ALUS and EG&S: The tangled world of ecological services

Monday, February 28, 2011

Everyone agrees that alternative land use services and ecological goods and services are promising projects to pursue. But Ontario farmers are not alone in finding them difficult to get off the ground

by MARY BAXTER

In 2008, Steve and Anita Buehner grew their last tobacco crop. Like other growers wrestling with the decline in the province's tobacco industry, the Norfolk County couple had been searching for a replacement. They found their answer in diversifying their 180 acres near Waterford into cash crops, apple production and agritourism with a focus on lavender and wine.

Offering farm visitors an opportunity to explore their property went hand-in-hand with the agritourism vision and, in 2009, the couple enrolled in the Norfolk ALUS (alternative land use system) pilot program.

With the program's help, they reforested a small wedge of a steep hill that had been in apple trees, established a wildlife corridor shelterbelt (including a hedgerow intended to help sustain pollinators), introduced tall grass prairie to a steep hill where they had experienced erosion problems and reintroduced a wetland to the lowest area of the farm that had previously been heavily tiled. "For the farm itself, it's important that we look at returning some of the more fragile lands back to nature," Anita says.

ALUS connected the Buehners to funding for the work and provided them with annual payments for the environmental benefits their conservation and restoration efforts produced. The program, operated by a partnership advisory committee that includes representation from the Norfolk Federation of Agriculture and the county's land stewardship council, bases its annual payments on local land rental rates. Payment ranges from $75 an acre for those who might be able to make some use of the alterations to $150 an acre for land removed from production.

The annual payments "are extremely important," says Anita Buehner, explaining that the transition to agritourism is "huge" and comes with "high capital investment." ALUS was "what we needed to get it done now," she says, noting it will be several years before the agritourism venture reaches profitability. But perhaps equally important is the recognition that they are delivering an ecological service: "We think it's really critical that farmers in particular are rewarded for their efforts in conservation and stewardship of the land."

Since its establishment in 2008 as a pilot in Norfolk, ALUS has been poised to become as vital to the delivery of ecological goods and services (EG&S) as the environmental farm plan has been to managing farming's environmental risks. In November, though, its transition from pilot to a permanent program appeared to be in jeopardy. Many of the government grants that comprised much of the program's $1.3 million budget had disappeared. However, the crisis was short-lived. By January, the George Cedric Metcalf Charitable Foundation and W. Garfield Weston Foundation, had stepped in.

"We have a budget of a little over $1.5 million to work with for the next three years," says Bryan Gilvesy, a Texas longhorn cattle rancher near Tillsonburg and principal spokesperson for ALUS. The budget will be able to cover the costs of continuing the contracts of the 88 Norfolk farm families that are enrolled in the program. There's even enough to add 30 more farmers in Norfolk County each year.

Over the past decade, projects like ALUS that buy EG&S from farmers are appearing with greater frequency throughout Ontario. A five-year, $50,000 pilot program in Huron County pays $250 an acre per year to four farms to take land out of production. Shashi Kant, a professor with the University of Toronto's faculty of forestry is seeking federal money to establish a reverse auction pilot to encourage stewardship in the Credit Valley watershed near Toronto. The provincial government is proposing to establish a phosphorus trading network as part of a plan to reduce the amount of phosphorus making its way into Lake Simcoe.

Lack of clarity
But though the idea of buying EG&S may be gaining some traction in Ontario, it faces hurdles, too, say its proponents.

There is some "real confusion around it and there's a lack of clarity," says John FitzGibbon, chair of the Ontario Farm Environmental Coalition and a director of the School of Rural Planning and Development at the University of Guelph. "You see all these different kinds of things being put out as EG&S."

FitzGibbon says EG&S goes beyond one-time incentive programs and involves paying for activities that support a public interest, including removing land from production. He uses the example of a landowner asked to retire productive land in order to expand buffers around a wetland. "That is a shifting of rights, in a sense from an agricultural right to a conservation right and that person deserves to be paid for that," he says. Another example he offers is Gilvesy being paid by organizations to delay haying on his farm, Y U Ranch, to protect the birds nesting there. "That costs him something in terms of the quality of the fodder," FitzGibbon points out. "There's a responsibility of the public to contribute to the management of these interests."

