IDR Team Summary 7

Design a federal policy to maintain or improve natural capital and ecosystem services within the United States, including measuring and documenting the effectiveness of the policy.

CHALLENGE SUMMARY

The renewable wealth of the United States resides in its people, land, and waters. The capacity to generate ecosystem services is a component of natural capital, which is in turn a component of renewable wealth. Natural capital is related to the capacity of a region to provide food, fiber, pharmaceuticals, potable water and other goods; maintain water and air quality, soil fertility, and other characteristics of a healthful environment; and present people with educational, recreational, and spiritual values of nature. A given area of landscape or seascape yields many ecosystem services, and the aggregate yield of ecosystem services depends on management by people.

Yet natural capital is not monitored, unlike indices of financial and social capital (stock markets, inflation, T-bill yields, unemployment, educational status, etc.). Regulatory ecosystem services (which maintain water and air quality, soil fertility, and other characteristics of a healthful environment) and a number of provisioning and cultural ecosystem services are not marketed and rarely measured. However some ecosystem services such as food production and recreational use are marketed and measured.

“In the beginning, the world was one.” Now, however, the responsibility for natural capital, or the ecosystem services it generates, is balkanized among federal agencies, as well as among federal, state, and local jurisdictions. For example at the federal level, one agency deals with agricultural and forestry yields and soil conservation; another deals with water infiltration and runoff; another with fish and wildlife; another with water and air quality in relation to human health. And many ecosystem services



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IDR Team Summary 7 Design a federal policy to maintain or improve natural capital and ecosystem services within the United States, including measuring and documenting the effectiveness of the policy. CHALLENGE SUMMARY The renewable wealth of the United States resides in its people, land, and waters. The capacity to generate ecosystem services is a component of natural capital, which is in turn a component of renewable wealth. Natural capital is related to the capacity of a region to provide food, fiber, pharma- ceuticals, potable water and other goods; maintain water and air quality, soil fertility, and other characteristics of a healthful environment; and pres- ent people with educational, recreational, and spiritual values of nature. A given area of landscape or seascape yields many ecosystem services, and the aggregate yield of ecosystem services depends on management by people. Yet natural capital is not monitored, unlike indices of financial and social capital (stock markets, inflation, T-bill yields, unemployment, edu- cational status, etc.). Regulatory ecosystem services (which maintain water and air quality, soil fertility, and other characteristics of a healthful environ- ment) and a number of provisioning and cultural ecosystem services are not marketed and rarely measured. However some ecosystem services such as food production and recreational use are marketed and measured. “In the beginning, the world was one.” Now, however, the responsibil- ity for natural capital, or the ecosystem services it generates, is balkanized among federal agencies, as well as among federal, state, and local jurisdic- tions. For example at the federal level, one agency deals with agricultural and forestry yields and soil conservation; another deals with water infiltra- tion and runoff; another with fish and wildlife; another with water and air quality in relation to human health. And many ecosystem services 73

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74 ECOSYSTEM SERVICES and important elements of natural capital fall between the cracks in U.S. legislation and policy—there is no mandate, for example, to monitor and maintain ecosystem services such as pollination, natural hazard regulation, pest regulation, or aesthetic values. Just as the nation developed policy and legislative frameworks for environmental issues such as water and air quality and endangered species in response to growing scientific and public understanding of the impor- tance of these issues, it may now be time to develop a policy and legislative framework for the more comprehensive management of natural capital and ecosystem services. Key Questions • What would be the goal of a U.S. policy for natural capital and ecosystem services? (In considering this and the following questions, be sure to include regulating ecosystem services as aspects of natural capital that are essential for sustained flows of all relevant ecosystem services.) • How should a new U.S. policy or legislative framework integrate, replace, or be integrated into the many existing laws and policies that guide various aspects of ecosystem service management? • What would key elements of a U.S. policy (considering both actions that federal agencies could take within their existing mandates and needs for new legislation) consist of, particularly with respect to (a) assessment of the status of ecosystem services; (b) management; (c) monitoring; (d) account- ing; and, (e) public communication and education? With respect to the assessment needs, no federal policy provides for assessment of ecosystem services or natural capital. How can this be done? • How can the effectiveness of policy for ecosystem services be measured? How can we improve policy based on iterative assessments of ecosystem services? Reading Carpenter S, Matson P, and Turner S. Draft. Natural capital, services and human well-being. In Sustainability Science. Daily GC, Polasky S, Goldstein J, Kareiva PM, Mooney HA, Pejchar L, Ricketts TH, Salzman J, and Shallenberger R. Ecosystem services in decision making: time to deliver. Front Ecol Environ 2009;7(1): 21–28. Heinz Center (The H. John Heinz III Center for Science, Economics and the Environment). The state of the nation’s ecosystems. Island Press: Washington, D.C., 2008.

