WHAT ARE NATIVE PRAIRIE GRASSLANDS WORTH?

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1 Presented by Chris Nykoluk, on behalf of the Ranchers Stewardship Alliance Inc., Saskatchewan October 2013 WHAT ARE NATIVE PRAIRIE GRASSLANDS WORTH?

2 PROJECT LEADS Sue Michalsky, Rancher/Director Ken Belcher, School of Environment & Sustainability, U of S Commission for Environmental Cooperation three countries, one environment

3 PHOTO CREDITS.. Michael & Tamela Burgess Branimar Gjetvaj Orin Balas Iren Nagy Dr. Steve Davis Sue Michalsky Heather Peat Hamm Chris Nykoluk

4 RANCHERS STEWARDSHIP ALLIANCE INC.. A Saskatchewan based group Ranchers Increasing endemic grassland biodiversity, sequestering carbon, and improving economic viability Market recognition

5 STATE OF THE RESOURCE Native grasslands in SK are endangered Less than 20% remains in Saskatchewan (?) Beef production: sustainable Endangered species Competing interests & threats Current economic model is insufficient

6 OVERARCHING PROJECT PURPOSE To quantify non-market valued goods produced by native grasslands. Encourage the idea of efficient allocation of land resources. Stimulate discussion and innovative thinking. Conservation.

7 FIVE PROJECT PARTS 1. Literature review - identify non-market values in $$/acre 2. Other opportunity costs 3. Partner stewardship costs biodiversity 4. Historical investment in land conversion 5. Conversion costs

8 1. LITERATURE REVIEWED Costanza (1997) United States Sask Forage Council (2010) Saskatchewan PFRA Community Pasture Program Kulshreshtha & Pearson (2006) Saskatchewan, Manitoba Heindenreich (2009) British Columbia Olewiler (2004) DUC and NCC Wilson (2009) British Columbia Action for Agriculture utube (2012) Upper Bow River, AB Riemer (various years) Saskatchewan

9 1. LITERATURE REVIEW: NON-MARKET VALUES * * *

10 LITERATURE REVIEW HIGHLIGHTS Non-market values min estimate = 2.5x (Kulshrestha and Pearson, 2006) Key: undervaluation Substitutes: costly and slow ROI non market valued items: considerable

11 SUMMARY OF INDIRECT BENEFITS (ADJUSTED TO 2012 DOLLARS) Total Economic Value = Indirect benefit/acre/yr + Direct benefit/acre/yr

12 AVG INDIRECT BENEFIT= $297.79/AC/YR **** SK native grasslands save taxpayers about $225M/year.

13 2. OPPORTUNITY COSTS (A.K.A. THREATS) the income foregone that would have been available if the land had been allocated to it s next most economically productive use.

14 2. OPPORTUNITY COSTS. Residential/recreational development Industrial use and expansion Low profitability - cattle industry Land owner turnover and succession Cultivated crops, and government program support for cultivation Market gardens & other crops Irrigation schemes

15 2. OPPORTUNITY COST DETERMINATION Crop insurance programs Income insurance vs rainfall insurance

16 CROP INCOME INSURANCE: TWO SOILS Chickpeas, Large Kabuli Crop RM #51 (Brown Soil Class L) RM #429 (Black Soil Class B) $ Not insurable Lentils, red Canola Wheat, durum Wheat, Hard Red Spring $ $ $ $ $ $ $ $ Alfalfa $82.17 $ Alfalfa/grass $54.25 $63.08 Grass, introduced $21.58 $43.05 Potatoes, seed $1, $1, Native grassland rainfall insurance $6.00 $10.00

17 3. STEWARDSHIP COSTS Partners: Avg cost/acre to provide stewardship (not including income generating activities) Four Partners

18 3. STEWARDSHIP COSTS (CONT D) Range: $5.20/acre to $13.88/acre Avg: $7.96/acre Management? Weeds?

19 4. HISTORICAL EXPENDITURES FOR CULTIVATION Federal government (DLA), railways GRIP, WGSP, Crop insurance Subsidies removed (750,000 acres) Direct pmts to producers ( : $42B/$18.5B in SK)

20 Cropland Area (ha), Prairie Provinces ( ) CANSIM Data - Prairie Provinces Snapshot ( ) 34,069, ,378, ,902, ,188, ,876, ,944, ,832,

21 $1,600, Direct Payouts to Producers, (CANSIM data) $1,400, $1,200, $1,000, $800, $600, $400, $200, $ Direct Payments to Producers Manitoba Direct Payments to Producers Saskatchewan Direct Payments to Producers Alberta

22 Direct Payouts to Producers , Prairie Provinces $20,000, $18,000, $16,000, $14,000, $12,000, $10,000, $8,000, $6,000, Man Sask Alta $4,000, $2,000, $ total direct pmts

23 5. CONVERSION COSTS 1. Native prairie > cropland, & 2. Cropland > grassland

24 CROPLAND CONVERSION TO FORAGES Native and tame seedings Many NGO players (DUC, NS, NCC, SWA) Average payout on 3.3 M avg of $72/acre Taxpayers: up to $109/acre

25 RESEARCH NEEDED 1. How much native grassland remains? Condition? 2. How to progress to Total Economic Value (TEV)? 3. What is current TEV of native grasslands? 4. How to communicate the above? 5. Functioning and sensitivities of grassland ecosystems 6. Evaluation of different policy mechanisms 7. Research to enable habitat and biodiversity markets 8. Multi-disciplinary Health of Environment vs Human Health????

26 PROJECT INVESTIGATION SUMMARY Lit review: extreme variability Opportunity Cost approach: native prairie still at risk; producer income forgone * Stewardship Costs: best option for PES? Taxpayers willing to pay both ways: how to reward managers for doing the right thing?

27 Why should I pay for something that has been provided for free?

28 WHERE TO FROM HERE? Never doubt what a small group of thoughtful, committed citizens can do to change the world; indeed, it's the only thing that ever has. -Margaret Mead

29 THANK YOU!