Darryl offered a number of ideas for how to build on the Environmental Farm Plan for EG&S:
• New partnerships (e.g., Greenbelt, Ducks Unlimited);
• Targeted cost-share projects, by sector, by project, by geography;
• Voluntary trading (e.g., on the Chicago CO2 markets);
• Environmental taxes;
• Annual payments;
• New regulations;
• A mix of the above.

He left the group with the following questions to ponder:
• Should EG&S be included in agri-environmental policy in Ontario?
• If so, which policy approaches should Ontario consider?
• What is the baseline of farm stewardship responsibility?
• How do you measure success?

Questions and Answers:

1. Q. We restored 20 acres of tall grass prairie, and the only concern of our neighbours was
about weeds. Although weeds have not become a problem, I am now starting to worry
that it will attract endangered species.
Also, I can’t get the cash to continue the management of the property. Prescribed burning
just went from $1,500 to $4,500.
A. I don’t know exactly how to answer your concerns. The EFP program funding runs out
in 2008, although I expect it will be continued. The money available for environmental
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 34
programs is a small amount relative to the Agricultural Policy Framework overall. If things
are not working, as you point out, then farmers may want to raise these issues with the
federal government as it is currently developing the next generation of the Agricultural
Policy Framework (see http://www.agr.gc.ca/pol/consult/index_e.php).

Comment from the Floor: I know someone in South Dakota with 160 acres of tall grass
prairie who uses it to graze cattle. I’m not sure how well it’s working, because he’s only
been doing it for 100 years. He says it’s great pasture, and he gets no complaints from his
neighbours about smoke.






3.9 Ontario’s Conservation Authorities, Ecological Goods and Services and Watershed
Stewardship (Mike Puddister)

Mike Puddister, Manager, Natural Heritage and Stewardship with Credit Valley
Conservation, currently also carries responsibilities for a new initiative which is
exploring the Ecosystem Goods and Services provided by the Credit River Watershed.

Abstract:

The presentation provided an overview of the conservation authority program in Ontario,
a program created some sixty years ago under the Conservation Authorities Act.
Conservation authorities are community-level organizations that manage natural resources
on a watershed basis across Ontario.

The goal of Conservation Authority watershed stewardship programs is to protect and improve the
health of watersheds in Ontario. Conservation Authorities work with their watershed communities
and landowners in identifying local concerns and creating solutions to protect and enhance the
local environment and the ecological goods and services that they provide.

Conservation Authorities collect data, carry out studies, map resources and monitor the
state of Ontario’s watersheds daily. This positions them to be able to track the quality and
quantity of the EG&S provided within a watershed, subwatershed or smaller tributary area.

Mike began with an overview of the conservation authority (CA) program:
• The program was created over 60 years ago in Ontario;
• Conservation authorities are community-level organizations that manage natural resources
on a watershed basis;
• 10+ million people live in watersheds managed by CAs
o This represents almost 90% of the population of Ontario;
o CAs cover 98,000+ sq. km. (almost all of southern Ontario);
o They expend $160+million per year, mostly through municipal levies and
self-generated revenues

Comment regarding managing tall grass prairie:
“The buffalo did a great job...”
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 35
Using science as a basis for action, Conservation Authorities develop programs and approaches
that protect, restore and manage Ontario’s land and water resources through:
• Collecting data ;
• Carrying out studies;
• Mapping environmental resources; and
• Monitoring the state of Ontario’s watersheds daily.

This type of work positions CAs to be able to track the quality and quantity of ecological goods and
services within a watershed.

Authorities offer a wide range of programs and services often tailored to meet the needs of the
local communities and the needs of the watershed, including:
• Watershed strategies;
• Flooding and erosion control;
• Water quality and quantity;
• Reforestation and sustainable woodlot management;
• Ecosystem regeneration;
• Environmental education;
• Securement of sensitive lands;
• Outdoor recreation;
• Soil conservation;
• Environmental land use planning;
• Habitat protection and restoration;
• Agricultural and rural landowner assistance;
• Protection of sensitive wetlands, flood plains and valley lands.

Conservation Authorities approach watershed management through partnerships:
• CAs have a strong track record of partnering with municipal, provincial and federal
governments as well as landowners and other groups;
• CAs believe in the importance of involving people living in watersheds to make decisions
about the best way to ensure there are healthy and sustainable resources now and in the
future;
• Authorities work closely with their watershed communities and landowners in identifying
local concerns and creating solutions to protect and enhance the local environment and
the ecological goods and services that they provide;
• The need to build trust with landowners is key.

Watershed Stewardship is a key priority:
• Goal of CA Watershed Stewardship Programs is: To protect and improve the health of
watersheds in Ontario;
• Three key watershed stewardship programs offered by many CAs to landowners are Water
Quality Improvement and Protection, Forestry and Fish, and Wildlife Habitat
Enhancement;
• A natural component of these programs involves the protection, enhancement and
rehabilitation of natural areas and corridors (many of which fall along creeks and streams);
• The rehabilitation and protection of natural areas (such as wetlands and watercourses) also
play a significant role in addressing surface and ground water quality.

Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 36
While the level of Watershed Stewardship services may differ, all conservation authorities offer
some common basic services:
• They provide:
o technical advice;
o design and planning services, with
o on-site assessment and financial incentives (often in partnership with local
municipalities and community groups, provincial and federal government and
non-government agencies).

Financial incentives are offered for a number of services:
• BMPs, which can include nutrient storage, buffer strip establishment, erosion prevention,
shelterbelt planting and fencing of cattle from streams;
• Planting programs, including tree and shrub planting, direct sales of trees and shrubs, site
planning, site assessment and monitoring;
• Rehabilitation, restoration and enhancement generally focusing on stream and wetlands,
wildlife habitat and species at risk;
• Woodlot management, which focuses on sustainable forestry practices and assistance to
meet landowner needs.

From 2000 to 2005, Conservation Authorities supported:
• 8,759 water quality improvement projects; with
o 7,004 landowners involved; and
o $22.4 million in grant dollars given out;
o 21 CAs support Permanent/Fragile Land Retirement Programs; and
• 10 million trees planted:
o 5,199 ha. (13,000 ac.) of land planted;
o 4,464 landowners were involved; and
o $5.5 million in grant dollars given out.

On the specific subject of valuing ecological goods and services:
• Conservation Authorities support the concept of payment for EG&S;
• However, further research is required towards understanding the value of these
environmental benefits to society – particularly from an integrated watershed perspective;
• For example, the Credit Valley Conservation Authority is currently supporting two
research studies that will help us place value on some of the ecological goods and services
provided by the Credit Watershed. This is our initial attempt to better understand the
EG&S provided by the watershed and how they benefit the watershed community.

The first study is looking at the socio-economic value of the Credit River Fishery. In this
case we are attempting to place an economic value on fishing products or goods that are
provided through the ecological services or features and functions of the river – which is
not only the fish themselves but the overall experience provided.

This is a rather common example of studying EG&S and uses what has been referred to as
the Product Travel Cost Method which essentially measures the “willingness to pay”.

The second study is attempting to determine the portion of the total value of properties
that can be attributed to their proximity to, and nature of, nearby natural areas such as
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 37
woodlots and ravines. This study utilizes hedonic models to determine the effect of natural
features on real estate prices in different neighbourhoods. In this case we will be
determining the value of the various services (such as aesthetics) which is provided by these
natural areas to the nearby properties and their owners…at a cost.

In both cases this information will assist the Authority in making stronger and more
complete arguments for the protection, restoration or enhancement of natural features and
functions within the watershed.

We are also supporting an application to research farm level EG&S which we hope will
help shape future agricultural policy

• Therefore, CAs support work that builds an understanding of the environmental, human
and economic cost and benefits of BMPs implemented by landowners. We should also be
careful to not undersell the value of stewardship as an ethic and a sense of responsibility;
• Emphasis must be placed on directing limited public resources to those actions that
achieve the highest benefits for the community.
• Approach to dealing with EG&S needs to be straight forward;
• It should compliment existing programs; and
• Once developed, this enhanced approach must be straight forward in its implementation,
complimentary to existing programs and supported by long term funding.
• A significant challenge is to develop a way to sustainably fund payment for EG&S on a per
acre basis that is flexible, that would motivate landowners in all regions of Ontario to go
beyond the minimum (or what may be legally required) and on an ongoing basis to help
ensure that land is not reverted back to past practices when traditional market conditions
change.
• Given our traditional and evolving role in watershed stewardship as a key component of
watershed ecosystem management we will continue to support the delivery of new and
innovative stewardship programming that benefits watersheds, society and landowners.
• It must be supported by long-term funding.

