Donald Hey was one of the speakers at the Fifth Annual Water Law, Policy and Science Conference Conference at the University of Nebraska-Lincoln. His is one of many views on the issues of dealing with water quality. Prairie Fire has asked for other points of view to come forward in future articles.
In the Midwest, the loss of millions of acres of wetlands over the past 200 years has directly led to multiple, interconnected environmental problems: poor water quality, increased nutrient pollution, rising flood-damage costs, vanishing biodiversity, degraded wildlife habitat and lost recreational opportunities. More than 100 million acres of wetlands in the lower 48 states have been drained since 1780, many of these areas drained to create dry land for row crops.
Extensive agriculture drain tile systems and narrow, incised outlet ditches have replaced the shallow, vegetated swales and meandering streams that once served as the main surface drainage conduits. Instead of days, it takes only hours for today’s modern drainage systems to efficiently drain the surface water and groundwater out of the fields into streams and rivers. This wholesale change in how water flows across our landscapes has had numerous—and expensive—repercussions.
Today, however, we have an opportunity to reverse this drainage. By implementing a new strategy we call “nutrient farming,” the Wetlands Initiative (TWI) is working to create a financial engine that can fuel restoration of millions of acres of wetlands throughout the entire MississippiRiver Basin, including on the Missouri River. A nutrient farmer will manage restored or created wetlands to optimize the natural, beneficial biological processes, such as denitrification, that clean the water. Removed nutrients can be measured and counted as “credits,” which can then be purchased by cities or industries as a natural, more cost-effective way to clean the water and meet water-quality standards.
This strategy addresses the persistent question, “How can we pay for wetland restoration?” By creating a water-quality trading market—one that also provides important habitat and recreational benefits—we can generate an economic incentive for landowners in the floodplain to restore wetlands. =
Examining the problems
Within the Upper Mississippi River Basin, agricultural practices are the principal source of nitrogen in our rivers and streams. Fertilizer is the largest contributor of nitrogen to the Mississippi River, as the benefits of increased nitrogen fertilizer application and increased crop production have become well established. The highest fertilizer usage and nitrogen yields occur in the Corn Belt (Illinois, Indiana and Iowa). The combination of excessive fertilizer use with rapid agricultural drainage paints a bleak future for water quality. For example, concentrations of nitrate-nitrogen in the Illinois River have more than tripled in 100 years. In 1900, the mean concentration of nitrate-nitrogen was 1.9 milligrams per liter; in 1990 it was 6.5 milligrams per liter.
These nutrients in the Upper Midwest flow straight to the Gulf of Mexico. There they create a seasonal zone of hypoxia (low oxygen), a growing “Dead Zone” where no organisms can survive in bottom and near-bottom waters. Scientists from the Louisiana Universities Marine Consortium recently announced that they estimate that this summer’s Dead Zone will be the largest it has been since measurements began in 1985. The zone could stretch into the shelf waters of Texas, covering more than 10,000 square miles, nearly 20% larger than the previous zone record in 2002. Excess nutrients cause an explosive growth of algae, which, when they decompose, consume most of the oxygen in the waters.
The news about flood damages is similarly discouraging. Despite increasing national expenditures to control flooding, damage costs have risen (Fig. 1). These expenditures directly parallel the rise in number of acres drained (Fig. 2, page 10). This correlation is to be expected: When the landscape is drained of its wetlands, water is forced to move quickly across the landscape, causing flood damages downstream.
Most commonly, environmental problems have been addressed by large structural and energy-intensive projects—dams, levees, wastewater treatment plants, cooling towers and fish hatcheries. These solutions often create other environmental problems (e.g., increased release of greenhouse gases through extensive burning of fossil fuels).
A better solution could be “nutrient farming,” the practice of managing restored or created wetland—usually on drained land used for row crops—to harvest nutrients such as nitrogen and phosphorus from the water and carbon from the air.
Nutrient farming is designed to consider the First Principle of Environmental Management, that is, economics controls how we use land and therefore controls the environment. Across the centuries, our land-use practices have been driven by our need to maximize our economic profit from that land, without regard to the value of nonmarket-based services of that land (e.g., flood or sediment storage, water-purification functions, wildlife habitat). Usually, this has meant that we needed to drain the land—even the floodplain—because we have perceived that land was more valuable dry than wet.
It is now time to harness the Second Principle of Environmental Management, that is, economics can cure the environment. We need to develop solutions that are effective and efficient at mitigating the damage, while being sustainable in terms of energy and operating costs. These solutions must be fair in terms of distribution of benefits. At root, these solutions need to generate a profit for the landowner.
Nutrient farming directly addresses the obvious reality that restoring wetlands is expensive and, although we know that restored wetlands would be desirable, no one has yet developed a financing scheme large enough to effect large-scale restoration. Some state and federal programs, foundations and private organizations do finance some wetland restoration. However, the cost and the scale of restoration to solve current nutrient and flood storage issues are enormous. The federal hypoxia task force estimated that five to 13 million acres of restored wetlands in the MississippiRiver Basin will be needed to significantly reduce the nutrient load reaching the Gulf of Mexico. Current restoration and conservation programs will contribute just a small fraction to the nutrient management requirement. Market-based or economic strategies are needed to finance this type of large-scale wetland restoration.
