potential applicants are requested not to contact SC members regarding this RFP. 6.1 Proposal Review Process: Prior to proposal evaluation, submitted proposals will be subject to the following review by a subset of the NRI SC: 1. Administrative Review review for completeness 2. Financial Review review for completeness and responsiveness to financial elements and stated requirements of RFP 3. Technical Review review for completeness and responsiveness to technical elements of RFP 4. Overall Review review for completeness, clarity, and responsiveness to overall RFP, to include responses to all required elements of the RFP 7

8 Interested parties will have the opportunity for a one-on-one, Q&A telephone conference call with NRI. Gordian Knot Strategies will reach out during the week of April 16 th to schedule with bidding teams. 6.2 Proposal Evaluation Process: Members of the NRI SC will receive a summary describing the completeness of each proposal as per the review process described above. NRI SC members will independently evaluate each proposal received based on the following rating system: Category or Topic Maximum Points Completeness of Proposal in Addressing RFP 25 Proposal Clarity 10 Budget and financials 25 Responsiveness addressing priority elements of the work scope 15 Responsiveness to creating economic roadmap of key components 15 Statement of Qualifications 10 The Award will be made to the Consultant whose proposal receives the most collective points from the NRI SC, in keeping with the judgment of the NRI SC. NRI and the NRI Steering Committee reserve the right to not make an award if no proposals received are deemed not to have met the needs of NRI as described in this RFP. 8