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75 IDR TEAM SUMMARY 7 President’s Council of Advisors on Science and Technology. July 2011. Sustaining enviromental capital: protecting society and the economy. Executive Office of the President. Scarlett PL and Boyd JW. Quantification, policy applications, and current federal capabilities. Resources for the Future, March 2011. Because of the popularity of this topic, two groups explored this subject. Please be sure to review the other write-up, which immediately follows this one. IDR TEAM MEMBERS—GROUP 7A • Genevieve Bennett, Ecosystem Marketplace • Mark T. Brown, University of Florida • David H. Festa, Environmental Defense Fund (EDF) • Vilay H. Khandelwal, University of Southern California • William H. McDowell, University of New Hampshire • Volker C. Radeloff, University of Wisconsin-Madison • James A. Riggsbee, RiverBank Ecosystems • James Salzman, Duke University • Kelly Wendland, University of Idaho • Heather E. Wright, Gordon and Betty Moore Foundation IDR TEAM SUMMARY—GROUP 7A Vilay Khandelwal, NAKFI Science Writing Scholar University of Southern California IDR Team 7A was asked to develop an effective federal policy aimed at maintaining or improving the legacy of the nation’s ecosystems for future generations. Earth’s ecosystems—from rainforests to deserts, from marshes to mountaintops—have been formed over millions of years of geological changes and biological evolution. The diverse ecosystems provide shelter to their plant and animal inhabitants while providing us with resources and services that sustain and enrich our lives. Some resources like food, water, and minerals can be priced in dollars; others, including the value of a forest for its beauty, the aesthetics of a waterfall, or the preservation of pristine places on Earth are intangible. Ecosystem services refer to the entire gamut of benefits that ecosystems provide, both tangible and intangible.

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76 ECOSYSTEM SERVICES Task at Hand As the world population continues its super-exponential growth, a greater need for human use of physical space is coupled to an ever-increasing demand for basic necessities like food and water, in addition to the goods that have come to define the comforts of modern human life. As society encroaches upon ecosystems to satisfy these needs, the cost-benefit analysis that underlies such actions is so heavily skewed toward tangible factors, that intangible services meted out by the ecosystems are unspoken for. This limited system of valuation is flawed. Given the long-term con- tributions of ecosystems to human experience, it is important to not only consider the immediate impacts of our actions, but also their legacy for the future. Federal regulation of the environment through the Clean Air Act, Clean Water Act, Endangered Species Act to name a few, are geared to promote human health and biodiversity but not necessarily the health of our ecosystems. As such, there is a need to revamp our federal policies to protect our natural capital. Redefining the Task Just as the fiscal policy of the government is designed to increase the GDP and expand the economy, the team recommended that environmental policies ensure an overall net increase of natural capital within the national balance sheets. In other words, it should be the objective of the federal govern- ment to identify and rehabilitate strained ecosystems, strategize to maintain or enhance the ones currently in use and prevent the degradation of others. With near 10% unemployment, two wars, and the possibility of a double-dip recession preoccupying an acrimoniously partisan Congress, shepherding a new piece of environmental legislation through the Con- gress would be a herculean task. Therefore, the team focused its efforts on designing a conceptual framework to guide a federal policy over a long term, while also recommending immediate measures within the purview of existing mandates of federal regulatory agencies, sidestepping the need for immediate legislative action. Federal Policy Given the great number of unknowns concerning ecosystem charac- terization and valuation, the team chose to lay out a logical framework for

