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  1. WATERSHED MANAGEMENT Module 23, part C – Economic Component

  2. Watershed management organization • Social Component • Ecological Component • Economic Component

  3. Watershed management structure • A strong watershed structure • uses sound science • facilitates communication and partnerships • fosters actions that are well planned and cost effective • stimulates actions and tracks results

  4. Economic component • Economic Components • Watershed Economics and Ecosystems • Watershed Protection Economics • Funding Sources

  5. Desotelle Watershed economics and ecosytems • The nations gross domestic product (GDP) is considered the nation’s barometer of economic well-being. • Ecosystem services are important in our day to day lives. Since these fundamental services were in place long before the introduction of humans and operate at a very large scale, they are easily taken for granted.

  6. Ecosystem services do not have a price • Water regulation is a function of hydrological flows. • Water supply is a function of storage and retention (wetlands, ponds, streams, etc.) in the watershed. • Erosion control is a function of soil retention within an ecosystem. • Waste treatment is a function of a wetlands ability to remove or breakdown excess nutrients.

  7. GDP’s failures • The GDP is merely a gross tally of products and services bought and sold. There is no distinction made between transactions of what adds to or distracts from a watershed’s well-being. • If something lacks a price (e.g., water regulation, erosion control, water treatment, etc.) regardless of its importance to our health or welfare it is not included in the GDP. • If a transaction (e.g., land use change) destroys an ecosystem service, it is considered an economic gain under the GDP method.

  8. Watershed protection economics • There is never enough money for watershed protection and watershed managers must make careful choices about how to spend their limited resources. • Placing a value on our watersheds and its site specific characteristics such as soil type, land use, land cover, etc. is important for deciding the best future land use patterns in the watershed. • Studies are becoming available to help begin to understand and value water resources.

  9. Public trust vs. private property rights • Groups such as developers, farmers, realtors may argue that a person owning land has a right to develop it as they please. Taking of the use of this land must be compensated according to the value of the property. • Public trust has an obligation to safeguard the public health, safety, and welfare of the public. • The value of land is an important consideration and should be assessed with ecosystem services in mind.

  10. Balancing development and protection • Watershed development does not have to be synonymous with resource degradation. • Growth managed in a watershed context can locate and design homes and businesses in a way that will reduce or eliminate impacts in the watershed. • Protecting a watershed requires, good planning to protect forest cover, provide storage, and reduce impervious cover to the extent necessary for natural resource protection.

  11. Economic watershed protection tools

  12. Watershed planning considerations • Direct appropriate level of new growth to the subwatersheds that can best afford and accommodate the changes. • Requires investment of time and money for technical studies, monitoring, decision-making, etc. • Citizens rank protection of water resources highly. A North Carolina survey showed a strong preference for spending more public funds on environmental protection than highway construction, welfare, or economic development. Only crime and education ranked as higher spending priorities among citizens (Hoban and Clifford 1992).

  13. Land conservation considerations • Property adjacent to protected wetlands, floodplains, shorelines, and forests are great locations for development (U.S. EPA 1995). This is expressed in research showing a greater willingness to pay to live near these habitats. • Conserving trees saves money on energy bills and runoff treatment. • Coastal wetland areas contribute to the local economy through recreation, fishing, and flood protection.

  14. Aquatic buffer considerations Lakes and the Economy • A shoreline or creek buffer can help protect valuable wildlife habitat. Each mile of buffer protects 12 acres of habitat along shorelines and 25 acres along creeks (Schueler 1995). • Corporate landowners can save between $270 to $640 per acre in annual mowing and maintenance costs when open lands are managed as a natural buffer rather than turf (Wildlife Habitat Enhancement Council 1992). $700/ft $300/ft Property Value $50/ft Water Clarity Sources: Mississippi Headwaters Board and Legislative Commission on Minnesota Resources, 2003; University of Maine 1996; Itasca County, MN Assessor’s Office 2003.

  15. Site design considerations • Clustering development can reduce capital cost of subdivision development by 10 to 33%, primarily by reducing the length of infrastructure (streets, sewer, etc.) needed to serve development (NAHB 1986; Maryland Office of Planning 1989; Schueler 1995). • Clustering typically keeps from 40 to 80% of total site area in permanent open space. • Minimizing impervious cover by narrowing streets, shared drives, reduced parking area is a cost savings to developers.

  16. Minnesota Erosion Control Association Minnesota Erosion Control Association Erosion & sediment control considerations • Typically, the cost to install and maintain ESC can average $800 to $1,500 per cleared acre per year depending on duration of construction and site conditions (SMBIA 1990; Paterson et al. 1993). • Applying other watershed protection tools can help reduce the cost for ESC (e.g., buffers, site design, forest conservation). • Careful timing of land clearing activities as development proceeds can be economical. • Benefits to resources by preventing impacts is difficult to measure, but we do know prevention is more cost effective than restoration.