Questions:

1. Frank Hoftyzer, President, Ontario Soil and Crop Improvement Association.
I am not sure how to take the message. We have a system in place right now through the
Environmental Farm Plan. We don’t need any more research, we just need the funding to get on
with it.
A. We’re not saying that we need to research at the farm level. We see a role in implementing
projects under the environmental farm plans.



Conservation Authorities have and will continue to support the delivery
of new and innovative stewardship programming that benefits
watersheds, society and landowners.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 38
3.10 Valuing Ecological Goods and Services: Policies and Experiences from the U.S.
(Laura Haynes)

Laura Haynes, a Natural Resource Specialist with the U.S. Department of Agriculture, presented
the perspective of VEGS from her experience with the U.S. Natural Resources Conservation
Service (NRCS).

Abstract:

This presentation provided a comprehensive look at the approaches and programs used by the U.S.
Natural Resources Conservation Service (NRCS) to help value ecological goods and services. With
the mission of “Helping People Help the Land”, NRCS has been providing products and services
since 1935 to enable people to be good stewards of the soil, water, and related natural resources on
non-Federal U.S. lands. Valuing ecological goods and services is at the core of the NRCS mission –
and is reflected in the actions of the Agency. This presentation reviewed the policies that drive
these actions and provides a deeper look into four USDA programs: Conservation Security
Program; Environmental Quality Incentives Program; Wetland Reserve Program administered by
NRCS; and Conservation Reserve Program administered by the Farm Service Agency. In addition,
the presentation addresses the challenges, strengths and weaknesses of the USDA approach. A
better understanding of these methods and practices could provide ideas for changes in current
Canadian policy.

Laura began her presentation with an overview of the U.S. Natural Resources Conservation
Service and the programs the NRCS supports.
• Since the Dust Bowl of the 1930’s, the Natural Resources Conservation Service (previously
known as the Soil Conservation Service) within the U.S. Department of Agriculture has
worked with conservation districts and others throughout the U.S. to help private land
owners, as well as Federal, State, Tribal, and local governments and community groups
conserve soil, water and other natural resources on non-Federal lands.

• With the mission “Helping People Help the Land”, NRCS provides financial and technical
assistance to private land owners through a wide portfolio of natural resource conservation
programs that provide environmental, societal, financial, and technical benefits.

• Most of these programs are authorized through the Food Security Act of 1985 (also known
as the Farm Bill), which is reauthorized every five years.

The primary “customers” of the NRCS are the following:
• Farmers and ranchers;
• Private sector who support agriculture and natural resource conservation;
• Governments (or units) responsible for natural resources use and management; and
• Non-profit organizations.

The NRCS has six mission goals to help achieve an American landscape where both productive
agriculture and high-quality environment coexist. These goals are the following:
• Foundation Goals
o High-quality, productive soils
o Clean and abundant water
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 39
o Healthy plant and animal communities
• Venture Goals
o Clean air
o Adequate energy supply
o Working farm and ranch lands

In order to reach these goals, the NRCS is guided by these key principles:
• Assess the resources on the land, the conservation problems and opportunities;
• Draw on various sciences and disciplines and integrate all their contributions into a plan
for the whole property;
• Work closely with land users so that the plans for conservation mesh with their objectives;
and
• Through implementing conservation on individual properties, contribute to the overall
quality of life in the watershed or region.

The NRCS does face challenges when trying to meet mission goals:
• Honoring private property rights
• Complex, dispersed nature of non-point source pollution
• Diverse nature of agriculture
• Urban-rural conflict
• Ongoing agricultural production and enterprise changes
• Increasingly complex array of environmental problems and regulations
• Competition for Federal funding

However, the NRCS also faces opportunities:
• There is a growing public interest in:
o Environmental amenities; and
o Paying for ecological goods and services.
• Technology is advancing to help address conservation concerns.

The NRCS meets these challenges and opportunities, through the following VEG&S approach:

1. The NRCS uses a locally-led framework
• Conservation partnerships with decisions at the field level;
• These partnerships include a close working relationship with the 3,000 state conservation
districts across the U.S. and the 17,000 district employees;
• Most of the 12,500 NRCS employees are located at the field level.

2. The NRCS conducts Resource Assessments through the use of the Natural Resource Inventory -
a statistical survey of land use and natural resource conditions and trends on U.S. non-Federal
lands.

3. The NRCS applies science-based assistance, by:
• Developing sound conservation technologies; and
• Providing technical assistance to producers.

4. The NRCS uses a “Portfolio Approach,” which offers:
• A wide range of conservation programs;
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 40
o Technical assistance
o Easement programs
o Cost-share programs
o Stewardship program
o Grants for innovation;
• Conservation solutions tailored to producer needs;
• Market-based approaches

The NRCS Conservation Programs fall into two funding authorizing categories:
1. Mandatory Programs:
• $1.76 Billion in 2006
• Agricultural Management Assistance Program
• Conservation Reserve Program
o Technical assistance only
• Conservation Security Program
• Environmental Quality Incentives Program (EQIP)
o EQIP Conservation Innovation Grants
o EQIP Ground and Surface Water Conservation
o EQIP Klamath River Basin
• Farm and Ranch Lands Protection Program
• Grassland Reserve Program
• Wetlands Reserve Program
o Wetlands Reserve Enhancement Program
o Bid Pilot Project
• Wildlife Habitat Incentives Program

2. Discretionary Programs:
• $1.49 Billion in 2006
• Conservation Technical Assistance (CTA) Program
o CTA Cooperative Conservation Partnership Initiative
o CTA Grazing Lands Conservation
o CTA Grazing Lands Conservation Invasive Species Grants
• Emergency Conservation Program – Technical assistance only
• Emergency Watershed Protection Program
• Resource Conservation and Development Program
• Watershed Protection and Flood Prevention Program
• Watershed Rehabilitation Program
• Watershed Surveys and Planning Program
• Healthy Forests Reserve Program

She then went on to provide descriptions of two of the NRCS “Working Lands” programs:

I. The Conservation Security Program (CSP):
• CSP aims to "Reward the best and motivate the rest”.
• The CSP encourages conservation stewardship for soil, water, air, plants, animals, and
energy by:
o Rewarding producers that meet the highest conservation standards
o Providing incentives for others to meet same conservation standards; and thereby
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 41
o Providing long-term conservation benefits for society.

• Programs status for fiscal years 2004 - 2006
o 280 Watersheds/50 States
o 19,375 Contracts/15.8 Million Acres

CSP funding by resource concern:















Who can participate in CSP?
• Those in a Priority Watershed;
• Those with eligible land;
• Those meeting applicant eligibility;
• Those meeting treatment requirements for soil and water quality; and
• Those willing to do additional resource enhancement.

A producer can enter into CSP in one of the three Tiers. As the producer rises in Tiers, the
payments increase.
• Tier I – A producer must at least meet soil and water quality criteria on part of the
agricultural operation to enter the first Tier.
• Tier II – A producer meets soil and water quality criteria on all of the agricultural
operation AND agrees to address one other resource concern (i.e., wildlife habitat).
• Tier III – A producer meets criteria to protect all natural resources on all of the agricultural
operation AND agrees to do additional activities.

The CSP offers 4 different payment components, with contracts for specified terms:
• An annual stewardship component for the benchmark (current level of) conservation
treatment;
• An annual existing practice component for maintaining existing conservation practices;
• One-time new practice component for additional practices; and
• An enhancement component for exceptional conservation effort.

Conservation Security Program Total Funding
from 2004-2006
3%
Energy
37%
Soil
Conservation
2%
Air Quality
8%
Wildlife
Management
47%
Water Quality
3%
Water
Management
Total: $408,104,821
Pie chart percentages represent the primary resource concern addressed through the implementation of each conservation program. NRCS
recognizes there are multiple benefits gained through the implementation of conservation programs.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 42
CSP Four Payment Components
Stewardship Payment
Existing Practice Payment
5 -Year Contracts
5 -10 Years
5 -10 Years
Tier I Tier II Tier III
New Practice Payment
Enhancement Payment



She noted sample practices that a producer could do to receive an enhancement payment
through CSP.

1. Practices for Achieving Soil and Water Quality (Beyond Water and Soil Criteria):
• Conservation tillage
• Erosion control (e.g., terraces)
• Cover crops
• Nutrient management
• Grazing management
• Pesticide application and management
• Use of buffers

2. Energy Enhancements – an exciting new area in conservation incentive payments:
• Management, conservation, and generation options
(e.g., energy audits, recycling lubricants, using ethanol or biodiesel);
• Likely to evolve with experience.