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77 IDR TEAM SUMMARY 7 infrastructure building central to an effective policy. The best strategy for a visionary federal policy would involve identification and measurement of key variables, training of personnel, and effective implementation of the policy. Building the infrastructure For successful management, it is essential to keep a regular tab on the assets. Thus, in agreement with the 2011 President’s Council of Advisors on Science and Technology (PCAST) report, the IDR team recommended instituting a quadrennial assessment of the state of the nation’s ecosystems. This would entail the characterization of ecosystem health in terms of measurable parameters. A scholarly identification of such parameters forms the backbone of any such evaluation. If such parameters have not yet been identified, it is essential to fund academic research to do so. National ecosystem data portal Once these parameters have been identified, it is essential to develop tools for efficient data collection and analysis. Currently, data regarding various aspects of any ecosystem are being collected by different agencies. For instance, the Environmental Protection Agency (EPA) collects data on air and water quality while the Department of Agriculture (DOA) collects data on soil composition. However, these data are not shared across agen- cies, and the analytical tools to link data and extract information regarding the health of our ecosystems are lacking. Thus, the team recommended creation of a national repository, where all information pertaining to an ecosystem, whether gathered by a local or a national agency, can be entered. There is a need for the development of an analysis system to interchangeably compare the costs of various components of an ecosystem in terms of their benefits and incorporating this information with accounting decisions for any projects. The interoperability of this interagency data portal would be a key requirement for adoption of sound practices that analyze complex data and include it in the rubric of federal decision-making. Interagency training center The team strongly felt the need to break down the governmental stove piping and require regulatory agencies to share responsibility and make management decision collectively. Given the lack of incentives for agencies

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78 ECOSYSTEM SERVICES to engage in a dialogue, the team recommended creation of an interagency training center to cultivate knowledgeable, skilled, and capable managers from multiple agencies as a vehicle for ensuring better understanding of ecosystems as a whole. With a goal to promote synergy, cooperation, and efficiency as these agencies work together, the best practices would be shared across agencies for the implementation of cost-effective actions. Customize targets Data collection is not the goal, ecosystem preservation is. The team concluded that the need to set identifiable environmental goals is crucial for ensuring sustainable ecosystem services. Academic research including modeling studies need to be commissioned to identify clear endpoints for the various ecosystems. Rather than rigid strategies like total maximum daily loads (TMDL) for water pollution, the team realized that endpoints would require adaptive management strategies, which would need to be determined for each ecosystem on a case-by-case basis. It is not expected that the ecosystems will be untouched, rather, that the final action would be taken to maximize ecosystem service. Were a new infrastructure for analysis and management to be put in place, it would be the responsibility for the government to pass legisla- tion aimed at codifying updated practices at the regulatory agencies and employing adaptive management strategies to ensure timely response to human actions. Evaluation of current tax subsidies while accounting for the benefits from ecosystems is essential in order to ascertain whether existing tax policy is hurting ecosystems. Adoption of ecosystem centric practices within governmental bodies like Securities Exchange Commission would set the tone for businesses to adopt similar practices. Recommendations for Immediate Action In addition to the long-term goals of federal infrastructure develop- ment and Congressional action, the team made recommendations for immediate implementation by federal agencies like National Oceanic and Atmospheric Administration (NOAA), the EPA, and the DOA that already recognize the concept of ecosystem preservation and restoration. The Army Corps of Engineers, whose mandate is “to restore significant ecosystem func- tion,” also plays a role here. Schemes such as mitigation and species banking, watershed management projects, as well as farmbill payment programs, cur-

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79 IDR TEAM SUMMARY 7 rently at work at local, state, and national levels highlight regulatory agency efforts for maintaining ecosystem health. What hinders the effectiveness of these efforts in achieving optimal so- lutions is the lack of proper targeting of resources. Absence of a framework to reward projects with best practices and of incentives to replicate these on a larger scale is another problem. A clear example of ineffective resource management is the Conserva- tion Reserve Program with an annual budget of $6 billion for payments to farmers as incentives to adopt environmentally friendly practices. Rather than recruiting farmers with land that can provide greatest net ecosystem service, CRP recruits the lowest bidder. Incentives are provided for adop- tion of practices irrespective of the final measurable benefits. Rather than ensuring healthy practices on land currently in use, CRP focuses on retired land. CRP needs to identify ecosystems that would generate the most services and link payments to measurable outcomes. For example, it makes greater economic sense to ensure maintenance of wetlands in the Mississippi delta than paying a farmer in the desert to not use a tractor on a Wednesday. Other immediate recommendations include a. assigning engineers at NASA to design satellites with enhanced remote sensing abilities that can provide a real time account of the state of an ecosystem’s health; b. directing part of Federal Emergency Management Agency (FEMA) budget on disaster relief to preventive pilot projects including wetland preservation, as a buffer against flooding; c. developing an interagency training center and data portal as out- lined above; d. implementing the findings of the PCAST 2011 report. Summary Given the academic consensus on the importance of the ecosystems as a critical part of our nation’s present and future infrastructure, it was the recommendation of the IDR Team 7A to enable better environmental practices following a three step approach: 1. Lay the groundwork for comprehensive legislation to generate mo- mentum within the civil service to make informed decisions.

