Sustainable Funding for Watersheds

Executive Summary

This paper is written for the purpose of exploring potential long-term and sustainable funding options that will be necessary for the successful implementation of a Colorado River Basin (CRB) riparian restoration initiative. For the purpose of this paper, sustainable funding is defined, as a perpetual revenue stream that is sufficient in magnitude to accomplish a program’s goals and reliable enough to confidently develop long-term maintenance and monitoring programs.

Funding Mechanisms

This work included a review of funding mechanisms that have been employed in the US and internationally. Numerous considerations, explained in detail in the white paper, were taken into account when compiling this list. As an example, funding resources that are subject to federal appropriations were not evaluated because of their susceptibility to economic and political changes. Thus, they do not meet the basic definition of sustainable funding. The funding mechanisms that were considered to be potentially sustainable are organized according to five fundamental funding sources: tax based, regulatory, lending, market, and voluntary based revenue sources.

Case Studies

Two types of case studies were conducted. The first examined several different single source federal tax programs that have been established, or failed to become established in the US. These federal programs were evaluated to provide lessons learned that will help guide an understanding of the appropriateness of such methods to fund a CRB initiative. Funding programs of this type include: Pittman-Robertson Act of 1937; Dingell-Johnson Act Sport Fish Restoration Act of 1950; Migratory Bird Conservation Act of 1929 and the Migratory Bird Hunting Stamp Act of 1934; North American Wetlands Conservation Act of 1989; Conservation and Reinvestment Act (CARA); Harbor Maintenance Trust Fund; US Commission on Ocean Policy; The Domenici-Landrieu Gulf of Mexico Energy Security Act of 2006; and the Highway Trust Fund.

The second type of case study focused on large-scale ecological restoration initiatives that employed multiple funding sources and mechanisms, as well as other innovative funding strategies employed at smaller scales and from outside the restoration arena. Lessons learned from these case studies provide insight on programmatic issues such as how they were established, how they are managed, where funding comes from, and their ability to accomplish the goals of their program, as well as more specific funding issues that should be considered if a Colorado River initiative is undertaken. The programs reviewed include: Platte River Restoration Program; Columbia River Basin; California Bay-Delta; Everglades Restoration Program; Great Lakes Restoration Program; Puget Sound Partnership; Chesapeake Bay Restoration Program; National Estuary Program; Murray-Darling Watershed Restoration (Australia); Working for Water Programme (South Africa); and the European Union’s Water Framework Directive.

The key finding that resulted is that none of the large-scale watershed programs, even those approaching 30 years of existence, have been successful in securing or identifying long-term sustainable funding to reach their goals. Additionally, despite decades of work and billions of dollars, the large-scale restoration projects surveyed in the US have made little progress.

Funding Mechanism Viability in the CRB

Information gathered from the case studies’ lessons learned was combined with professional knowledge of the political, economic, and ecologic situation in the CRB to determine the appropriateness of the funding mechanisms examined to the CRB. The funding mechanisms were applied to different geographic levels (local, state-wide, basin-wide) and rated on their potential significance, reliability, applicability, and political/social applicability to derive an overall viability ranking.

Next Steps

Subjective assessments summarized in the funding mechanism viability ranking represent a starting point for more in-depth discussions and may change based on value judgments of others. Lessons can be taken from the case studies and used to determine: 1) If any of the funding mechanisms explored are worth further consideration in the CRB; 2) How these various funding approaches might be efficiently integrated into larger funding strategies that are appropriate for the CRB and; 3) What programmatic, political, and social approaches are necessary to facilitate the implementation of the preferred strategies.

As planning for a large-scale watershed restoration continues, which may be a long process, there is benefit for watershed restoration proponents to actively pursue restoration on a grass- roots or sub-watershed level to help provide the education, awareness, and successful demonstration projects that are so critical for garnering public support for a larger initiative.

The following recommended next steps are based on the information assembled and include supporting actions that may be necessary to answer key questions:

1. Identify several potential sustainable funding mechanisms that seem to have promise and develop a rudimentary analysis of their theoretical application in the CRB including user-based revenue potential and more detailed examination of legal and political challenges. To begin this analysis, it is suggested that representatives of the Walton Family Foundation, The Nature Conservancy (TNC), and the Tamarisk Coalition hold a workshop to determine the best prospects for sustainable funding and how to move towards implementation of them.

2. A fundamental aspect of any sustainable funding mechanism is that it will take political will to institutionalize most of the mechanisms identified. Four questions need to be answered to gain this political will: 1) What is the problem? 2) What are the solutions? 3) What are the costs? and 4) Who is going to pay for it? These questions can be answered by:

• What specifically are the problems in the CRB that are imperative, in the public’s view, to solve?
  Potential Actions:
  • Identify the full range of ecological problems in the CRB.
  • Determine the root causes of these problems.
  • Determine the public priorities for these ecological problems.
  • Determine how best to solve or mitigate the problems that are criticalpublic concerns.
• What are the potential solutions, their costs, and their long-term fiscal requirements?Potential Actions:
  • Conduct more detailed feasibility study of specific restoration strategiesand goals. For example, for an urban water and hydro-electric utility surcharge, how many people are involved, what would the surcharge rates need to be in order to meet the expected restoration costs, what political and legal obstacles are likely to be encountered?
• Who is going to pay for this? If payment for ecosystem service approaches are envisioned then what ecosystem services are important enough, by themselves or in combination with others, which the public would be willing to support?
  Potential Actions:
  • Identify and describe ecological services and products of the CRB; such as water, wildlife habitat, wildfire mitigation, recreation, aesthetics, flooding, preventing the endangered species listing, etc.
  • Define potential market relationships. For example, salinity control programs and downstream water users.
  • Identify specific resource users and their direct or indirect relationship to (willingness to pay for) ecological services and products of the CRB.
  • Determine market metrics and conduct cost/benefit analysis for individual ecological service and product markets.