The coalition has drafted a policy statement about EG&S. The top priority, FitzGibbon says, is having the public decide what its responsibility is.

"It really isn't very just to say that, well, we want to have all these species, but it's the landholder's obligation to take care of them," he says, using the province's Endangered Species Act as an example. "And it's particularly unfair when it says to that landholder that you're not competitive with other landholders who don't have species on their land."

The coalition's definition excludes projects that cap annual payments, such as the environmental water quality program operated by the Grand River Conservation Authority, where, since 1998, it has paid farmers in the Region of Waterloo and Wellington County $250 per acre for three years to plant trees on their property. (The municipalities provide the funding for the initiative.) The authority also administers a living snow fence program in Wellington County.

Along with the annual payment of $250 per acre for three years, the program pays $100 per acre for four years to bring the total payment to $1,150 over a period of seven years. Even though money is paid over a period of years, it's essentially an incentive for a conservation practice, FitzGibbon asserts.

Tracey Ryan, Grand River Conservation authority's conservation services supervisor, contends there is little difference between what Grand River does and programs such as ALUS. Like ALUS, the authority's program is grassroots, developed in response to consultations with many area farmers, she points out. "I think we're delivering a very strong program that the community values and participates in," she says. "I have politicians stand up and say 'we need ALUS' and we'll say 'we've got it,'" she says. "We don't blow our own horn."

A Manitoba ALUS pilot program has also provoked debate about what activities should be considered EG&S. Launched in 2005, the three-year pilot in the Rural Municipality of Blanshard was popular; just over 70 per cent of the municipality's producers, mostly grains and oilseeds growers, enrolled. They were paid $5 to $25 per acre depending on the services provided, which fell under the categories of wetlands, riparian, uplands and ecologically sensitive areas.

But many of the farmers who were enrolled received payments for not removing wetlands from their properties. Ian Wishart acknowledges the decision to allow the payments received flak, mostly from government. "You hear that from the bureaucracy," he says.

Wishart is the former president of the Manitoba general farm organization, Keystone Agricultural Producers, and he coined the idea of ALUS in 1999 while digging potatoes on his farm next to the Delta Marsh, north of Portage la Prairie. Keystone and Delta Waterfowl, a non-profit organization that supports waterfowl hunting in North America, subsequently spearheaded the program.

Wishart defends the decision. "The cost of recreating wetlands is atrocious. It's 10 times the costs that we're looking at and you never get the biodiversity back that is already existing." And while Manitoba generally loses wetlands at a rate of about eight per cent per year, during the years the pilot was in place "you would be hard-pressed to see any drainage having occurred."

Paid not to do things
Lack of government buy-in is another major hurdle facing the EG&S concept. "We really don't have an EG&S process, whereby a person takes an action or implements a management practice and there is an ongoing payment," says FitzGibbon. Recent governments are "interested but equivocal" and "we haven't really defined what kinds of services the government is prepared to pay for."

He points to the example of a program in New York State that pays farmers in the two watersheds serving New York City "not to do things that would force the city to do reasonable (water) treatment." There's a capital cost saving to the city and farmers are compensated for their change in practices.

In Canada, that approach hasn't happened, partly because of a difference in land laws but also because "governments, I don't think, really want to get into ongoing budget commitments," says FitzGibbon. So governments favour one-time projects rather than the ongoing support that EG&S by its nature needs, he says.

Paul Smith, senior policy advisor in the Ontario Ministry of Agriculture, Food and Rural Affairs' environmental and land use policy unit, says the provincial government "never really made a commitment" to annual payments like those ALUS offers to farmers. With no policy decision to take them on, "there's no system," he says. Acceptance of such a program looks doubtful, cost being a big factor.

A group set up by federal and provincial agriculture ministers analyzed the cost benefit of different types of EG&S systems, including annual payments, reverse auctions and market instruments such as water quality trading credits. They found annual payments to have the least desirable cost-benefit ratio. They reported their results at a 2009 meeting in Ottawa. "That analysis has led the federal provincial group not to be actively considering them as an option," Smith says.