II. The second program discussed was the Environmental Quality Incentives Program (EQIP):
• Purpose: Offers financial and technical assistance to help participants install or implement
structural and management practices on eligible agricultural land to confront threats to
soil, water, air, and related natural resources on their land;
• Eligibility: persons who are engaged in livestock or agricultural production on eligible
land;
• Voluntary program: EQIP does not impose any obligation or burden upon agricultural
producers that choose not to participate;
• Promotes: agricultural production and environmental quality as compatible national goals




Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 43
The incentives or payments that are offered under the EQIP program include:
• Practice Payments:
o Cost-sharing up to 75% of the costs for certain conservation practices important to
improving and maintaining the health of natural resources in the area, such as:
grassed waterways; manure management facilities; filter strips
• Incentive payments to encourage land management practices:
o nutrient management
o irrigation water management
o wildlife habitat management
• Practices are subject to NRCS technical standards and adapted for local conditions.

Funding for fiscal years 2002-20006 for EQIP based on resource concerns:






















Laura provided examples of EQIP-funded projects:

California is using EQIP to assist farmers to reduce agriculture generated particulate matter
(PM) and ozone contributions:
• Cost-share payments to farmers who reduce on-farm dust contributions from unpaved
roads or for use of alternatives to burning agricultural wastes;
• Results indicate that for each mile of unpaved road treated, up to 1,600 pounds of PM-10
can be prevented from entering the atmosphere;
• Provides cost-share payments for the replacement of old diesel engines so they meet
California Air Resources Board’s TIER II emission requirement level for NOx;

She then went on to provide descriptions of two of the NRCS “Land Retirement” programs:
I. The Wetlands Reserve Program (WRP):
Environmental Quality Incentives Program Total
Funding from 2002-2006
29%
Soil Management
Less than 1%
Wetland
Conservation
3%
Air Quality
6%
Wildlife Management
38%
Water Quality
24%
Water Management
Total: $3,548,297,867
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 44
• This is a voluntary program to restore and protect wetlands on the agricultural landscape
through the establishment of permanent or 30-year conservation easements or restoration
cost-share agreements where there is not an easement involved.
• The landowner continues to control access to his/her land.
• The program creates habitat for migratory birds and wetland-dependent wildlife and
provides producers a viable option for marginal lands through endeavors such as hunting.
• Since 1992, WRP has restored and protected 1.6 million acres.

II. The Conservation Reserve Program (CRP)
• The Farm Service Agency (FSA) administers CRP, however the NRCS provides technical
assistance to landowners and operators
• Landowners receive annual rental payments and cost-share assistance to establish long
term, resource conservation on eligible farmland.
• Payments are based on agriculture rental value of the land, and cost-share assistance up to
50 % for costs to establish approved conservation practices;
• Participants enroll in CRP contracts for 10 to 15 years;
• The benefits of CRP include:
o Protects millions of acres of American topsoil from erosion;
o Reduces run-off thereby protecting surface and groundwater;
o Acreage enrolled is planted to resource-conserving vegetative covers – making a
major contribution to increased wildlife populations in many parts of the country;

Laura concluded her presentation with a summary of the strengths and weaknesses of the NRCS
approach to providing VEG&S:

The Strengths:
• Solutions are tailored to local conditions and farmer and rancher objectives, meaning
there is:
o Local support;
o The ability to leverage partner resources;
o One-on-one technical assistance; and
o Conservation plans are resource based;
• NRCS is able to capitalize on the inherent conservation ethic of landowners.
• NRCS allows for the development and transfer of proven technology, such as:
o Reduced till
o Waste management systems
• Finally, the NRCS VEG&S approach allows for national consistency and efficiencies.

The Weaknesses:
• Enhancements could be made to target assistance to high problem areas;
• Administrative functions can take time away from work in the field;
• Programs could be integrated better;
• It is difficult to monetize goods and services; and
• The incentives for innovation could be improved.

And as a final comment, Laura offered some recommendations for Canada based on the
experience of the NRCS:
• There is a need for a Federal presence and consistency;
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 45
• Recommend the development of a measure for local control;
• Recommend the development of a process to ensure that conservation plans are developed
in partnership with the producer;
• Undertake resource assessments to help ensure the greatest benefit for the tax payer’s
investments in conservation;
• Develop technical expertise;
• Measure what you have done – develop science-based tools to measure desired outcomes;
• Understand farmers and ranchers;
• There are opportunities to share technology across national boarders; and
• There is a need for improved interaction with businesses and the private sector to develop
markets for environmental goods and services.

Questions and Answers:
1. Q. Who pays for all of this?
A. NRCS programs are funded through federal funds authorized mainly through the Food
Security Act of 1985, also known as the Farm Bill.
2. Q. Agricultural easements – how are they used, how do they provide benefits?
A. NRCS works with willing private landowners to buy the development and production
rights of a piece or whole property. The Wetlands Reserve Program is the best example of
an easement program that also provides private landowners benefits beyond the easement.
WRP allows participants to have hunting activities on WRP land as long as structures are
not built upon the land. Therefore this program not only protects wetlands, but it also
offers a side income from hunting.
3. Q. You indicated that there is a growing public interest in conservation.
A. Yes, I believe there is a growing public support for environmental amenities and paying
for EG&S. The Secretary of Agriculture when on a series of 100-plus town hall meetings
in preparation for the new Farm Bill, found general support for conservation programs.
The general feeling is if we are going to pay our farmers, why not receive conservation
benefits from those payments. As a result, the Secretary has proposed a $7 billion increase
in conservation programs for the 2007 Farm Bill.
4. Q. Are the programs voluntary?
A. Yes, NRCS programs are voluntary. But if you sign up for the program, you must
follow the requirements, and use NRCS approved technology.
5. Q. There was a question related to hunting, and incentives to retain hunting on the land
that does not seem to exist here in Ontario.
A. When a landowner signs up to the program, they lose certain rights to develop the
land, however, they continue to own the hunting rights, and often the carbon rights as
well.


3.11 Payment for Ecological Goods and Services Schemes: Experiences from Costa Rica
(Michael Kennedy)

Michael Kennedy has worked for the past year as an Advisor on Technology and Economics to
the Latin American and Caribbean Model Forest Network in Costa Rica.



Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 46
Abstract:

Costa Rica adopted a “payment for environmental services” (PES) scheme in 1996 to address
increasing deforestation and to promote economic development. The program now has been in
place for 10 years and has been studied extensively by researchers and forest practitioners due to its
universal utility as a market based policy tool. Since the PES scheme was adopted, forest cover in
the country has increased, however the PES scheme is not solely responsible. What is clear is that
the PES scheme in Costa Rica is a working program that is addressing some very serious issues and
this program provides an opportunity to learn about an alternative forest policy approach that
holds potential for use in Canada.

Mike began his presentation with a few clarifications and assumptions:
• By valuing EG&S we can better evaluate trade-offs;
• Examples of valuing EG&S already exist;
• Payment for EG&S schemes are contributing to rural development;
• A PES scheme can clearly address social, economic and environmental issues related to
forest-use;
• Ecological Goods and Services = Environmental Goods and Services;
• EG&S= Ecological Goods and Services;
• PES=Payment for Environmental Services;
• PES scheme: Framework in which payment for environmental goods and services are
traded;
• The existence of EG&S are linked to increases in human welfare;
• If we know the value of EG&S we can better manage a region’s natural capital;
• EG&S become assets whose increasing value is sought rather than inputs for production;
• By valuing EG&S we can slow or reverse environmental degradation;
• A new sustainable economy starts with valuing its assets (EG&S).

Then, to put the PES program in perspective, he provided an overview of the political situation
and history that led Costa Rica to launch this approach:
• Lack of public trust in the government;
• Government has increasingly relied on international development aid;
• International parties (funders, private enterprises and governments) have had a very
influential role in the country;
• Most industrialization has been state-run and bureaucratic;
• Presidential Decrees have been used to expedite the democratic process.
• More recently there has been a shift to a more open market form of capitalism;
• Deforestation
- from 1972-1990 Costa Rica lost 51% of its forest cover to land conversion;
• 1979
- Incentives were provided to land owners for reforestation and sustainable forest-use
(National Forest Development Plan);
• Structural Adjustments
- (late 1980’s) World Bank called for the abolishment of
traditional farming subsidies
and encourage a decrease in deforestation;
• Establishment of FONAFIFO
- This non-profit organization was formed to promote
reforestation and then to allocate the national tax fund to purchase EG&S;
• Forestry Law (1996)
- This law laid the groundwork for a new National Forest Strategy
aimed at conservation and the marketing of EG&S.

Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 47
And further, Mike provided an overview of the Program of Payment for Environmental Services
(PES) itself:
• The Costa Rican program of PES was the first of its kind in terms of scope and size;
• The PES program is Costa Rica’s forest policy tool for environmental management and
economic development;
• In Costa Rica there are five working PES programs;
• The Forestry Fund program (FONAFIFO) is the most extensive in the country, and has
been in existence for 10 years;
• The goal of the Costa Rican PES program is to consolidate the Meso-American Biological
Corridor:
o Also the program seeks to provide benefit to landowners whose properties had forests or
were suitable for forestry activities, in order to promote the conservation and recovery of the
country's forest cover (FONAFIFO 2007).
 To ensure the management, conservation and sustainable development of natural
resources.
 To promote environmental sustainability.
• In 1997 the World Bank funded an Eco-Markets project to:
o Provide payments for contracted projects (+200,000 ha)
o Increase the volume of existing contracts in 100,000 ha
o Increase by 30% participation of women in ESP
o Increase by 100% participation of indigenous peoples
o Strengthen FONAFIFO and SINAC institutional capacities

For the program as a whole, payments per contract are stratified over the 5 years in all cases:

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Reforest. 50% 20% 15% 10% 5%
Plantations 20% 20% 20% 20% 20%
SFM 50% 20% 10% 10% 10%
Protection 20% 20% 20% 20% 20%
Agroforestry 65% 20% 15% - -

• The transaction costs of the program are 7% of total funding (approx. $1 million);
• The main source of funding is from a gas tax
• The national program is managed by a non-profit group with 52 people in 9 offices across
the country.
• Monitoring is done through annual sampling (10%/year).
• External audits are performed every 5 years.
• Close monitoring of satellite imagery and GIS coverage is done on a regular basis (by the
University of Alberta).

Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 48
Measuring success of environmental management is never easy:
• The Costa Rican PES program has increased:
o Forest cover
o Area in protection
o Land areas with management plans
o Participation of landowners.
• Costa Rica is an emerging economy with 26% of the population in poverty thus attention
is given to the program’s impacts on:
o Deforestation
o Economic development
o Poverty reduction.

Potential future benefits of the programs could include:
• Increased revenue from tradeable carbon credits
• Bio-prospecting potential
• Reduced costs of hydroelectric production
• Establishment of low-cost wood supply

Many of the original PES programs were started in developing countries to contribute to economic
development and reduce tropical forest loss, so an important question is: Has this program
decreased poverty?
• Many researchers say NO! (Espinoza et al. 1999, Herrador and Dimas 2000, Landell-Mills
2002, Miranda 2003, Miranda 2004, Landel-Mills 2002, Pagiola 2003, Pagiola 2005);
• The Costa Rican PES scheme for the most part provides a secondary and tertiary income to
land owners

What is next for Costa Rica?
• Prioritization of country based on key ecological features;
• Re-evaluation of sustainable forest management program;
• Purchase of carbon off-sets through regional airlines;
• Re-examination of how program can address poverty.

Mike continued with some commentary on PES schemes in general:

PES schemes can be successful when:
• There is a clear link between science and the service being provided.
• The EG&S to be provided are clearly defined.
• Contracts and payments are flexible, ongoing and open-ended.
• Transaction costs do not exceed benefits
• Rely on multiple sources of revenue that are sufficient and sustainable.
• Compliance, land use changes and provision of services is closely monitored.
• The program is flexible to promote efficiency and effectiveness.

PES schemes have limitations when:
• They are executed without proper monitoring and control mechanisms.
• The cost or price of good or service is set arbitrarily and does not correspond with demand.
• Their design is not based on previous socio-economic or biophysical studies.
• They depend on external funding sources.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 49
• The PES scheme is not accepted by the local population.

And the lessons learned?
• A PES scheme can renew the relationship between rural and urban populations.
• Careful attention needs to be given to prioritizing the areas of ecological significance.
• A balance needs to be sought in benefits (balancing small and large landowners).
• The public must be involved, as buyers and as knowledge providers.
• A PES scheme is not a short-term solution to environmental problems. It takes years.
• Differences between Canada and Costa Rica
• Costa Rica is traditionally dependent on farming.
• Exploitation of the forest is very recent in Costa Rican history.
• More demands on the land base (higher population density).
• Big shift to conservation based forest policy.
• Tourism is the principle industry.
• It’s hot in February!

And Mike left the group with a long list of fundamentals that need to be taken into
consideration:
• Deciding whether a payment for EG&S scheme is appropriate starts with one question:
o “Are there EG&S that are being lost because we have no measurable value for
them?”
• If yes, then creating a market for EG&S requires three key components:
o Market framework
o Legal framework (institutional and financing)
o Management (monitoring and evaluation)
• Establishing a market for EG&S requires :
o Identification of the services to be provided.
o Establishing a willingness to pay and willingness to accept of buyers and sellers.
o Establishing payment mechanism(s) and distribution of transaction costs.
• At this point marketable EG&S include: water quality, biodiversity, carbon sequestration
and storage, landscape beauty, and waste assimilation.
• The legal framework required to establish a payment scheme includes:
o Clear legislation
o Institutional framework (key players)
o Monitoring program (indicators)
o Clear property rights
• Legislation can
lay the foundation of the PES scheme.
• Institutional framework defines the roles and responsibilities of all key players.
• Financing - setting up the program and securing its sustainability is paramount.
• The management of a payment schemes must include the following stages:
o Goal and objective setting
o Planning and prioritization
o Monitoring and evaluation
• Many of the tools used to manage payment schemes include:
o GIS
o GPS
o spatial modeling
o multi-criteria analysis
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 50

Traditionally there are four methods to value EG&S.
o Contingent valuation method
o Travel cost method
o Hedonic price method
o Benefits transfer
• Determining the value of EG&S is critical.
• Values of EG&S should be high enough to provide an incentive and low enough to be
financially viable.
• A lot of time and energy in research has been spent on determining the appropriate
method to value EG&S.
• The technique used to value a particular EG&S will depend on the good or service in
question and the political landscape.
• The types of EG&S considered will vary by the priorities of the management authority.
• The services considered in modern markets include:
o Mitigation of greenhouse gases
o Water quality: flow and regulation
o Biodiversity
o Erosion control
o Aquatic and terrestrial animal habitat
o Aesthetics
• Valuing EG&S is a way to market services that landowners are already providing.
• Valuing EG&S can renew the “social contract” between rural and urban people.
• An EG&S scheme is not a short-term solution.
• EG&S can and must be valued and marketed at different scales (local, regional, and
global).
• There are already some great ideas in Canada.

Questions: None


3.12 Developing Local Markets for Sustaining and Enhancing EG&S from Private Land
(Ed Hanna)

Ed Hanna returned for a second presentation, in which he expanded upon his earlier
presentation by speaking to the development of local markets for sustaining and enhancing
EG&S from private land.

Abstract:

The presentation described a proposed program to create local markets for EG&S produced by
private farms. The underlying economic rationale for this market-based system was presented. The
advantages of using competitive markets to purchase local supplies of EG&S were explained.
Implementation details of the market system including the central roles played by the highly
successful Environmental Farm Plan program and local conservation authorities were discussed. As
well, the practical challenges of implementing the program at a large scale across the entire province
or all of the country are considered. Implementation barriers that need to be resolved were
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 51
discussed including information requirements, transaction costs, funding stability, landowner
reaction and the potential for perverse outcomes.

To begin, Ed addressed basic economics:

First, there must be producers and consumers:

EG&S Producers:
• Landowners are EG&S producers.
• EG&S are another farm product.
• Private producers (i.e., landowners) ultimately make the decision as to how much
EG&S is produced from their land; and
• Each producer decides what they are willing to accept to produce a certain amount of
EG&S (i.e., their minimum selling price)
• The concept of EG&S markets is based on the principle that the selling price of
producers (i.e., their willingness to accept) will partly depend on their costs of
production. Those landowners who are able to produce the most valuable units of a
given EG&S at the lowest cost are most likely to sell the most EG&S resulting in the
public securing future supplies of EG&S at the least cost.

EG&S Consumers:
• Many EG&S are consumed (enjoyed) by everyone (the public).
• Private citizens cannot purchase certain EG&S for their exclusive use;
• Therefore public purchasing agents are required; and
• Each agent decides their willingness to pay for a certain amount of EG&S (i.e., their
maximum purchase price).
• The amount of a certain EG&S purchased in any period will depend on local
demand/need (i.e., local ecological conditions), private production costs and the
available purchasing budget.
• In the IRIS
1
market-based incentive system, the local conservation authority has been
identified as the public purchasing agent for EG&S.

