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• 1. [Article] The New Natural Resources Economy: Water, Markets, Opportunities

  Presented during the Oregon Resource Conservation and Development(RC&D)Conference, Redmond, Oregon, April 23, 2010.

  Citation × Citation Citation Abstract Copy Title: The New Natural Resources Economy: Water, Markets, Opportunities Author: Institute for Natural Resources, Duncan, Sally Presented during the Oregon Resource Conservation and Development(RC&D)Conference, Redmond, Oregon, April 23, 2010. Title: The New Natural Resources Economy: Water, Markets, Opportunities Author: Institute for Natural Resources, Duncan, Sally Presented during the Oregon Resource Conservation and Development(RC&D)Conference, Redmond, Oregon, April 23, 2010. Close

• 2. [Article] Bringing the River Back: Working with Landowners on Willamette River Restoration

  The Willamette River has gone through extensive changes since Euro American settlement – changes that have reduced channel connectivity, destroyed important habitat for species and vastly undermined floodwater ...

  Citation × Citation Citation Abstract Copy Title: Bringing the River Back: Working with Landowners on Willamette River Restoration Author: Institute for Natural Resources, Greenbelt Land Trust, McCune, Myrica, Lurie, Sue, River Design, Duncan, Sally The Willamette River has gone through extensive changes since Euro American settlement – changes that have reduced channel connectivity, destroyed important habitat for species and vastly undermined floodwater storage capacity. Efforts to preserve portions of the river have a controversial legacy that has left lingering suspicions of government involvement in any activity that includes private lands. Nonetheless, there are opportunities for willing landowners to work with governmental and non-governmental partners to design and implement voluntary restoration projects which can provide financial and land use benefits. The river’s floodplain can be an asset and a resource beyond its usefulness for agricultural production. This report is part technical guide, part story based on interviews we conducted with different interests. We have separated out the landowners’ viewpoints and experience to make clear the importance of understanding that critical central element in restoration planning. The Harkens Lake area of the Willamette River near Monroe, Oregon, is a priority conservation area detailed in the 2002 Willamette River Basin Planning Atlas: Trajectories of Environmental and Ecological Change. The Horning families who own property in the Harkens Lake area have teamed with several partners to design and implement a restoration project as a way to, in their words, bring what was once a living area back to life as a way to give back to the river. If the potential for restoration is to be realized, landowners and their partners need to be aware of the multiple associated challenges and ways to work through them. Restoration is still new to many landowners, and projects can become complicated fairly quickly. The concept of lead project partners as case managers for landowners is critical. This approach will help landowners define their needs and expectations, develop the level of trust essential to project success, and ensure that landowners are not overwhelmed with the complexity of financing, the demands of design and permitting, and the challenge of incorporating good science. Landowners also need to know that there is a broad range of restoration programs and tools available, along with associated funding. The sweep of these programs and tools can be confusing. Though the Harken’s Lake project has not yet required permits from regulatory agencies, many stakeholders interviewed for this report identified permitting as one of the most perennially vexing parts of project implementation. It typically requires cooperation among different agencies at different levels of government, and can take from three months to three years, requiring a great deal of patience on the part of landowners and matching perseverance on the part of project partners. Finally, as the Harkens Lake story illustrates, a vital concept that may help ensure successful processes is making certain project partners and landowners discuss critical timing issues, align process steps accordingly, and develop two-way assurances that serve as accountability measures and benchmarks for progress. Those involved with the Harkens Lake restoration project expressed clear hopes: that the project will be a model for more restoration on the mainstem of the Willamette, that restoration will provide good compensation to property owners so that restoration represents a practical addition to agricultural business portfolios, and that landowners will feel good about their legacy in its benefits to the health of the river. The report should be of interest to landowners, agencies and others in the conservation community, and academics. We emphasize that it is a case study of one landowner’s experience, and the pool of associated interview participants was limited. Typical of single case studies, the experiences and outcomes cannot be generalized. There are nonetheless many elements of the study that represent long-standing landowner issues and concerns still shared by many, as indicated by the landowners and by several of the people we interviewed. Title: Bringing the River Back: Working with Landowners on Willamette River Restoration Author: Institute for Natural Resources, Greenbelt Land Trust, McCune, Myrica, Lurie, Sue, River Design, Duncan, Sally The Willamette River has gone through extensive changes since Euro American settlement – changes that have reduced channel connectivity, destroyed important habitat for species and vastly undermined floodwater storage capacity. Efforts to preserve portions of the river have a controversial legacy that has left lingering suspicions of government involvement in any activity that includes private lands. Nonetheless, there are opportunities for willing landowners to work with governmental and non-governmental partners to design and implement voluntary restoration projects which can provide financial and land use benefits. The river’s floodplain can be an asset and a resource beyond its usefulness for agricultural production. This report is part technical guide, part story based on interviews we conducted with different interests. We have separated out the landowners’ viewpoints and experience to make clear the importance of understanding that critical central element in restoration planning. The Harkens Lake area of the Willamette River near Monroe, Oregon, is a priority conservation area detailed in the 2002 Willamette River Basin Planning Atlas: Trajectories of Environmental and Ecological Change. The Horning families who own property in the Harkens Lake area have teamed with several partners to design and implement a restoration project as a way to, in their words, bring what was once a living area back to life as a way to give back to the river. If the potential for restoration is to be realized, landowners and their partners need to be aware of the multiple associated challenges and ways to work through them. Restoration is still new to many landowners, and projects can become complicated fairly quickly. The concept of lead project partners as case managers for landowners is critical. This approach will help landowners define their needs and expectations, develop the level of trust essential to project success, and ensure that landowners are not overwhelmed with the complexity of financing, the demands of design and permitting, and the challenge of incorporating good science. Landowners also need to know that there is a broad range of restoration programs and tools available, along with associated funding. The sweep of these programs and tools can be confusing. Though the Harken’s Lake project has not yet required permits from regulatory agencies, many stakeholders interviewed for this report identified permitting as one of the most perennially vexing parts of project implementation. It typically requires cooperation among different agencies at different levels of government, and can take from three months to three years, requiring a great deal of patience on the part of landowners and matching perseverance on the part of project partners. Finally, as the Harkens Lake story illustrates, a vital concept that may help ensure successful processes is making certain project partners and landowners discuss critical timing issues, align process steps accordingly, and develop two-way assurances that serve as accountability measures and benchmarks for progress. Those involved with the Harkens Lake restoration project expressed clear hopes: that the project will be a model for more restoration on the mainstem of the Willamette, that restoration will provide good compensation to property owners so that restoration represents a practical addition to agricultural business portfolios, and that landowners will feel good about their legacy in its benefits to the health of the river. The report should be of interest to landowners, agencies and others in the conservation community, and academics. We emphasize that it is a case study of one landowner’s experience, and the pool of associated interview participants was limited. Typical of single case studies, the experiences and outcomes cannot be generalized. There are nonetheless many elements of the study that represent long-standing landowner issues and concerns still shared by many, as indicated by the landowners and by several of the people we interviewed. Close