According to University of Guelph student Paul Guerra's 2010 master of science thesis, the costs can be substantial. Payments for 5.4 million acres of potential EG&S-producing privately owned lands in southern Ontario alone could cost each Ontario citizen between $1.09 and $24.09 a year. Dave Reid, co-ordinator of the Norfolk Land Stewardship Council, provides rough estimates that suggest it would cost $18 million per year to establish ALUS in 60 counties in Ontario.

But Prince Edward Island has embraced the program, despite the cost. Established in 2008, the PEI program has an annual budget of $1 million and complements regulations that protect water quality, such as buffer zones along creeks. "Early on there was a realization that, even if everybody did what we wanted them to do, we would just have minimum standards and we needed to do a lot more," says Shawn Hill, the island's ALUS co-ordinator. The outcomes they wanted "we realized we probably couldn't legislate."

The voluntary program invites farmers to provide enhancements to the required standards for an annual fee. For example, farmers who put in a 30-metre buffer zone instead of the regulated 15 metres would receive payment on the extra 15 metres. Land rental values determine payment amounts. "We've seen very good uptake," says Hill. Four hundred of the island's 1,800 farmers are enrolled.

He acknowledges that specialized circumstances drove PEI's decision to adopt the program and make it feasible. Often referred to as "the million-acre farm," the province is significantly smaller than Ontario. There's immense pressure to preserve groundwater, the island's only source of fresh water. "Being an island changes a lot of things," he says.

Green box subsidies
Factors motivating the establishment of EG&S programs can make comparisons difficult and further complicate justifying their utility to governments. FitzGibbon points out that the European Union treats EG&S as green box subsidies (subsidies that do not conflict with international trade agreements). "We here in Canada and Ontario look across and say there's no way we're going to put that kind of money into this, but they're using that to protect agriculture in the trade realm, whereas we're looking at it from an environmental point of view."

The programs in Europe are used in place of business risk programs, such as those available under the Canadian Agriculture Income Stabilization policy framework. The system is cross-compliant, meaning strings are attached to become eligible for the subsidies, he adds.

Smith notes that the Manitoba ALUS pilot essentially provided a tax exemption on wetlands (with the wetland protection payment equivalent to the tax amount that would have been levied on the wetland area). In Ontario, the conservation land tax incentive program has provided tax exemptions on wetlands and other natural areas for the past 25 years. The province is already investing "huge amounts of time, energy and money" into environmental action and has "an enormous wealth of activities and actions" available from the provincial and federal governments "to assist landowners." These range from breaks on property tax to the environmental farm plan, funding assistance for farm stewardship projects and other incentives for projects under environmental and wildlife conservation legislation.

In many cases, farmers can get up to 100 per cent of the costs of implementing a project through a combination of funding sources.

FitzGibbon says that, given the economics, he's not convinced the public is willing to commit in the long term to fulfill its responsibility on EG&S. Yet provincial legislation such as the Endangered Species and Clean Water Acts, as well as efforts to increase public access on private property within the Greenbelt, indicate public interest in private property is growing. It really does "behoove us to find a better way."

He says a Farm Environmental Coalition group is developing policy for how to address "the significant threats" agriculture poses to water sources listed in the Clean Water Act and in reports developed by the province's 19 source protection committees. The group recommends that the Act's stewardship fund cover farmers' costs to mitigate the threats. "It is unlikely that funding would be available for ongoing payments," he writes in a February email. Any EG&S payments might come from municipalities; the province will not do this, he states. "We are being practical given the current issues of funding and the province."

Gilvesy says the better way for ALUS lies in marketing its services and tapping into foundations for support rather than the public purse. "What we're doing here is something called social enterprise," he says. Foundations "want to incubate your idea into a very big and broad idea." It doesn't leave the government out, but governments are low on money right now and there are other ways they can contribute. He points to government representation on ALUS' technical committee.

Carbon trading fraud
Developing a market for EG&S, though, presents a whole new challenge. The recent collapse of a carbon credit trading system in Chicago and several instances of fraud within the European carbon trade market have damaged the credibility of ecological marketing.