So how would a market-based EG&S system work?
• Periodically (e.g., annually), the conservation authority would issue requests for EG&S
bids. Ideally the requests for bids would be as specific as possible about the desired
types of EG&S and the preferred locations where EG&S are required.
• Producers (i.e., private landowners) would submit competitive bids to produce EG&S.
Each producer would individually decide:
o whether they wished to submit a bid,
o the amount and location of certain EG&S to be supplied and
o the bid price for each.
• Purchasing agents (i.e., the conservation authority) would then compare bids with
available funds and choose which and how much of each EG&S to purchase. The


1
IRIS is an acronym for the Institute for Research and Innovation in Sustainability at York University. This
presentation is based on a research proposal that has been developed by IRIS to test the requirements for
establishing local EGS markets.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 52
objective would be to secure the best balance and greatest amount of local EG&S given
the budget available.

In order for the system to work, three challenges need to be overcome:

1. There must be well-defined products, to overcome the information barrier.
• A major challenge for producers and purchasers is EG&S information;
• Few landowners have detailed knowledge of EG&S, let alone how best to produce and
measure them;
• Purchasers have a hard time measuring produced EG&S, and their value.


The IRIS market-based incentive system proposes to overcome this information barrier by using
the existing Environmental Farm Plan (EFP) program:
• EFPs provide a well established tool for bridging this information gap;
• The EFP program was initiated in Ontario in the early 1990s by the Ontario Soil and Crop
Improvement Association and has now spread throughout Canada. In Ontario, the
program is administered by the OSCIA. The EFP program has been embraced by the farm
community and is now well established;
• An EFP is a voluntary and confidential process used by individual farmers to identify
environmental risks and benefits from their farm operations;
• Instead of producing and purchasing specific EG&S, the products are EFP land
management practices;
• The EFP program provides an ideal delivery platform for a market-based incentive system
provided that the EFP framework can be used to bridge the EG&S information barrier;
• EFP themes cover all farm operations that may influence local supplies of EG&S:
o EFPs are based on 22 environmental themes (worksheets) that correspond well
with certain EG&S.
o The EFP themes (areas of focus) include:
 Fertilizer and pesticide handling;
 On-site waste management;
 Water use;
 Soil and crop management;
 Runoff and drainage management;
 Wetlands and pond management;
 Woodlot and wildlife management

• The connections between these individual practices and local supplies of EG&S need to be
established.
o The missing link is tying these EFP themes to local supplies of EG&S;
o This missing link is common to many EG&S programs;
o Making these connections is a primary focus of ongoing research (e.g., Watershed
Evaluation of Best Management Practices (WEBs));
o Ultimately, local purchasing agents will need to make this link;
“The farmer knows exactly what he needs in order to produce corn,
soybeans, etc., but to produce Cerulean Warbler habitat – no way!”
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 53
o Conservation authorities have the technical expertise relating to EG&S and are
well suited to serve as the local EG&S purchasing agent.
o Local farm organizations would continue to deliver the EFP program itself but do
not have comparable focus and expertise in EG&S and are therefore not proposed
to be the local purchasing agent despite this being the case with other EG&S
programs.

2. There must be a degree of long term market stability
• Nothing is certain in farming but, on the other hand, there is some certainty that people
will continue to eat and that markets will continue to exist for many conventional farm
products. Without this certainty, capital investments in farming would be greatly reduced.
• The same is true for EG&S markets. The farm community must have confidence that that
the public will continue to purchase EG&S from private land in the future or long term
investments in land management practices to enhance and sustain EG&S will be minimal.
• Some stability can be provided through the terms of purchase agreements;
• Ultimately, market stability will depend on public demand for EG&S and the
establishment of a stable mechanism for financing the ongoing purchase of EG&S from
private land.

3. There must be efficient transactions
• Transaction efficiency is a primary research focus, and the IRIS program is particularly
interested in determining the reaction of the farm community to a bidding process;
• It’s necessary to confirm that the public receives what it is paying for;
• Auditing of Environmental Farm Plans is a regular occurrence. The IRIS market-based
incentive system auditing will piggyback on the current EFP auditing program as much as
possible;
• Confirming certain farm management actions is auditable. However, attempting to
measure directly the actual amount and quality of a given EG&S produced by individual
farm is highly impractical. Instead, farm practices will be audited and the supply of EG&S
deduced on this basis.

Ed went on to discuss three potential pitfalls with a market-based incentives system:

1. There is potential for a reduction
in stewardship:
• Some programs provide greater rewards for bad actors. Incentive programs should not
reward unfairly those who have been the least responsible environmental stewards in the
past.
• Strategically reducing farm stewardship could improve EG&S competitiveness. The
cheapest improvements are the easiest to implement and are done first. Incentive
programs must not reward backsliding.
• Two counteracting measures are proposed to be put in place:
o Minimum EFP requirements as have been used with other programs would be
established to set a minimum baseline to be eligible to participate;
o Terms of the purchase agreement would include specific conditions to restrict
“backsliding.”

2. Loopholes may exist
• Every program has the potential for loopholes (e.g., laws, taxes);
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 54
• Remedying loopholes is an inevitable and never-ending task;
• Requires vigilance in identifying and efficiently remedying loopholes;
• A major advantage with a market-based system is that market prices will automatically
adjust as loopholes are detected and remedied (i.e., the inherent intelligence of the
market).

3. Market response or enrolment in the program
• Market response is commonly used as a measure of performance with other EG&S
programs (e.g., the level of enrollment in a program). However, choosing the right market
response criterion to measure program performance is critical.
• For example, enrolment is typically a poor indicator of program performance. Obviously if
the farm community refuses to participate totally, the program will not be able to achieve
its goals.
• On the other hand, high enrolment often is indicative of the “selling price” being too high.
This means that the public is not getting the best return on its investment.
• The underlying reasons for enrolment rates are the most informative measures of program
performance:
o Prices;
o Transaction costs;
o Market stability;
o Cultural/social acceptability.
• The local purchasing agents will need to adjust their purchasing behaviour as the market
dictates. A key measure of program performance is the cost of securing supplies of EG&S.

Ed repeated a point he made in his earlier presentation, that it is important to select the best
economic instrument, and these criteria need to be applied:
• Efficiency
• Distributional effects
• International trade
• Continual improvement
• Flexibility
• Transaction costs

The advantages of using markets include:
• Desired EG&S are supplied at the least cost (efficient EG&S supplies);
• Markets reward local knowledge and ingenuity (most deserving operators are rewarded
accordingly);
• Under international trade rules, purchasing EG&S is not considered an illegal subsidy, just
another farm product;
• The system rewards continual improvement (i.e., continual innovation by individual
farmers and by the farm community collectively in producing local supplies of EG&S will
lead to lower production costs and greater margins);
• Purchasing agents can set prices according to local circumstances and the need for certain
EG&S. Likewise, prices can be adjusted over time as circumstances change. This provides
a high level of program flexibility.



Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 55
He then went on to discuss one last advantage of a market-based incentive system:
• With a market-based incentive system, the price is an emergent property of the system.
Prices are not set a priori;
• Instead, the supply price is established by the producers. According to Adam Smith,
through the interaction of producers and consumers, the best result will emerge and is
reflected by the prevailing market price. This approach is directly opposite to the idea of
central governments attempting to control the economy to promote the public interest or
attempting to impute what the market value of EG&S would be if an EG&S market
existed.
• EG&S prices (i.e., the valuation of EG&S) emerge from the selling and buying of EG&S.
This price information is extremely valuable and greatly improves our understanding of
EG&S supply costs.

In conclusion, Ed reminded us of the key EG&S questions:



Questions: None


3.13 Healthy Ecosystems = Healthy Communities: Natural Areas Restoration to Benefit
Water Quality and Quantity in the Agricultural Landscape (Dave Richards)

Dave Richards, a Water Resources Coordinator with the Aylmer District office of the Ontario
Ministry of Natural Resources (OMNR), provided some insight into two local initiatives in
southwestern Ontario.

Abstract:

The practical implementation of natural areas conservation and protection is taking place through
the Wetland Drain Restoration Project and the Subwatershed Riparian Buffer Restoration Project.
These initiatives are very successful collaborative partnerships with local landowners, municipal
24
Concluding Comments
Concluding Comments

Key EGS questions:
1.
How much?
2.
What quality?
3.
What location?
4.
Least cost?
5.
Fair distribution?
6.
How certain?

Key EGS questions:
1.
How much?
2.
What quality?
3.
What location?
4.
Least cost?
5.
Fair distribution?
6.
How certain?
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 56
agencies and resource organizations. Two aspects profiled through these projects are the
incorporation of incentives to landowners for services derived from natural areas function and the
use of the Drainage Act as a tool to promote healthier waters.