• 3. [Article] Financing mechanisms that advance ecosystem service markets and promote rural sustainability

  Ecosystem services markets represent potential revenue streams for small- and medium-scale rural agricultural and forest producers, many of whom have faced significant economic downturns over the past ...

  Citation × Citation Citation Abstract Copy Title: Financing mechanisms that advance ecosystem service markets and promote rural sustainability Author: Institute for Natural Resources, Central Oregon Intergovernmental Council, Duncan, Sally, Ewing, Amy, Lurie, Sue, Ecosystem Economics Ecosystem services markets represent potential revenue streams for small- and medium-scale rural agricultural and forest producers, many of whom have faced significant economic downturns over the past several decades. Demand for ecosystem services (ES) in the form of investments by public agencies, mitigation funds from regulated entities, and voluntary payments from corporations and individuals will require credits predominantly supplied by rural areas. Participation on the supply side entails high transaction costs and financial risks that may, however, discourage many rural landowners from participating in projects that would generate supply credits. The project purpose was to explore rural landowner financing needs for ES projects in the growing marketplace. The Institute for Natural Resources (INR) explored those issues in two phases. Phase I entailed preliminary identification of the range of financial approaches for payments for ecosystem services (PES) projects. That was followed by a December 1, 2009, workshop which brought together financial industry professionals along with non-governmental and government leaders active in developing ecosystem services markets to discuss the challenges and opportunities for financing ES projects. Workshop findings from Phase I, entailing participation by financial experts, helped inform the investigation for Phase II involving rural landowners. Phase II combined multiple approaches including focus groups, case studies and a pilot project evaluation. Title: Financing mechanisms that advance ecosystem service markets and promote rural sustainability Author: Institute for Natural Resources, Central Oregon Intergovernmental Council, Duncan, Sally, Ewing, Amy, Lurie, Sue, Ecosystem Economics Ecosystem services markets represent potential revenue streams for small- and medium-scale rural agricultural and forest producers, many of whom have faced significant economic downturns over the past several decades. Demand for ecosystem services (ES) in the form of investments by public agencies, mitigation funds from regulated entities, and voluntary payments from corporations and individuals will require credits predominantly supplied by rural areas. Participation on the supply side entails high transaction costs and financial risks that may, however, discourage many rural landowners from participating in projects that would generate supply credits. The project purpose was to explore rural landowner financing needs for ES projects in the growing marketplace. The Institute for Natural Resources (INR) explored those issues in two phases. Phase I entailed preliminary identification of the range of financial approaches for payments for ecosystem services (PES) projects. That was followed by a December 1, 2009, workshop which brought together financial industry professionals along with non-governmental and government leaders active in developing ecosystem services markets to discuss the challenges and opportunities for financing ES projects. Workshop findings from Phase I, entailing participation by financial experts, helped inform the investigation for Phase II involving rural landowners. Phase II combined multiple approaches including focus groups, case studies and a pilot project evaluation. Close

