Remarks at the 2nd National Water Quality Credit Trading Conference, Merlyn Carlson, Deputy Under Secretary
Natural Resources and Environment


Pittsburgh, PA
Tuesday, May 23, 2006


Good Morning,

It is great to be here in Pittsburgh, at the 2nd National Water Quality Credit Trading Conference. I deeply appreciate you giving me the opportunity to join you today, and I am honored to be up here with such a distinguished panel, Jon (Jon Scholl, U.S. EPA, Ag Advisor) and Kathleen (Kathleen McGinty, Secretary, PA DEP).I do also want to thank Craig Derickson (NRCS PA State Con),and I congratulate you on your new position as the NRCS Pennsylvania State Conservationist.

It is great to see so many of you in the audience today. I must say that I am looking forward to hearing from you, the people on the ground making water quality credit trading happen. I’m eager to hear the success stories during the concurrent sessions.

USDA Market Based Policy

Almost a year ago, at the White House Cooperative Conservation Conference, Secretary Johanns announced the U.S. Department of Agriculture’s policy on Market-Based Environmental Stewardship. Today, I would like to give you an update on where we are going with market-based approaches to conservation, like water quality credit trading.

Secretary Johanns and I believe strongly that voluntary incentive-based approaches are the best way to achieve the highest levels of conservation on America’s private lands.

In cooperation with other Federal Departments, as well as tribal, state, and local governments, USDA is looking to broaden the use of private sector markets for environmental goods and services through emerging voluntary market mechanisms.

We believe agriculture and forestry have tremendous potential to provide environmental offsets and enhancements that can be traded, sold, and bought in a market. USDA is continuing to develop and improve the understanding of natural resource management and the benefits from conservation practices by providing sound information to everyone. For the first time, ecosystem services can be quantified and given the value they deserve.


Importance of clean water

Let me share with you something that is not so new at USDA.
USDA has always placed a high priority on improving water quality and quantity, on helping farmers find ways to conserve water. We’re in the business of helping people help the land—and that means the water, too. Our programs address water quality and quantity in a variety of ways. Farmers and ranchers know that sound, profitable farming and maintaining clean, pure water supplies go hand and hand. We all know that clean water is a critical resource to all of us whether we live in the city or work on the farm. We all are concerned about the quantity and quality of water available to meet our daily needs.


NRCS Strategic Plan

Bringing the market to bear on conservation is an important part of our future.

For example, the Natural Resources Conservation Service, just recently unveiled a new strategic plan, outlining the agency’s vision of productive lands—healthy environment.

The strategic plan draws on three closely linked, overarching strategies that support one another: Cooperative Conservation, Watershed Approach and the Market Based Approach. All of the strategies are closely linked and support one another. We all know that working cooperatively achieves the highest levels of environmental stewardship.

We want to work with our partners to identify and assess opportunities for private sector investment in water quality credit trading and educating the public on the value of ecosystem services. The second strategy, the watershed approach, recognizes the importance of moving conservation beyond the field and the farm to the landscape of the entire watershed. These two strategies provide a foundation for the third strategy, the market-based approach. In line with the USDA policy the goal is to broaden the use of markets for environmental and ecosystem services through voluntary market mechanisms. These mechanisms include water quality credit trading, mitigation banking, competitive offer-based auctioning and eco-labeling. New market based approaches will compliment our existing programs, while broadening the opportunities for conservation.
Let me give you some examples of projects involving water quality trading or offer market based incentives. I know that you’re all aware of the most famous water quality credit trading effort involving agriculture, the New York City Watershed. Instead of building a multi-billion dollar treatment plant, local farmers and agribusiness worked with the city to address water quality issues on nearly 500,000 acres of farm land in the watershed that supplies New York with drinking water.

Conservation Innovation Grants

In addition, we offer Conservation Innovation Grants, these grants help NRCS to work with other public and private entities to accelerate technology transfer and the development of new approaches to address some of the Nation's most pressing natural resource concerns.

Soon, we expect $20 million will be awarded to applicants whose ideas best foster new and emerging conservation strategies and tools. We expect a number of them to focus on market-based approaches such as water quality credit trading.
Several pilot projects funded by C-I-G grants have been testing market based incentives for conservation.