Dave began by stating that ecosystem components (wetlands, riparian areas, woodlands) are
critical to hydrological features:
• They are a part of surface and groundwater pathways;
• Impairment of ecosystem components influence and impact water quality and quantity;
• They provide the first line of defence to protect water before we use it in our homes – they
are an integral part of source water protection; and
• They provide critical habitat for fish and wildlife, including species at risk

Dave used a specific example of an irrigation pond that is not functioning properly:
• A wetland being drained by two municipal drains is no longer functioning to recharge
groundwater and adjacent irrigation ponds are drying up;
• Through dialogue and involvement of the landowners and drainage superintendent
remedial efforts were undertaken to “plug the leak,”
• The wetland was able to function properly, and the irrigation pond provided a more
sustainable water supply.

He suggested the following strategies for protection and restoration of natural areas:
• Identify
potential restoration areas in the landscape (GIS mapping model);
• Protect and restore
wetlands and riparian areas in the landscape, (Wetland Drain
Restoration Project, South Creek Buffer Project);
• Develop
and test new incentives for landowners to practise resource stewardship
(Ecological Goods and Services, ALUS);
• Involve
partners and landowners in all projects (CAs); and
• Promote
adoption of projects through demonstration sites.

Dave asked the question: “How much habitat is enough?” and noted that Environment Canada
has these targets based on science, in its publication, How Much Habitat is Enough, 2
nd
Ed.,
2003:
• Wetlands: > 10% of each major watershed, < 6% of each sub watershed or restore to
historic;
• Forest Cover: > 30% of watershed, 10% interior forest with 100 m buffer, 6% interior
forest with 200 m buffer;
• Riparian Habitat: at least 75% of watercourse naturally vegetated (30 m width).

He then went on to show how these targets have been applied to a specific project in
southwestern Ontario: Enhancing Riparian Buffers on South Creek:




“TRUST: It was very important for us to get the trust of the landowners.”
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 57
MNR Aylmer District
MNR Aylmer District
1111
South Creek Riparian Buffer South Creek Riparian Buffer
Watershed TargetsWatershed Targets
::
Targets should be specific, measurable and quantifiable. They will serve
as a benchmark to track progress towards ecosystem objectives.
Have Now?
What we need!
Wetlands
4.3% 10.0%
(18.3% historic)
Riparian Buffer
36.4% 75.0%


1. Through the use of GIS modelling, project members were able to identify priority sites for
restoration, and specific landowners they wanted to talk to.
• They identified 30 landowners to talk to;
• 16 of the 30 were doing a good job already (2 more have signed on);
• It was difficult for government to contact landowners;
• So they used landowner partners (Stewardship Council and Drainage Superintendent) to
contact new landowners on their behalf;


2. They then applied incentives for ecological goods and services to change farming practices on
the priority sites:
• Incentives equalled the average value of the land rental rate to produce crops
(i.e., $150/Acre/Year x 2.31 Acre = $346.50/Year for ecological services provided by the
riparian buffer);
• 26 of 30 landowners participated;
• Environmental Farm Plan workshops were held in communities within the watershed and
the landowners and public were made more aware of the value of riparian buffers;
• Drainage Act programs covered 1/3 of the costs and MNR/partners the rest.



3. The outcome was:
• 71.8% riparian buffer is now
in place along South Creek;
• Target is 75%;
• With 2 new landowners
signing on, they’ll meet the
target of 75%, coming from
an original buffer of 36.4%;
• Total cost: $3909.75.



• “Landowner/landowner contact has 8/10 hit rate…We were getting
2/10 on our own”.
MNR Aylmer District
MNR Aylmer District
1212
South Creek Subwatershed Riparian South Creek Subwatershed Riparian
Buffer Restoration Background Info.
Buffer Restoration Background Info.
South Creek Riparian Buffer South Creek Riparian Buffer
Project:Project:
-- 66 PTTW;66 PTTW;
-- 122 Rural Wells;122 Rural Wells;
-- 1 Municipal Water Supply;1 Municipal Water Supply;
-- Willing landowners;Willing landowners;
-
-
Solid Stewardship Council;
Solid Stewardship Council;
-
-
Solid CA working relationship;
Solid CA working relationship;
-
-
Strong working relationship
Strong working relationship
with local municipality.with local municipality.
MNR Aylmer DistrictMNR Aylmer District
2121
How did we do it? Incentive for
How did we do it? Incentive for
Ecological Goods & ServicesEcological Goods & Services..
$ 204.75 $ 68.25 0.455High 4m Riparian Buffer3
$ 1,114.20 $ 371.40 2.476High5m Riparian Buffer6
$ 2,030.40 $ 676.80 4.512Very High9m Riparian Buffer22
$ 130.05 $ 43.35 0.289High4m Riparian Buffer11
Three Yr. CostAnnual CostArea (Acre)PriorityPrescriptionProperty #
Incentive programs are important tools to support biodiversity cIncentive programs are important tools to support biodiversity conservation on onservation on
private property, Ontarioprivate property, Ontario’’s Biodiversity Strategy, MNR 2006.s Biodiversity Strategy, MNR 2006.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007) 58
Dave provided reference to a very useful document entitled ‘Source Water Protection & the Clean
Water Act: How do we Build Capacity?’ developed by The Ontario Rural Council (TORC).

And he noted these particular points that emerged from the TORC forum in July 2006:
• “Rural landowners believe the Clean Water Act would be a more effective legislation if
funding for land stewardship activities was made available” (TORC);
• Preferred outcomes: “Create an inventive-based program for landowners providing
environmental service”.

Questions and Answers:

1. Q. What did you plant in the buffers?
A. Only one of the 26 landowners wanted trees planted. We planted tall grass, winter
wheat, alfalfa.
2. Q. In a way, this is rewarding the bad performers. What can we do to reward good
performers?
A. That’s a good point. One thing we did was, when we dealt with landowners who had
3 m buffers, and they went to 5 m, we would pay for the whole width.
3. Q. Did the water quality at the Delhi water treatment plant improve?
A. It’s being monitored by the CA, MOE, and the local municipality. The Drainage
Superintendent looks at it this way: If you look at a stream without buffers, the water is
dirty; if you look at one with buffers, the water is clean. The landowners have noticed this
and are quite happy.


3.14 Alternative Land Use Services (ALUS): Valuing Ecological Goods and Services on
Farmland (Dr. Bob Bailey)

Dr. Bob Bailey, Vice President of Policy for Canada at Delta Waterfowl, is working with a policy
team led by agricultural producer organizations, in cooperation with conservation groups and
governments, to develop and implement the Alternative Land Use Services (ALUS) concept. He
provided an overview of ALUS, and explained why Canada needs an ecological goods and
services program like ALUS.

Abstract:

Alternative Land Use Services (ALUS) is a farmer developed, farmer driven conservation plan for
agriculture. It recognizes and provides incentives to participating farmers who practice good land
stewardship and helps protect the environment for all of us. Experience with award-winning
programs like Ontario Stewardship has shown that the most effective on-farm environmental
solutions are farmer driven, which means that they are planned and delivered by farmers and farm
organizations, in cooperation with governments, conservation groups and the public. ALUS is
different from traditional conservation plans because it empowers farmers to design and deliver
environmental solutions in their communities. Dave Reid, Stewardship Coordinator with Norfolk
Land Stewardship Council, will present on the proposed ALUS pilot in Norfolk County and what
actions have been taken to date to implement the ALUS concept there.

Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
59

Dr. Bailey began by reminding us of our key values:
• Our life support system relies on:
o air;
o water;
o food and fibre.

• Our social system values :
o spouse;
o family;
o friends; and
o community.


And then went on to speak to: How Wealth is Created on Farmlands:
1. There is a simple formula:
• Natural capital + social capital / physical inputs = economic capital
2. Goods from farmlands include:
• Air;
• Water;
• Food/ fibre; of all the goods, these are the only marketable goods
• Wildlife;
• Fish;
• Species at risk; and
• Biodiversity.

Dr. Bailey pointed out that we are using and exporting our natural capital and we’re not having
any effect on farm income.

Natural Capital and Agriculture –
is there a disconnect??
0
5
10
15
20
25
30
35
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
(Billions $)
Net Farm Income
Value of Exports



“Agriculture has a unique opportunity to be recognized for taking
the lead on environmental issues, and we believe that ALUS is the
best method to capture that opportunity.”
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
60
Foundation of the ALUS Partnership
Resource Ownership on Private Lands
XAir
XXTrees
XLivestock
XFish
XWildlife
XCrop
XWater
XSoil
Public
Public
Private
PrivateResource
And what is the result, or the “cost of the status quo?”
• Erosion of natural, social and economic capital in rural Canada;
• Marketplace continues to erode natural capital on farmlands;
• We have a farm income crisis – more exports of natural capital;
• A distorted global playing field for Canadian agricultural products;
• $55 billion in direct support/ trade injury compensation; $6.1 billion more demanded;
• Proliferation of ineffective regulatory approaches to environmental problems – treating
symptoms not causes;
• Environmental boutique programs and projects.