• 4. [Article] Local Ecosystem Services Marketplaces: Public Utilities as Development Drivers

  Executive Summary The Institute for Natural Resources (INR) received funding from the Bullitt Foundation in 2009 for Financing Mechanisms that Advance Ecosystem Services Markets and Promote Rural Sustainability. ...

  Citation × Citation Citation Abstract Copy Title: Local Ecosystem Services Marketplaces: Public Utilities as Development Drivers Author: Lurie, Sue, Duncan, Sally, Fishler, Hillary, Bennet, Drew, Institute for Natural Resources Executive Summary The Institute for Natural Resources (INR) received funding from the Bullitt Foundation in 2009 for Financing Mechanisms that Advance Ecosystem Services Markets and Promote Rural Sustainability. 1 That research strongly suggested that, at least for the short- and possibly medium-term, payment for ecosystem services (PES) may best be framed at the local and regional levels. INR therefore proposed examining policy and program options that could facilitate and support local and regional marketplaces, pertaining to all forms of PES, rather than more narrowly conceived credit markets. To pursue this approach, INR proposed expanding its work with the Eugene Water and Electric Board (EWEB). EWEB is the chief supplier of water for the city of Eugene, Oregon, and its source water protection program coordinator is in the process of developing an innovative voluntary incentive program (VIP) to maintain and restore healthy riparian forests along the McKenzie River. EWEB’s envisioned VIP is a distinct departure from typical restoration and PES models in that it gives highest payment—or dividend—priority to those properties with intact, healthy riparian forests. In other words, it pays for good stewardship, not for restoration. It can be a model for other utilities, which could duplicate or adapt the program in part or in full depending on variables such as watershed ownership patterns, authorizing authorities for such programs, potential partners, and other features. INR’s Bullitt Foundation funding has used the EWEB program to examine institutional aspects that act as both opportunities and constraints to greater public utility PES program development and administration. Also in 2011, INR was awarded a National Institute of Food and Agriculture (NIFA) grant to examine public utilities as local PES marketplace drivers. The research includes a case study of the EWEB program, examining funding and structural aspects, testing PES buyers’ and sellers’ preferences and developing a corporate engagement model. Concurrent work on the two projects has enabled INR to leverage information from each to mutually enrich the knowledge and context for both projects. Few, if any, legislative or legal barriers surfaced during our research. However, a number of pivotal institutional issues have emerged; most are administrative and funding related. While there was consistent interest in the concept of PES, there was fairly consistent lack of knowledge and support regarding the use of PES and green or living infrastructure as a cost avoidance strategy and lack of knowledge regarding how to create and fund such programs. (Note that this report uses the terms “green infrastructure” and “living infrastructure” interchangeably. Both refer in this case to the targeted riparian forests doing the job of supporting the utility’s clean drinking water requirements.) Interviews and focus groups provided information for the following recommendations. Greater details can be found in the body of the report. • Knowledge regarding how to design a PES program is a resource. Although many utilities may have heard about PES and living infrastructure, staff may not know where to turn for help and information. • Education for inreach (internal management communications) as well as public outreach will be critical to building support for funding and implementing EWEB-like programs. • Utilities might benefit from expanding the partnership concept to other organizations and agencies that might not be part of the watershed investment district or partnership. This could include larger landowners, other utilities, or additional investors. • All utilities potentially face different resource constraints such as technical support or funding. Larger utilities working with and mentoring the smaller systems can provide comprehensive program ownership and subsequent source protection awareness and actions, to help them face staff, ratepayer base and budget constraints. Regardless of partnership opportunities, utilities and other organizations should think about how PES might be integrated strategically with or into other programs. • Program design should proceed whether or not funding is immediately available, but always with funding options in mind. An effective approach may be to design the program first in concert with landowners and potential partners and follow that with stakeholder education. • Finding the right price point as well as other potential non-monetary incentives to encourage participation is a variable that will be area specific and will differ among landowner types and available alternatives. • Interested utilities will need to acquire realistic valuation of the ecosystem services the program will use. • Creating a watershed investment partnership or similar interorganizational collaborative arrangements will help all partners add capacities and increase efficiencies through sharing program funding for infrastructure, aligning goals, and utilizing existing competencies. Title: Local Ecosystem Services Marketplaces: Public Utilities as Development Drivers Author: Lurie, Sue, Duncan, Sally, Fishler, Hillary, Bennet, Drew, Institute for Natural Resources Executive Summary The Institute for Natural Resources (INR) received funding from the Bullitt Foundation in 2009 for Financing Mechanisms that Advance Ecosystem Services Markets and Promote Rural Sustainability. 