  17. Stormwater bmp considerations • Used to promote recharge (infiltration), remove pollutants (filtering), prevent streambank erosion, control downstream flooding. • Engineered BMPS (i.e., stormwater ponds, wetlands, swales, etc.) are among the most expensive watershed protection tools. • Homes near a stormwater wetland in Minnesota were nearly identical in value to homes bordering a high quality urban lake (Clean Water Partnership, 1997). • BMPs must be maintained and this task often falls on landowners or local government.

  18. Non-stormwater discharge considerations • On-site treatment systems (septics) must have appropriate drainage area and soil to function properly. • There are costs to installing and maintaining these systems, but without proper design, installation, and maintenance, the cost to water quality degradation and property values can be extreme.

  19. Watershed protection programs • Educating citizens and businesses about their daily role in protecting the quality of the watershed is on-going. • Investment in programs on watershed education, public participation, monitoring, inspection of on-site treatment systems, low input lawn care, household hazardous waste, business pollution prevention is a key element in the protection of the watershed. • Management and application costs are often generated by local government. Preventing impacts maintains ecosystem integrity and reduces restoration costs.

  20. Funding Sources • The three more common types of funding mechanisms for watershed programs are • General revenues • Permit fees • Dedicated revenues (i.e., stormwater utility fees) • Grants • Loans • Tax levies

  21. General revenues • General revenues come from local government revenues (income, fees, fines, etc.). It is used by all levels of government to fund programs and service. • Generally stable during economic downturns • Allocation is highly variable and watershed protection is often considered a low priority

  22. Permit fees • Permit fees place the cost of watershed programs on those who create the need for the service. Fees may be assessed on the basis of the amount of area disturbed, type of development (i.e., residential, commercial), or the amount of land developed. • Disadvantages include: burden to collect fees, dependent on the level of growth in the community, and the potential for fees to be diverted into a general agency fund rather than used for watershed management.

  23. Stormwater utility • This is a dedicated funding system providing a stable source of revenue for watershed protection. • The user charges typically reflect the proportion of stormwater runoff a property contributes to stormwater sewer system. Often impervious surface is used as an indicator for fees. • Fees are used to finance capital and operating expenses needed for local stormwater management programs.

  24. Grants • Grant programs may come from federal, state, or private foundations. • Time-consuming for staff to write and administer grants. • Effective for specific projects easy to identify a start and end time where funds are not available from fees or permits.

  25. Loans • The State Revolving Loan (SRF) is often a way to obtain a low interest loan for watershed implementation. • Applicable for local agencies. • Money borrowed must be repaid, and therefore, there must be a plan for repayment. Repayment does not have to come from the activity for which the loan is used.

  26. Tax levies • Ad valorem taxes are often used for watershed management programs. This process requires a special assessment district for a specific function or geographic area (watershed). • Special assessment districts operate as an independent government agency (e.g., watershed district) capable of imposing a tax levy in order to finance watershed planning and implementation. • Governing comes from a board appointed by the local agency (e.g., county board).

  27. References • Center for Watershed Protection. 1998. Rapid Watershed Planning Handbook. Center for Watershed Protection. Ellicott City, Maryland. • Center for Watershed Protection. 1997. The Economics of Watershed Protection. Watershed Protection Techniques, Vol. 2, No. 4. Center for Watershed Protection, Ellicott City, Maryland. • Honachefsky, William B. 2000. Ecologically Based Municipal Land Use Planning. Lewis Publishers, Boca Raton, FL. 256 pp. • Know Your Watershed. Putting Together A Watershed Management Plan – A Guide for Watershed Partners. Conservation Technology Information Center, W. Lafayette, IN. • Ministry of Environment and Energy and Ministry of Natural Resources. 1993. Water Management on a Watershed Basis: Implementing an Ecosystem Approach. Ministry of Environment and Energy and Ministry of Natural Resources, Ontario, Canada. 32 pp. • Minnesota Department of Natural Resources. 2004. A Quick Guide to Using Natural Resource Information. Minnesota Department of Natural Resources, St. Paul, MN. • Terrene Institute. 1996. A Watershed Approach to Urban Runoff – Handbook for Decisionmakers. Terrene Institute, Inc. Alexandria, VA. 115 pp. (Terrene Institute is no longer in operation – see for a poster concept). • U.S. Environmental Protection Agency. 1997. Top 10 Watershed Lessons Learned. National Center for Environmental Publications and Information. 800-490-9198.