Canada doesn’t take advantage of the “greenbox” program under the WTO. Every other
country does, and we heard a good example today of the U.S. Farm Bill.

Dr. Bailey described ALUS as:
• an incentive- based concept developed by grassroots farm organizations across Canada for
delivering
ecological goods and services to Canadians from farmland
And, suggested that ALUS is needed for these reasons:
• Conserving life support systems is essential on working landscapes;
• The lack of a market for environmental goods is depleting natural capital; and
• The public is demanding effective
programs that deliver
environmental results
.

The goal of ALUS is to foster the production of ecological goods and services from privately-
owned agricultural land in Canada
• In addressing this goal, we will support rural incomes, economic diversification, and rural
communities in general;
• In this sense, ALUS is an appropriate political complement to the urban agenda that is
capturing public attention.


• Those areas that are “public” have
traditionally been regulated to
conserve the resources;
• We believe that regulation can
only go so far, and only to deal
with specific issues;
• For broad impact on the
landscape, a different approach is
needed.



Farmers are major landowners in Canada, and if they can no longer
afford to continue to protect the wetland on their acreage or to work
around the brush, all Canadians are losing an ecological benefit. If these
environmental benefits are what all Canadians want, then there must
also be a sharing of responsibility and a sharing of cost.
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
61
The key points about the new ALUS approach are:

First, the approach is based on the concept of paying farmers on an annual basis to provide
Canadians with services that produce benefits such as clean air, water and wildlife habitat.

And the key points include:
• It is based on ecosystem management principles;
• The emphasis on environmental assets/ landscapes;
• ALUS rewards people for doing the right thing – it provides incentives for new and some
existing environmental services;
• It is trade neutral, and within the rules of the WTO;
• It is community driven and farmer delivered;
• It is administered by existing agricultural organizations and agencies;
• It does not replace, instead it builds, on existing policies and programs;
• It integrates conservation programs at the community level; and
• It is based on accountable and transparent program delivery.

In implementing the ALUS concept for EG&S policy, what would it look like?
• There would be a baseline of reasonable environmental regulations, and farmers accept
this principle;
• It would include good agricultural land stewardship and business risk management
(BMPs); and
• There would be ALUS incentives to deliver on-farm ecological goods and services.

ALUS will work because:
• Farmers are in the best position to manage agricultural ecosystems;
• Communities are in the best position to manage local delivery of environmental goods and
services (EG&S);
o Decisions should be pushed down to the local level
• Communities empowered with knowledge and resources will make good environmental
decisions;
o People are better educated and more environmentally concerned.

And, returning to the “Valuing” of Ecological Goods and Services:

Life Support Values:
• We are conserving natural capital (life support processes) by easing market pressures on the
environment on working landscapes;
• Securing the supply and quantity of ecological goods and services; and
• Treating causes rather than the environmental symptoms.

Social Values:
• We are reconnecting Canadians with farmers, food and rural environments;
• Farmers and communities are acting directly to improve the environment and quality of
life; and
• Achieving mind- change.


Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
62
Questions and Answers:

1. Q. Ed Hanna asked, “Why do you think that the crop insurance companies are best
delivery agents for ALUS?”
A. A good deal relates to trust. Crop insurers also have all the GIS data and people know
them well.


3.15 Alternative Land Use Services: Norfolk County Pilot Proposal and Actions to Date
(Dave Reid)

Dave Reid, Stewardship Coordinator for the Norfolk Land Stewardship Council in southwestern
Ontario, followed Dr Bailey’s presentation with a presentation of an example of an ALUS
project – a pilot project in Norfolk County, Ontario.

Dave began with an outline of the history of developing the proposal for this pilot:
• In Jan 2002 Ian Wishart and Bob Bailey presented the idea to Ontario Stewardship;
• In March 2002, the Norfolk Federation of Agriculture endorsed pursuing a pilot;
• The organizing committee met 6 times in 2002;
• $40,000 from Agricultural Adaptation Council, Norfolk Land Stewardship Council and
Delta Waterfowl Foundation to develop the pilot;
• March 4 & 5, 2003 an evaluation workshop was held; and
• On Jan 31, 2004 the Norfolk ALUS pilot proposal was completed.

The pilot project is based on these operating principles:
• Voluntary – farmers chose to participate;
• Capping – farmers could enrol up to 20% of farmed land;
• Integrated – linked to Environmental Farm Plan program and existing programs;
• Flexible – 9-year agreement; 3-year intervals;
• Targeted – the focus was on fragile or marginal lands;
• Accountable – audit to ensure “bang for buck”.

ALUS includes four services:
• Wetland Services
o Protect and restore wetlands via wetland drain restoration;
o To improve surface and ground water supplies.
• Riparian Services
o Establish undeveloped grassy areas along lakes, streams, ditches and ponds;
o To reduce silt load and improve fish habitat.
• Upland Services
o Promote tree planting, grassed waterways, wild flower meadows and perennial
grassed field borders on uplands; to
 Sequester carbon;
 Produce clean air;
“It isn’t our common future that people are worried about now,
it’s our common backyards.”
Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
63
 Reduce soil erosion; and
 Improve wildlife (& pollinator) habitat.
• Wildlife Enhancement Services
o Protect and enhance fish and wildlife habitat with emphasis on species at risk
(e.g., implement recovery plan actions);
o To increase biodiversity.

And the incentives that were offered included:
• Annual payments
o based on land area; and
o varying from $10 - $150/ac/yr depending upon specific service and extent of
continued farm use of affected area;
• Share start-up costs 50-75% while capitalizing on existing incentive programs;
• Extension assistance on the farm; and
• Property tax rebate.

The ALUS pilot allows for an evaluation of the ALUS concept, and useful research into how it
might work:
• This is a pilot to test the ALUS concept;
• We don’t have all the answers;
• University of Guelph and Ontario Farm Environmental Coalition involvement;
• The pilot has two primary objectives:
o To assess community capacity to manage and deliver EG&S, and;
o To determine if we can successfully integrate existing programs via collaborative
community structure.

Funding for the pilot:
• $260,000 expended to date originating from 24 partners;
• Fundraising for a county-wide pilot started this past spring (2006);
• $1.9 million cash and in-kind is required for 2+ year pilot ending March 31, 2009;
• Sources include 3 levels of government, NGO’s, participating farmers, foundations and
U.S. sources.

The predicted benefits of ALUS include:
• Increased landscape connections and perennial green natural areas;
• Enhanced nutrient management on the farm, complimenting the Nutrient Management
Act;
• Increase in the pastoral settings in the rural countryside … attractive to residents and
visitors;
• Increased hunting, fishing, viewing opportunities …enhanced farm income from this
source;
• Enhanced biodiversity – incentive not to “Shoot/Shovel/Shut Up!”
• Help in ensuring source water protection and safe drinking water … this means improved
human health!




Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
64
What have been the actions to date on the ALUS Pilot?
• The Partnership Advisory Committee was formed:
o In fall 2004;
o Membership for the core group includes: 3 Norfolk farmers; one County
councillor; a vice president of Delta Waterfowl; the Chair of the Long Point
Foundation; the general manager of the Long Point Conservation Authority and
the stewardship coordinator from the Norfolk Land Stewardship Council;
o They have met 15 times to administer and manage the Norfolk pilot;
o Guests from Ontario Ministry of Agriculture Food and Rural Affairs (OMAFRA),
Agricorp, Ontario Ministry of Natural Resources (OMNR), Ontario Federation of
Agriculture (OFA), Long Point Region Conservation Authority (LPRCA) and
Agriculture and Agri-Food Canada have provided input.
• A Benchmark Survey was conducted in 2005:
o 731 returns from farmers, rural non-farmers, and town folk;
o Sought opinions on the current state of social, economic, and environmental
conditions in Norfolk County;
o Results published July 18, 2006, available at www.ontariostewardship.org/norfolk


17


Dave then showed a few examples of projects that had been completed or were underway:

1. The first example was the South Creek Buffer Restoration, the project referred to by Dr.
Bailey in the previous presentation:


Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)
65
18
• ALUS Demonstration Watershed being
developed to restore riparian buffers on 5x
municipal drains in South Creek watershed …
involves potentially 30x farmers …aim to
increase % channel buffered from 30% to
75%;
26 of 30 priority sites identified by MNR through GIS
now have minimum 4 m. vegetated buffers …all
landowners approached through farmer-to-farmer
liaison …all chose the ALUS type annual payment
of $150/ac/yr over 3-year agreement …this raised
extent of creek length buffered from 36.4% to 71.1%
affecting ~25 acres for a 3-year cost of $11,126


2. The other examples were “demonstration farm” sites participating in the ALUS Pilot:

19
• 4x ALUS Demonstration Farms established
to show the public, interested farmers and
potential investors the merits of the concept.