1 That research strongly suggested that, at least for the short- and possibly medium-term, payment for ecosystem services (PES) may best be framed at the local and regional levels. INR therefore proposed examining policy and program options that could facilitate and support local and regional marketplaces, pertaining to all forms of PES, rather than more narrowly conceived credit markets. To pursue this approach, INR proposed expanding its work with the Eugene Water and Electric Board (EWEB). EWEB is the chief supplier of water for the city of Eugene, Oregon, and its source water protection program coordinator is in the process of developing an innovative voluntary incentive program (VIP) to maintain and restore healthy riparian forests along the McKenzie River. EWEB’s envisioned VIP is a distinct departure from typical restoration and PES models in that it gives highest payment—or dividend—priority to those properties with intact, healthy riparian forests. In other words, it pays for good stewardship, not for restoration. It can be a model for other utilities, which could duplicate or adapt the program in part or in full depending on variables such as watershed ownership patterns, authorizing authorities for such programs, potential partners, and other features. INR’s Bullitt Foundation funding has used the EWEB program to examine institutional aspects that act as both opportunities and constraints to greater public utility PES program development and administration. Also in 2011, INR was awarded a National Institute of Food and Agriculture (NIFA) grant to examine public utilities as local PES marketplace drivers. The research includes a case study of the EWEB program, examining funding and structural aspects, testing PES buyers’ and sellers’ preferences and developing a corporate engagement model. Concurrent work on the two projects has enabled INR to leverage information from each to mutually enrich the knowledge and context for both projects. Few, if any, legislative or legal barriers surfaced during our research. However, a number of pivotal institutional issues have emerged; most are administrative and funding related. While there was consistent interest in the concept of PES, there was fairly consistent lack of knowledge and support regarding the use of PES and green or living infrastructure as a cost avoidance strategy and lack of knowledge regarding how to create and fund such programs. (Note that this report uses the terms “green infrastructure” and “living infrastructure” interchangeably. Both refer in this case to the targeted riparian forests doing the job of supporting the utility’s clean drinking water requirements.) Interviews and focus groups provided information for the following recommendations. Greater details can be found in the body of the report. • Knowledge regarding how to design a PES program is a resource. Although many utilities may have heard about PES and living infrastructure, staff may not know where to turn for help and information. • Education for inreach (internal management communications) as well as public outreach will be critical to building support for funding and implementing EWEB-like programs. • Utilities might benefit from expanding the partnership concept to other organizations and agencies that might not be part of the watershed investment district or partnership. This could include larger landowners, other utilities, or additional investors. • All utilities potentially face different resource constraints such as technical support or funding. Larger utilities working with and mentoring the smaller systems can provide comprehensive program ownership and subsequent source protection awareness and actions, to help them face staff, ratepayer base and budget constraints. Regardless of partnership opportunities, utilities and other organizations should think about how PES might be integrated strategically with or into other programs. • Program design should proceed whether or not funding is immediately available, but always with funding options in mind. An effective approach may be to design the program first in concert with landowners and potential partners and follow that with stakeholder education. • Finding the right price point as well as other potential non-monetary incentives to encourage participation is a variable that will be area specific and will differ among landowner types and available alternatives. • Interested utilities will need to acquire realistic valuation of the ecosystem services the program will use. • Creating a watershed investment partnership or similar interorganizational collaborative arrangements will help all partners add capacities and increase efficiencies through sharing program funding for infrastructure, aligning goals, and utilizing existing competencies. Close

• 5. [Article] Financing Ecosystem Service Markets: Issues and Opportunities

  INR’s long-term goal with this and other projects is to help revitalize rural economies and contribute to rural sustainability, while increasing ecosystem restoration and thoughtfully developing ecosystem ...