Gilvesy acknowledges the glitches, but stresses governments around the world continue to explore ways to manage carbon. "I don't see that the scientific momentum has stopped," he says, pointing out that Ontario continues to be committed to the Western Climate Initiative. The initiative is a commitment of seven U.S. states and four Canadian provinces to develop a shared market for trading carbon offset credits.

Making ALUS marketable requires verifying, evaluating and quantifying the program's environmental claims, says Gilvesy. Norfolk ALUS has already begun this work by commissioning a study from ÉcoRessources in Montreal that explores carbon sequestration in native grasslands.

Efforts are also underway to explore what type of organization the Norfolk pilot program should eventually become. As well, Delta Waterfowl, the program's long-term partner, will undertake national market research to determine likely purchasers of ALUS' services.

"I think these are pretty exciting times," Gilvesy says. At a time when farmers are regarded as producers of commodities, programs like ALUS "elevate us to people that produce vital links" as far as human health, human wellness, environmental wellness and of course, food are concerned. And when you increase farmers' relevance, "then surely incomes will follow." BF
 

 ALUS programs inhibited by funding problems, fear of bureaucracy

Efforts to establish Alternative Land Use Services beyond Norfolk County indicate that many factors must fall into place before an ecological goods and services payment program can succeed.

An attempt to create an ALUS project in the City of the Kawartha Lakes fell through last spring because of difficulties in getting it off the ground and finding the money, says Doug van Hemessen, stewardship co-ordinator for the Victoria Stewardship Council. There was interest, but "no one had the resources to take it on."

The Couchiching Conservancy, a non-profit land trust organization, was one of the organizations interested in bringing ALUS to the area. Mark Bisset, the conservancy's executive director, says the Conservancy wants to provide farmers with an incentive to care for lands in the Carden Alvar, a rare form of biological environment that's associated with a shallow limestone plain. "We don't necessarily have to own those properties; we want to work with them," Bisset says.

The conservancy did have money to fund a program, but ALUS "was more than we needed," he adds. Pooling their money with other groups was not possible because the terms of the funding required it be used only on land within the alvar.

However, ALUS has struck a chord in Grey and Bruce Counties, says Amber Cowie, Ontario Nature's greenway program manager. The non-profit conservation and wildlife protection organization is part of the Ontario ALUS Alliance, an affiliation of more than 40 groups wanting to foster the ALUS program in other areas of the province. Its greenway program works with communities and municipalities to extend natural corridors to protect wildlife habitat in southern and eastern Ontario.

Even so, "we're in a little bit of a holding pattern," Cowie says. The barrier? No one group has yet emerged from the core members of about 15 to 20 involved to assume leadership.

Nor are all farmers interested in the ALUS model. The St. Clair Region Conservation Authority tried to introduce the program in northern Lambton County a few years ago.

Only two landowners out of 40 to 50 responded and only one of those considered doing in-ground work, says Brian McDougall, the authority's director of watershed services.

Brian Baswick, who is chair of the Norfolk Land Stewardship Council and a farmer liaison for the Norfolk ALUS program, says worries about the program creating more opportunities for government intervention may be one of the reasons. "We have a hard time convincing people we're not a government organization," he says.

It's one of the reasons why local farmers are used as liaisons to promote and help people become involved in the program. "It's easier to approach someone as a neighbour or a colleague than as a bureaucrat or a government official," says Baswick.

Legislation that has the potential to affect farming activity, such as the Endangered Species Act with its provisions for protecting locations with endangered species, hasn't done ALUS "any favours," notes Baswick. "In a nutshell, farmers are afraid that, if some government organization finds species at risk on their property, it'll impact their property rights – their ability to farm. ALUS has nothing to do with that; we're just about creating habitat."

In eastern Ontario, South Nation Conservation introduced ongoing, ALUS-like payments in 2008 to its grant for buffer strips to encourage farmers to enroll. It adopted the measure because "we're competing against the cost of corn sometimes and the biofuel industry taking off," says Ronda Boutz, the authority's water quality coordinator.

Yet even with the incentive, it's a hard sell and, right now, no one is enrolled. "We're continuing to work with our committee to try and figure out if there is a different approach to take or a different way of marketing it to the farming community" that might emphasize the benefits and alleviate concerns about buffers being too much work, says Boutz. BF