Questions and Answers:

1. Q. A comment: I know a farmer who has seeded prairie grass on 8 hectares of land. He’s
paid $50/acre to keep the cattle out until July – the cattle have it for 2 months of the year,
nature has it for the remaining 10.
2. Q. Did you zero in on sites you were interested in specifically?
A. No – we got expressions of interest from farmers. We received 20 and then chose 4
locations for the pilot.
3. Q. Was completion of an Environmental Farm Plan a requirement?
A. No – we wanted farmers to do a plan, but it was not a requirement of the project.


ALUS is a landscape approach to nurture environmental goods
and services (EG&S) from private farmed land …
“Farmers are the original stewards of the land. If the farmer can provide
these services for the good of society, it's another form of business,” says
Bauke Vogelzang, past president, Norfolk Federation of Agriculture.
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66
Appendix A
Speaker Biographies & Contact Information


Erling Armson
Biologist
Ducks Unlimited Canada
1-614 Norris Court
Kingston, ON
K7P 2R9
(613) 389-0418 ext. 123
e_armson@ducks.ca


Erling Armson has been a biologist with Ducks Unlimited Canada for 26 years. He has been involved with
delivering and managing conservation program in eastern Ontario for most of that time. He has also been
involved in the development of new landowner and landscape programs. More recently Erling has
participated in wetland oriented conservation policy development at the municipal, provincial and federal
levels. He is currently involved with implementing a wetland top-up program in conjunction with the
Canada-Ontario Farm Stewardship Program.


Dr. Robert Babe
Jean Monty/BCE Chair in Media Studies
University of Western Ontario
London, ON
N6A 5B7
(519) 661-2111, ext. 88501
rbabe@uwo.ca


Robert E. Babe is holder of the Jean Monty/BCE Chair in Media Studies at the University of Western
Ontario. He holds both an M.A. and PhD in economics. He is author of many articles and of seven books, all
addressing interrelations between economics and media/communications. Several of his articles, and most
recently his book, Culture of Ecology: Reconciling Economics and Environment, University of Toronto Press 2006,
focus on environmental matters.


Dr. Robert O. Bailey
Vice President
Policy for Canada
Delta Waterfowl Foundation
rbailey@deltawaterfowl.org

(613) 283- 6866

As a professional “agent of change” Dr. Bailey has a wide range of public and private sector experience in
providing strategic services to organizations with environmental and natural resource conservation and
management missions. As Vice-President of Policy for Canada at Delta Waterfowl, he is working with a
policy team led by agricultural producer organizations, in cooperation with conservation groups and
governments, to develop and implement the Alternative Land Use Services (ALUS) concept. Dr. Bailey and
his colleagues are active advocates for landowner, community and industry participation in the development
of national policy on ecological goods and services (EG&S), and for testing EG&S delivery options through
farmer- and rancher-driven ALUS pilot projects on private farms and ranchlands. Dr. Bailey was raised on a
farm in rural Quebec and received his PhD from the Faculty of Agriculture, McGill University.
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Darryl Finnigan
Resource Management Policy Analyst
Environmental Management Unit
Environmental Policy & Programs Branch
Ontario Ministry of Agriculture, Food & Rural Affairs
(519) 826-3843
darryl.finnigan@ontario.ca


Darryl Finnigan lives in Waterloo, Ontario, and has worked as a policy analyst for the Ontario Ministry of
Agriculture, Food and Rural Affairs since 2005. He is currently examining the agriculture sector interests in
provincial species at risk initiatives, management of the Great Lakes, and is a member of a federal-provincial
working group examining future policy options for ecological goods and services. Previous work experience
includes regulating new and existing pesticide uses in Canada for several years for Health Canada, and
researching and campaigning for stronger environmental laws for the Canadian Environmental Law
Association. Darryl has completed degrees at the University of Guelph and Simon Fraser University.


Dr. Andy Gordon
ECBA Room 2109
Environmental Biology
University Guelph
Guelph, ON
(519) 824-4120 ext. 52415
agordon@uoguelph.ca


Andrew M. Gordon received his Bachelor of Science in Forestry (Forest Environment) from the University
of New Brunswick in 1978 and a PhD (Forest Soils/Ecology) from the University of Alaska in 1985. Since
1984, he has been a faculty member in the Department of Environmental Biology, University of Guelph,
Guelph, Ontario, where he currently holds the rank of full professor, and is Director of the Agroforestry
Research and Development Program. His research interests lie in the investigation of ecosystem-level
processes in both agricultural and temperate/boreal forest systems. He has spent considerable time
developing and promoting agroforestry systems in temperate regions for their ameliorative and restorative
properties.


Ed Hanna
DSS Management Consultants Inc.
1886 Bowler Drive
Pickering, ON
L1V 3E4
(905) 839-8814
ed.hanna@dssmgmt.com


Ed Hanna has worked as a private consultant in environmental policy analysis and resource management for
over 30 years. During this time, he has coordinated numerous interdisciplinary studies involving diverse
disciplines. He holds an Honours Bachelor of Science and a Masters of Environmental Engineering
specializing in water resource management. He has conducted projects throughout Canada, as well as in
various other countries including the United States, Mexico, Costa Rica, Africa and Asia. Ed has taught
graduate-level courses in resource management and applied ecology in the Faculty of Environmental Studies
at York University and is currently a Research Fellow with the Institute for Research and Innovation in
Sustainability at York.

Valuing EG&S: An Ontario Perspective (Workshop Proceedings March 1, 2007)

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Laura Haynes
Natural Resources Specialist
Resource Economics and Social Sciences
Natural Resource Conservation Service/USDA
(202) 720-0064
laura.haynes@wdc.usda.gov


Laura Haynes is a Natural Resources Specialist for the Resource Economics and Social Sciences Division
within the Natural Resources Conservation Service at the U.S. Department of Agriculture. Laura has been
with the Agency for six months and focuses her work on energy, air quality and climate change issues and
policies. Currently, she is the Agency’s point contact for the energy title of the 2007 Farm Bill and for the
U.S. Interagency Regional Working Group, a coordinated effort to restore and protect the Great Lakes.
Prior to joining NRCS, Laura was with the U.S. Environmental Protection Agency’s Office of Air Quality
and Planning Standards focusing on ecological residual risk assessments for the air toxics program. In
addition to her work with the EPA, Laura worked in the U.S. House of Representatives. She served as a
primary advisor for two U.S. Congressman, both of whom represented the 5
th
Congressional District of
Tennessee, on several issues, including the environment, agriculture, and energy. Laura graduated from the
University of Tennessee with a Bachelor of Science in Biology. She received a Masters of Science in Public
Health with a focus on environmental health/air quality policy from the University of North Carolina at
Chapel Hill.


Michael Kennedy
(506) 375 4498
milkennedy@gmail.com


Michael Kennedy has a Masters and an Undergraduate degree in forestry from the University of New
Brunswick. The focus of Michael’s research is forest modeling related to environmental economics and forest
management. Michael has worked as a consultant for private woodlot owners, Industry Canada and
numerous forest companies in Mexico, Costa Rica and throughout Eastern Canada. More recently, Michael
worked as an Advisor on Technology and Economics to the Latin American and Caribbean Model Forest
Network in Costa Rica. In this role, he conducted numerous workshops, briefings and wrote position papers
on the Costa Rican experience in payment for environmental services. Over the course of a year, Michael
interviewed landowners, government staff and local NGOs about the program of payment for environmental
services in the region. Currently, Michael is working with the Costa Rican Protected Areas System (SINAC)
to facilitate capacity building related to internet communications. Michael is planning to move back to
Canada this year.


Lynn McIntyre
Director of Stewardship
Wildlife Habitat Canada
1750 Courtwood Crescent, Suite 310
Ottawa, ON
K2C 2B5
(613) 722-2090 ext. 234
lmcintyre@whc.org


Lynn McIntyre is currently Director of Stewardship for Wildlife Habitat Canada, with responsibilities for the
national stewardship recognition programs, the Stewardship Canada web portal and the citizen science
community monitoring program. Lynn has led numerous projects which included the National Volunteer
Sector multi-stakeholder consultation which led to Canada’s Stewardship Agenda, the 2000 and 2003