  Citation × Citation Citation Abstract Copy Title: Financing Ecosystem Service Markets: Issues and Opportunities Author: Institute for Natural Resources, Duncan, Sally, Lurie, Susan, Aylward, Bruce, Hartwell, Ray, Ecosystem Economics, LLC INR’s long-term goal with this and other projects is to help revitalize rural economies and contribute to rural sustainability, while increasing ecosystem restoration and thoughtfully developing ecosystem services markets. To assist in meeting these goals, this project aims to understand and overcome a significant hurdle on the supply side of these emerging markets: the financing burden and risk shouldered by rural landowners who wish to invest in restoration activities. In order to accomplish these objectives, the project seeks to identify and apply financial mechanisms and institutional arrangements that enable landowners to access ecosystem services markets, a new and potentially long-term source of land and water stewardship income. Our strategy for meeting these objectives combines a number of approaches including: policy research; collaborative inquiry and learning with landowners and financiers; on-the-ground pilot project development; dissemination and outreach of project findings Title: Financing Ecosystem Service Markets: Issues and Opportunities Author: Institute for Natural Resources, Duncan, Sally, Lurie, Susan, Aylward, Bruce, Hartwell, Ray, Ecosystem Economics, LLC INR’s long-term goal with this and other projects is to help revitalize rural economies and contribute to rural sustainability, while increasing ecosystem restoration and thoughtfully developing ecosystem services markets. To assist in meeting these goals, this project aims to understand and overcome a significant hurdle on the supply side of these emerging markets: the financing burden and risk shouldered by rural landowners who wish to invest in restoration activities. In order to accomplish these objectives, the project seeks to identify and apply financial mechanisms and institutional arrangements that enable landowners to access ecosystem services markets, a new and potentially long-term source of land and water stewardship income. Our strategy for meeting these objectives combines a number of approaches including: policy research; collaborative inquiry and learning with landowners and financiers; on-the-ground pilot project development; dissemination and outreach of project findings Close

• 6. [Article] Ecosystem Service Market Development: The Role and Opportunity for Finance

  This report is laid out as a progressive exploration of how the economics of ES production interacts with finance, broadly construed, in actual credit transactions. The inquiry proceeds in several steps. ...

  Citation × Citation Citation Abstract Copy Title: Ecosystem Service Market Development: The Role and Opportunity for Finance Author: Institute for Natural Resources, Central Oregon Intergovernmental Council, Duncan, Sally, Lurie, Sue, Ecosystem Economics This report is laid out as a progressive exploration of how the economics of ES production interacts with finance, broadly construed, in actual credit transactions. The inquiry proceeds in several steps. First, the economics of ecosystem services production is explored to provide critical context for potential financing approaches. This section examines dynamics of production under a number of incentive mechanisms currently employed to produce ecosystem services and also considers how economic incentives affect policy goals. The paper next turns to the role of finance in ES production, examining project cash flows and how financing directly enables development of ES credits through on-the-ground projects. The following section considers the breadth of sources for project finance, with a particular focus on how project design and characteristics shape access to government, philanthropic, and private capital sources. With this framework established, financing tools and recommendations are explored with an emphasis on how different approaches can influence key drivers of access to project funding. Input from stakeholder and financier interviews, as well as workshop findings, are integrated throughout. A brief conclusion completes the report. Title: Ecosystem Service Market Development: The Role and Opportunity for Finance Author: Institute for Natural Resources, Central Oregon Intergovernmental Council, Duncan, Sally, Lurie, Sue, Ecosystem Economics This report is laid out as a progressive exploration of how the economics of ES production interacts with finance, broadly construed, in actual credit transactions. The inquiry proceeds in several steps. First, the economics of ecosystem services production is explored to provide critical context for potential financing approaches. This section examines dynamics of production under a number of incentive mechanisms currently employed to produce ecosystem services and also considers how economic incentives affect policy goals. The paper next turns to the role of finance in ES production, examining project cash flows and how financing directly enables development of ES credits through on-the-ground projects. The following section considers the breadth of sources for project finance, with a particular focus on how project design and characteristics shape access to government, philanthropic, and private capital sources. With this framework established, financing tools and recommendations are explored with an emphasis on how different approaches can influence key drivers of access to project funding. Input from stakeholder and financier interviews, as well as workshop findings, are integrated throughout. A brief conclusion completes the report. Close