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Opportunities for Payments for Ecosystem Services in Alberta’s Agricultural Sector

Over the course of our latest webinar series we’ve looked at examples of effective ecosystem services markets that have been implemented at both the National and International level. In our final presentation of the series, Dr. Marian Weber gave us a look into the opportunities for ecosystem services markets to be implemented right here in Alberta’s agricultural sector.

This blog post summarizes Dr. Weber’s presentation.

Dr. Marian Weber is a senior researcher with InnoTech Alberta. She is working in collaboration with the Government of Alberta, University of Alberta, Alberta Biodiversity Monitoring Institute and the University of Guelph to better understand opportunities for payments for ecosystem services in Alberta’s agricultural sector.


What are payments for ecosystem services?

Ecosystem services are the benefits that humans receive from nature. According to the Millennium Ecosystem Assessment, these benefits include provisioning services such as food and clean water; regulating services that affect climate, floods, and water quality; cultural services that provide recreational benefits; and supporting services such as soil formation.

A payment for ecosystem services program is when farmers/landowners are offered an incentive in order to manage their land in such a way that protects or enhances the ecosystem services their lands provide.

So, why is this important for Alberta’s Agriculture Sector?

Did you know that agricultural ecosystems are the largest managed ecosystems in the world, and, in Alberta, almost 1/3 of our land is managed for crops and pasture?

As the population and the demands for food production expand, it will be increasingly challenging for farmers to both increase food production and maintain healthy ecosystems. In order for them to meet this challenge, producers have to factor ecosystem services into their decisions. One way to do this is to offer incentives for farmers/landowners to implement Best Management Practices (BMPs) that protect and/or enhance ecosystem services on their lands.

Dr. Weber explains that Payments for Ecosystem Services programs are ways to channel the benefits from ecosystem services from the public back to the producers, aligning both commodity and ecological benefit and production decisions.

We are starting to see increased efforts to quantify and monetize ecosystem services benefits and risks of degraded ecosystems. A recent report by Allianz outlined 3 major sectoral risks facing companies including:

  • social demands from consumers for sustainable production;
  • regulatory risks from government intervention to protect ecosystems; and
  • material risks that result from degraded ecosystems such as floods

According to Allianz, the agri-food industry (at the global level) was categorized as high risk. As a result, we are seeing the agri-food industry start to respond to these risks. One example familiar to Albertans is the McDonald’s initiative for sustainable beef practices.   

Though payments for ecosystem services have the potential to benefit producers, the environment and society, producers need more information about how these programs would work, as well as potential opportunities and risks from participation.

Opportunities for beef producers to participate in ecosystem service markets were explored in the Indian Farm Creek case study, a project funded by Alberta Innovates, Alberta Agriculture and Forestry, and InnoTech Alberta.

 

Case Study: Indian Farm Creek

In 2015, InnoTech Alberta, in collaboration with the Government of Alberta, the Alberta Biodiversity Monitoring Institute, the University of Alberta and the University of Guelph, developed a project in Indian Farm Creek, a sub-watershed in the Old Man River Basin, to evaluate the costs and benefits of providing ecosystem services from the livestock sector, and identify opportunities for beef producers to participate in ecosystem services markets. The project is in its final year.

Purpose and Method

The project considered 4 ecosystem services – carbon, biodiversity, water quality and water storage – where market opportunities have been capitalized on in other jurisdictions. The main components of the project included: 1) an evaluation of the effect of livestock BMPs on water quality and quantity, carbon, and biodiversity; and 2) an evaluation of the costs and benefits of BMPs including costs to producers and public willingness to pay for benefits.  

BMP Analysis and Cost Analysis 

IMWEBS (Integrated Modelling for Watershed Evaluation of BMPs) model, developed by the Watershed Evaluation Group at University of Guelph was used to assess the effects of BMPs on phosphorous, sediment, and nitrogen loads. Biodiversity and carbon are being added to the model through this project.

The research team also looked at the costs of adopting BMPs. Most BMPs are costly to farmers with costs depending on farm size, as well as the degree of conservation or protection. Incentives are required to cover those costs.

Public Willingness to Pay 

To determine whether the public would be willing to pay an incentive large enough to cover costs to producers, the team conducted a survey of residents of the South Saskatchewan River Basin. Residents were asked their willingness to pay increased taxes to pay farmers to implement BMPs to improve water quality and reduce risk to endangered species.

 Results from the survey showed that households were willing to pay a tax to improve water quality in the Bow River and Old Man Basins from ‘fishable’ to ‘swimmable’. They also were willing to pay for grassland habitat restoration to improve outcomes for species at risk.

The results of the economic analysis of the costs and benefits of livestock BMPS will be integrated with the IMWEBS model in order to evaluate different BMP scenarios including an evaluation of the scale at which BMPs would have to be adopted to lead to desired improvements to water quality and species at risk.

 

What’s Next? 

Dr. Weber explains that standardized models and metrics for assessing the impacts of BMPs on ecosystem services are a part of the information infrastructure required to support ecosystem service markets and “connect the value chain from demand side to supply side” and provide confidence and credibility in payments for ecosystem services.

Next steps for completing the project include workshops with beef producers and communities in the South Saskatchewan Region, and a final conference in 2019 that will bring together various experiences and lessons learned from ecosystem service markets in Alberta and across North America.

To learn more contact Dr. Marian Weber at: Marian.Weber@innotechalberta.ca