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80 ECOSYSTEM SERVICES 2. Outline a national policy that would focus on adaptive management strategies. 3. Guide immediate actions by regulatory agencies to optimize decision-making based on tradeoffs between the benefits and consequences of human actions to ensure long-term benefits from ecosystems. IDR TEAM MEMBERS—GROUP 7B • Katherine D. Cowart, Texas A&M University • Janet A. Cushing, U.S. Army Corps of Engineers • Benjamin S. Halpern, University of California, Santa Barbara • Heather M. Leslie, Brown University • Lydia P. Olander, Duke University • Diane E. Pataki, University of California, Irvine • Kathryn A. Saterson, U.S. Environmental Protection Agency • Gary M. Tabor, Center for Large Landscape Conservation IDR TEAM SUMMARY—GROUP 7B Katie Cowart, NAKFI Science Writing Scholar Texas A&M University IDR Team 7B was asked to design a federal policy to maintain or im- prove natural capital and the benefits humankind receives from ecosystems within the United States, including measuring and documenting the effective- ness of this policy. The first action the team took was to analyze the group’s strengths. The team, mostly composed of ecologists and biologists, decided that its purpose was to look for inspiration for protecting natural capital, develop a “do no harm” policy, and illustrate where ecosystems could make or have already made a difference in environmental quality. These analyses led to a slight adjustment in the wording of the team challenge: Design federal policy to maintain or improve natural capital and ecosystem services within the United States, including that ecosystem services be integrated into decision making and that policy effectiveness be documented and measured. Even with the revised wording, the team thought there are several chal- lenges in this general task. The first challenge is defining natural capital,

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81 IDR TEAM SUMMARY 7 and then how would anyone determine the value of an ecosystem service or an improvement. Although there has been debate over the definition of ecosystem services and what the term entails, the group decided to accept the meaning that ecosystem services are the benefits humans receive from the natural processes that make up an ecosystem. These benefits include purified drinking water, food, climate regulation, pollination, and even spiritual or recreational benefits. The second challenge centered around the policy aspect of the task and whether a new federal policy is needed and what the exact goal of the policy would be. The third, and probably most delicate challenge, was in how to handle tradeoffs among ecosystem services. Often an improvement in one area will result in a detriment to another, or refocusing improvement efforts from one area to another will result in harm. What’s the Problem? To help the team tackle the task, the group first tried to define the problem. The issues surrounding the value of ecosystems are multifaceted, and each of the sides must be taken into account before a successful policy can be put into place. First and foremost, team members believed that it is necessary to know the current state of ecosystems. After that, one can address the knowledge problem. Among the general public, there is a lack of understanding of what ecosystems are and why they are so valuable. In order to effect change, the public, including legislators at all levels of government, need to understand the role ecosystems play in providing benefits that are important to human life and health. The team also saw translation, institutional application, and commu- nication as problems surrounding ecosystem services. Translation involves monitoring the ecosystems themselves and analyzing the accumulated data to determine the ecosystems’ status. Using this information, scientists can better make informed tradeoffs to get the best overall value out of the eco- systems. Combining the knowledge of ecosystem services and the transla- tion of data into useable decision making tools makes up the institutional application problem. Here, the knowledge and translation come together for use in policy development, implementation, and management on the appropriate scales. This is a tricky balancing act, requiring that the knowl- edge and data are firmly and clearly in place. The last problem, communica- tion, refers to the communication to the public and to policy-makers. The team decided to put this issue aside for IDR Team 9 to handle.

