Paying Agriculture for Ecosystem Services

Remarks by Bruce I. Knight, Chief, Natural Resources Conservation Service, at “Making the Priceless Valuable: Jumpstarting Environmental Markets”
Portland, OR
June 8, 2006


Thank you, Buzz (Thompson). I notice in the program that my talk is entitled “Paying Agriculture for Ecosystem Services,” and I want to say right up front that that’s exactly what we hope will happen as environmental markets evolve. We want to see farmers receiving funds for the ecosystem services they’re providing that benefit us all.

I admit I’ve contracted market-based fever. But I haven’t had the fever—or the fervor to move forward with environmental markets—as long as many of you. I’m humbled to be part of this conference and sharing with you about our efforts to enable and support these markets.

Who We Are

Let me tell you a little bit about the Natural Resources Conservation Service. More than 70 years ago, we had a major ecological disaster in the U.S. Erosion was destroying the fertility of our nation’s farms and clogging rivers and streams with silt.

In 1935, huge dust storms swept across the central U.S. in the wake of severe drought in our Great Plains region, displacing millions of tons of soil and hundreds of thousands of families. Our agency was born in the midst of this period.

Keeping the soil on the land was the focus for the Soil Erosion Service, which became the Soil Conservation Service, the predecessor agency for NRCS. Today, we have a much broader emphasis: conserving the soil, increasing the quality and quantity of water, preserving air quality and expanding habitat for fish and wildlife.

Even more simply, our mission is helping people help the land.

We partner with farmers, ranchers and others to safeguard our Nation’s natural resources on private, working agricultural land. Our strategy is something we call locally-led, cooperative conservation. Our programs are voluntary.

Each of our programs includes technical assistance and most of them include a financial incentive or are cost-shared, combining federal dollars with the landowner’s own resources.

Working lands conservation programs are unique among U.S. agricultural programs because they are specifically designed to produce multiple benefits.
Farmers or ranchers who install conservation practices improve their land and enhance their natural resources.

But the public also receives many benefits:
• a cleaner environment,
• increased biological diversity
• and a scenic landscape, to name just a few.

2002 Farm Bill

The 2002 farm bill greatly expanded our investment in conservation— providing $17 billion over 10 years. And we’ve been busy working with farmers and ranchers getting conservation on the ground.

Over the past four years, we’ve assisted 1 million landowners in improving their natural resources. Working with partners and landowners, we’ve applied conservation on more than 120 million acres of working farm and ranchland.

Need for Additional Resources

I’m proud of all the conservation work we’ve done in cooperation with our Nation’s farmers and ranchers. But it’s not enough.

Even with increased funding provided in the 2002 farm bill, we still have a long list of worthwhile conservation projects that landowners would like to invest in, and that we would like to enable. Federal funds for conservation programs simply can’t keep pace with the demand, especially when budgets are tighter, as they are now, and likely will be in the years ahead.

Private environmental markets could—and should—supplement federal efforts for conservation and environmental protection. And, as you all know, there’s a long list of environmental goods that agriculture and forestry systems could provide at low cost: water quality, air quality, wetlands, endangered species, greenhouse gases and development rights.

Two weeks ago, in Pittsburgh, at the 2nd National Water Quality Trading Conference, U.S. Environmental Protection Agency Administrator Steve Johnson said he saw the agricultural community as a key partner in making environmental progress—as “producers of solutions, not creators of problems.” That makes a tremendous amount of sense to me—and I think the agricultural community will agree.

Market approaches to conservation are a logical extension of our work at NRCS. So, we’re determined to develop creative strategies that benefit the public, enhance the environment, enable the community situated here today, and support those who make their living from the land.

USDA Policy on Market-Based Environmental Stewardship

Toward that end, at the White House Conference on Cooperative Conservation last summer, Agriculture Secretary Johanns announced a new U.S. Department of Agriculture Policy on Market-Based Environmental Stewardship. Under this policy, we are actively pursuing opportunities to broaden the use of markets for environmental and ecosystem services through voluntary market mechanisms.

Today, Secretary Johanns is releasing a policy option paper on conservation issues that specifically lists market-based conservation as a potential option for the next farm bill.
The key to vibrant markets is that they are standardized, transparent and repeatable. There is a need out there for reliable, consistent information for willing buyers and sellers. And someone needs to help them find each other.

Where Do We Go from Here?

I approach market-based conservation as a given—it will happen. So the real issue is what roles we will all play—in expanding and marketing ecosystem services.

Our role in USDA continues to evolve. Some responsibilities and opportunities are still up for grabs. But I think other roles that we can and should play are coming into clearer focus.

First, we’re doing our best to educate ourselves—and our customers—on how ecosystem markets work. Joining our key leadership team here this week are leaders of two of our major NGO partners—the National Association of Conservation Districts and the National Association of Resource Conservation and Development Councils.

Environmental Credit Ownership

Second, we’re making our position on who owns environmental credits very clear. USDA considers environmental credits from agriculture—whether for carbon sequestration, water quality, biodiversity or wetlands—to be the property of the farmer—the landowner—the one who’s applied conservation practices on the land—regardless of federal cost-share dollars invested.

A key feature of a workable market is simplicity. So, we don’t think it makes any sense to get all tied up over which piece or percentage the farmer paid for and which part a federal or local program paid for. Keep it simple: the farmer owns it.

Partnership with EPA and FS

Another thing we’re doing is strengthening our partnership with the Environmental Protection Agency and the Forest Service—as it pertains to marketing. We think it makes sense for federal agencies—whether they take a regulatory or incentive-based approach—to work together to serve the taxpayers responsibly.


Technology and Tools

NRCS is also positioned well to help on the technological front. That’s always been our strength—technical assistance and technical tools.

We know that environmental credits must be verifiable, repeatable and based on the best available science. One of our commitments is to develop tools that will help measure and reliably quantify environmental benefits associated with various conservation practices. A first step is to share our existing tools.

NRCS currently has over 160 conservation practice standards that we use today. We are continuously reviewing them to keep pace with emerging technology.
All of our conservation practices standards are available for you to use or review on our website at www.nrcs.usda.gov.

We also have the foundational data that everyone can use in wise land management—digitized soil maps through our Web Soil Survey.

Fostering Innovation

NRCS is continually developing new conservation technology to benefit landowners and the environment. This year, we have $20 million for Conservation Innovation Grants to foster new and emerging conservation strategies and tools.
These grants go to partners who want to test innovative conservation approaches and technologies with a view toward sharing them with farmers and ranchers who could benefit.

We’re especially interested in projects that merge markets and conservation. For the second year in a row, we plan to invest $5 million in projects specifically targeting market-based approaches. I encourage you all to apply in next year’s cycle.

Verifying Results

We have strong evidence of the value and efficacy of conservation practices—70 years of tracking practices on the land. We know we’re helping people help the land by saving soil, cleaning up the water and sequestering carbon.

But we’d like to be even more specific in quantifying the results. We want empirical data—public or private—that outside investors will have enough confidence in to pay for environmental credits. So NRCS is participating with a number of other USDA agencies in the Conservation Effects Assessment Project.
We expect to have results in 2008. I hope that this becomes an enabling platform for ecosystem markets.

Conclusion

In conclusion, I believe the next major advance in conservation will come through market-based approaches. Some of you have heard me say this before, but I think that great conservationist Theodore Roosevelt’s sentiments are particularly apt: “The nation behaves well if it treats the natural resources as assets which it must turn over to the next generation increased, and not impaired in value.” Trading has the potential to fulfill that dream, to treat natural resources as assets with value.