For example, right here in Pennsylvania, we are demonstrating a reverse auction system for farmers to offer to install best management practices to reduce nutrients. Later today, you can learn more about this project from Scott Van de Mark, from the PA environmental council during session three of the concurrent sessions.

In Virginia, we are trying water quality credit trading with 100 farmers to improve water quality in the Chesapeake Bay. The purpose of this project is to quantify the benefits provided by the use of Innovative Cropping Systems as compared to conventionally-managed cropping systems. The Innovative Cropping System method reduces nutrients, thus improving water quality within the Lower James River and the Chesapeake Bay.
In Florida, we are working with the World Wildlife Fund and ranchers to reduce phosphorous in Lake Okeechobee. The goal is to design, establish, and evaluate a market-based program on ranches in the Lake Okeechobee watershed to reduce phosphorous loads, improve wildlife habitat, and sequester carbon.

In Ohio, with help from our partners, we implemented a water quality trading program to address challenges caused form non-point source pollution. An extensive economic and market analysis of the viability of a trading program in the Great Miami River Watershed indicated a potential savings of over $350 million for the communities, with nearly $40 million dollars of new money for investments in agricultural best management practices. You can learn more about this project later today from Mark Kieser, in concurrent session two. Dusty Hall, from the Miami Conservancy District, will go into even greater detail on this project on Thursday morning. This must be good one to be on the agenda twice.

Information Tools

I mentioned earlier that part of our role at USDA is to help provide information and the tools necessary for our customers and partners, so they can make good land use decisions. We’re continually working on new tools.

Just yesterday we announced that the USDA’s National Resources Inventory study shows a 43% reduction in cropland soil erosion between 1982 and 2003. The NRI is a statistical survey of natural resource conditions and trends and it assess soil erosion, land cover and use, wetlands, habitat diversity, selected conservation practices and related resources. The NRI, in cooperation with Iowa State University, found that total tons of soil eroded declined in all major river basins. This remarkable reduction did not happen by chance, or by regulation. It was through extraordinary efforts and cooperation at the local level that led to the significant gains. Soon, we will be announcing the recipients of the Cooperative Conservation Partnership Initiative (CCPI), grants. CCPI encourages the formation of partnerships to devise and implement watershed or regional solutions to pressing natural resource priorities associated with agriculture and rural settings. We expect to have $4 million for these partnership grants. Of the critical natural resource concerns facing agriculture and the environment, many require solutions that look beyond the borders of individual farms and ranches, or the common ways that natural resource conservation programs are implemented. CCPI projects are expected to secure implementation funds from a wide range of potential partners who have a history of working with agricultural producers. We have a new online energy estimator, that gives farmers and ranchers reliable information at their home computer on potential energy savings by incorporating conservation practices such as no-till and nitrogen reduction plans. Soon they will be able to see how much water they will save as well, by using more efficient irrigation methods.

While the focus is on saving fuel, these conservation practices are also important to water quality and quantity. We also offer soil data through our web soil survey. Again this is basic, fundamental information to guide land use decisions.It is part of our ongoing effort to make sure the latest information is available and easily accessible over the Internet.

Information will be the greatest tool in enabling market-based approaches to conservation. One of the most potentially helpful information efforts involving a number of USDA agencies is the Conservation Effects Assessment Project (CEAP).

This project will identify the specific benefits of conservation practices such as conservation buffers, erosion control, wetland conservation and restoration, establishment of wildlife habitat and management of grazing land, tillage, irrigation water and nutrients.

The initial focus is on water quality, soil quality and water conservation on cropland.

We look forward to the day when our customers will turn to our website to be able find even more sound information about water quality credit trading and eco-system markets.

CLOSING

We all know that the demand for conservation is far greater than the funding that is available. Especially when budgets are tighter, as they are now and likely will be in the years ahead. Water quality credit trading will enable more conservation without overwhelming taxpayers. I look forward to hearing your input and working with you on expanding on water quality credit trading to enhance our natural resources and bring environmental benefits to all our citizens.

Theodore Roosevelt once said "The nation behaves well if it treats the natural resources as assets which it must turn over to the next generation increased, and not impaired in value."

I share President Roosevelt’s vision, and I see water quality credit trading as a chance to build partnerships that can improve our natural resources. Together, we can make President Roosevelt’s dream a reality.

Thank you very much!