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82 ECOSYSTEM SERVICES All of these issues form a feedback loop that should be maintained for optimal understanding. One issue to consider independently, however, is that the relationship between these issues changes depending on which frame is taken, either by the scientists providing the information or the politicians acting on the data. The issue of ecosystem services maintenance can be viewed through a human-centric lens, one in which human benefit and well-being are focused on above all else. The other frame looks more at protecting resources and ecosystems because it’s the morally right thing for humans to do. One team member pointed out that the relationship between human benefit and resource benefit is complex, since history has shown human well-being to continue to increase even as resources or ecosystem availability decreases. How Will Policy Help? At first, the team was skeptical new policies to regulate ecosystems would even be accepted, considering the current political climate which is averse to more regulatory policies and the introduction of a new policy would be a long term goal. This view led the team to look at current poli- cies, analyzing whether or not they are helpful or if they could be adjusted to meet the ecosystem needs. Policies of other countries were also discussed, because ecosystems often cross borders and to truly protect all of the eco- systems that the United States enjoys, we will still need a global approach to ecosystem maintenance. Of all of the different avenues available for legal change in the United States, the team decided changes on multiple levels need to be made. New federal and state policies, such as implementing a set of minimum standards to maintain the integrity of ecosystems, will help, but lower level incentives need to be in place to really bring about a change to current eco- system management. For example, municipal bonds or tax codes could offer incentives to those doing their part to better local ecosystems. State-level incentives for other green infrastructure could be suggested. The federal government could encourage lower-level improvements in environmental policy by enforcing current laws, by encouraging comprehensive planning, and by offering subsidies and other incentives. Passing a federal policy seems like a lofty goal, especially with so many unknowns to account for. One of the major aspects to be considered is the assessment of current ecosystems, though there is no policy currently in place for this. Because little is known about the current state of ecosystems,

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83 IDR TEAM SUMMARY 7 one of the only ways to create a policy in this area would be to create a broad yet ambitious plan. The hesitation is that perhaps the policy would have no effect because the lack of information available would mean little could be done to enforce the policy. One thing that scientists could do to help in this dilemma is to switch focus in research to look at the current states of ecosystems. The team thought that could help tremendously in what they called the “we don’t know” battle. Policy Recommendations Even with the pessimism about a regulatory bill passing now, the team came up with a list of things to include in an ideal political world. The team’s policy would contain sections addressing the following aspects: Assessment, management, monitoring, accounting, communication, and funding. Under the assessment section, the policy should define the services and natural capital for a given social-ecological context, be realistic about what people can do and know, take a precautionary practice-based approach, be explicit about the range of actors involved, do not limit to native species, and set ecosystem services targets for restoration and improvement. These targets would set standards that everyone using a particular area would need to be aware of in order to maintain or improve the area and would include things like limits on hunting or fishing, water pollution, crop fertilization, or other human processes that can negatively impact an area. This section also gives scientists the green light to study more, addressing the “we don’t know” battle. The management clause would identify policy and other strategies to achieve the goals listed in the assessment clause. It could take into account private versus public land as well as freshwater, marine, and terrestrial sys- tems. The main purpose of this clause is to say who exactly is responsible for which aspect of maintaining a specific part of an ecosystem or an area. It would require interagency cooperation, such as between the Environmental Protection Agency and the U.S. Corps of Engineers. The third clause, monitoring, will measure the effectiveness of the policy and related actions by building in explicit targets. This is primarily a balance between the scientists and the government; scientists will look at the changes in monitored areas over time and compare those values with the values obtained before the policy started. If the values are better, show- ing that the different aspects of the ecosystem are healthier, then the policy

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84 ECOSYSTEM SERVICES succeeded in that case. The final three clauses, which were not fleshed out completely, deal with accounting, public education and communication, and funding to monitor and manage adaptively. Based on these ideas, the team recommended that we actually imple- ment a policy meeting these criteria. The team thinks that passing this law will integrate ecosystem services into current laws, create a demand for ecosystem services approaches and information, generate policy-relevant research, and lead to longer term institutional change at multiple scales of governance. We as a society will be more adaptive, handle uncertainty, and ensure provision of services if we do these things. The team also recommended that a test site, like a case study, be done in managing an ecosystem service. This test might include changing the tax code or other benefits to those doing as suggested. A test site may provide more incentive to a larger policy implementation if all goes well. And if that policy is enacted, resulting in healthy ecosystems, that will lead to healthy communities and healthy economies, greatly benefiting society.