One such market-based strategy is water-quality credit trading. The U.S. EPA been actively supporting and urging implementation of such programs since 2003. Credit trading programs have been established for different scales of watersheds, ranging from two sources in a minor watershed to multiple stakeholders in the Chesapeake Bay. The two main trading approaches are “cap-and-trade” systems and offset programs. Cap-and-trade programs have been implemented in watersheds with multiple point sources, such as municipal and industrial treatment plants, and have improved water quality by setting a limit on the total loading within the watershed from a group of regulated (point dischargers) sources. In an offset program, point sources seek offsets, or credits, from unregulated nonpoint sources, such as farmers who adopt best management practices (BMPs) or participate in cooperative conservation programs to improve water quality. With either type of program, the exchange of credits allows a water-quality goal to be met through the implementation of the most cost-effective nutrient reduction methods within a particular watershed and provides an economic incentive to landowners to implement practices that improve water quality.
The Wetlands Initiative’s alternative trading strategy of nutrient farming will use wetlands to remove nutrients. Rather than growing corn and soybeans, a nutrient farmer will “grow” wetlands. The “harvest” is the excess nitrogen and phosphorus removed from the incoming surface water and carbon dioxide, which is removed from the atmosphere. The farmer can manage the land to optimize the natural wetland processes that sequester or remove phosphorus, nitrogen and carbon. Unlike BMP strategies, nutrient-reduction credits can be verified because nitrogen and phosphorus concentrations can be measured at the intake and outfall of the nutrient farm. To quantify carbon sources and sinks, measurements will be needed of the carbon fluxes (i.e., carbon dioxide uptake, greenhouse-gas emissions) and carbon content in the vegetation, soils and sediments. Landowners then sell nutrient-reduction credits, either through an open market or long-term contracts, to other crop or livestock farmers, municipalities or industries that release excess nutrients to surface waters and cannot cost effectively remove these nutrients themselves.
TWI has performed a number of economic studies to demonstrate the efficiency of nutrient farming, including a study comparing the costs of nutrient removal using traditional “concrete-and-steel” treatment technologies with using wetlands in the IllinoisRiver Basin. Using data from the seven treatment plants of the Metropolitan Water Reclamation District of Greater Chicago (MWRDGC), TWI concluded that wetland treatment could save the district $1.6 billion over traditional methods. This is based on the fact that the district estimates it will need to spend approximately $2.5 billion (present value cost1) to upgrade its plants to meet federal nutrient criteria standards; the same job could be completed using 200,000 acres of restored wetlands for only $900 million.
A similar savings could be achieved for the two wastewater-treatment plants in Lincoln, Neb. TWI estimates that wetland-based treatment could save the city $31.5 million. (TWI used estimated upgrade costs for MWRDGC’s reclamation plants to compute this cost; actual upgrade costs will be dependent on current and future technology used.) We estimate that this wetland-based strategy could result in approximately 4,000 acres of wetlands restored in the Lincoln area and save significant electrical energy—enough to meet the annual needs of the residents of Grand Island, Neb. (population 44,550).
Such savings could also be realized by the landowner who practices nutrient farming. For example, using the Iowa State University Ag Decision Maker Calculator on March 25, 2008, TWI estimated that corn and soybeans provide $83 and $110 net return per acre, respectively. However, when a nutrient-farming industry is established, the same landowner could earn an estimated net return of $357 per acre producing nitrogen, phosphorus and carbon credits. If the nutrient farmer could also be compensated for additional uses such as flood storage and recreational use, then his or her total net return could increase to approximately $541 per acre. This is an illustration of how the land could be more valuable wet than dry.
Pilot projects are needed to verify costs, document nutrient removal rates and conduct other research. TWI is developing a 1,300-acre nutrient farm pilot project along the Illinois River, about 40 miles north of Peoria. Federal and state permits are still pending on the project. The project, the first of its kind in the nation, will become a demonstration and research site for nutrient removal in wetlands. The U.S. EPA, The Nature Conservancy, Argonne National Laboratory, the University of Illinois and many other institutions will partner with us in this project.
The research topics will be diverse and interdisciplinary, addressing questions such as how do wetlands store and remove nutrients? What is the impact of wetlands on greenhouse gases? How much energy does a wetland system require? Is this process economic sustainable: What impact does a diverse plant community have on nutrient removal? Can the wetlands store sediment from the tributaries? What wetland design will be most effective? How will wildlife, particularly waterfowl, respond to the restored wetlands? We expect that answers to these questions will enable nutrient farming to gain acceptance as a nutrient-removal technology at a broad scale.
1. Present value costs equal capital costs plus annual operations and maintenance costs for 20 years, converted to present dollar value.
Figures are provided by the author.