Sustainable farming is good for the future, good for food, and good for the neighbors – but it doesn’t always pay off financially for the farmer himself. Cattle rancher Mike Rudolph hopes that brook trout credits can keep his organic ranch in the black.
This is the second in a two-part story. Part One covers the Bay Bank’s work to match landowners with conservation partners
12 August 2011 | The Rudolph Family has been farming in West Virginia for generations, and Mike Rudolph doesn’t want that tradition to end. So he decided to team up with the Pinchot Institute’s Bay Bank to look for ways that conservation could pay off — literally. The bank – along with the Cacapon and Lost Rivers Land Trust, helped him develop a land management plan that would generate ecosystem and Brook Trout habitat credits — one of the voluntary habitat credit protocols unique to the Bay Bank.
Though the national compliance banking model has been relatively successful in California and Florida, it plays a much smaller role in habitat protection in the rest of the country, according to the Bay Bank, which looks to address the gap by developing habitat credit protocols.
These protocols are based on the habitat priorities established by the State Wildlife Action Plans (SWAPs), which were developed to respond to the variety of pressures these habitats face. They do not, however, include a financing mechanism. If successful, voluntary habitat credits could rectify that.
But first, landowners must be willing to adopt the necessary land management practices to earn the credits.
The Necessary Steps
To earn these credits, Rudolph will have to ensure that the habitat remains viable, as it is right now. Currently, the property contains many of the characteristics that are important to healthy brook trout populations, including 200 foot buffers around the streams with existing trout populations, a high percentage of vegetation and a low percentage of invasive species.
Though the Rudolphs already engage in sustainable farming, they will have to ensure that these habitats remain intact for the duration of the contract established during the sale of the credits. This could include active monitoring of invasive species and managing the deer population; the exact approach will depend on the credit type.
Developing a Protocol
The characteristics that are important to any specific habitat credit are determined by the protocols, which are developed in a partnership between conservation NGOs, research experts and state agencies.
The protocol for the Brook Trout Habitat credits was developed in a partnership between the Bay Bank and experts from the National Fish and Wildlife Foundation, Defenders of Wildlife, the Nature Conservancy and State DNRs. This protocol details the habitat requirements for brook trout in cold water streams so that someone can go in to the field and look at the land with the habitat of the Brook Trout in mind.
Kevin Anderson, the Chesapeake Bay Land Protection Coordinator for Trout Unlimited sees easements and conservation to be exactly what is needed for protection of brook trout.
“TU has long recognized the importance of preserving land with easements and similar agreements to protect trout habitat,” he says. “It is especially important in areas where a lot of land is in private ownership, not unlike the Chesapeake Bay Watershed.”
The protocol weights and aggregates the habitat characteristics and gives a final score for credit value of a property. Beyond these landscape characteristics, the habitat protocol requires that the property be in a priority area for that particular habitat. For brook trout, that means the locations outlined by the Eastern Brook Trout Joint Venture and Trout Unlimited.
The priority set by Trout Unlimited is based on the results of the Conservation Success Index (CSI), a geo-spatial tool. This tool examines a variety of criteria including habitat, population integrity and future threats. It also examines at the sub-watershed scale to understand the condition of the brook trout in that specific region, according to Anderson. This helps inform the kind of strategy to pursue.
“We make sure this project is in those spots so we can make sure we are targeting credit investment in the areas that have been identified as being most important,” says Erik Sprague, the manager of the Bay Bank. .
The Conservation Fund recently calculated the number of credits available on the Rudolph land using this protocol. A total of 17,826 Bay Bank habitat credits can be generated, including 3,468 Brook Trout credits. The remaining credits are from the mature forests and shale barens located on the land.
To benefit financially from these potential credits, the land owner does have to give up some control and take on responsibility for the condition of their land. In addition, since these are voluntary credits, the exact management plan will depend on the negotiations with the buyer.
A Unique Approach
While land conservation is not a new concept, the Bay Bank’s habitat conservation approach is unique. These credits require responsibility on the side of the landowner and stricter monitoring to ensure the viability of the credits.
“The landowner does have some requirements that are different than easements or cost-share that are currently available to them. In some ways, they are more restrictive,” says Sprague. “They are much more targeted in the landscape, to the habitat themselves and not the whole property.”
This difference from a traditional easement has strengths and weaknesses.
“If we protect a great big piece of land for a specific species and that species should go away a 100 years from now, we still want to have reasons for that easement to be there,” says Nancy Ailes of the Cacapon and Lost Rivers Land Trust.
Putting credits up for sale means that the landowner has said they will maintain the condition of the habitats on their property for a set amount of time, up to 150 years. This removes the threat of development but also requires the landowner to actively protect aspects of their property. .
“The credit means that we have gone in, we have assessed the condition of those shale barens,” says Sprague. “As they are, here are the credits you have available. If you sell those credits, those conditions cannot change.”
The sale of any credits requires a land management plan that describes the type of activities needed to maintain the current condition of the land. In addition to removing invasive species and managing deer populations, the Rudolphs will have to fence the cattle from the stream to protect the Brook Trout population.
Monitoring the condition of the land is a key aspect for buyers; the land management plan includes the group responsible. For the Rudolph property, the Cacapon and Lost Rivers Land Trust will be that group.
Ailes says that the Rudolph’s will have to change little to comply with the terms of their management plan.
“They are excellent stewards of the land to begin with,” she says. “That is why we can put their properties on the top of our list to protect…How many farms do you see with old growth forest on them? They just don’t exist around here but they do with that family.”
However, the Land Trust will have to ensure the Rudolph’s continue these practices. Monitoring will involve annual visits to the property to ensure that the conservation easement and protection is upheld. Most likely, because this is more specific than an easement, additional groups will be involved in monitoring the property.
“Another group that has a whole lot more strength and background in the particular credit would also come in to monitor the property to make sure the management plan is being followed,” says Ailes.
“We see land trusts as playing a key role there and potentially government agencies, provided they get the technical assistance they need to actually monitor these agreements for the Brook Trout credits,” says Anderson.
The contract’s length also factors into the number of credits a landowner will have available to sell. If a landowner decides to engage in a contract of 100 to 150 years, they will receive 100% of the credits generated by their conservation activities. For a 50 year contract, they will receive only 50% of the generated credits. The minimum contract length is 20 years, in which case a landowner would only receive 20% of the credits.
The Rudolph property has opted for permanent easement, making it attractive to buyers and conservationists.
“Perpetual conservation is ideal, it is something we all strive for,” says Sprague. “At the same time, we know there are some real barriers to that with landowners.”
However, the effort of the landowner means little if there is not a way to sell the credits. The Bay Bank must work with its partners and government agencies to ensure a smooth transaction process. There are many moving parts in any contract — including how they fit into traditional easements.
“One thing we are going to have to be involved in in the beginning, is helping (the government agency) get comfortable with ‘how do credits fit in to how I traditionally do conservation, what are they, legally how do they fit with different easements that we use?’” says Sprague. “We are kind of working through that process now.”
To ease that process, the Bay Bank has incorporated many of the Chesapeake Bay’s existing market standards and protocols already in place while adding the voluntary habitat protocols.
The Bay Bank’s teams has to find a demand for these credits—without interested buyers, there is little point for landowners to generate credits. Though the Bay Bank focused on filling in gaps that exist in habitat conservation, they still run into the fact that there is not a compliance market to stimulate demand for the voluntary habitat credits. Instead, they must actively work to create interest in purchasing.
Right now, Sprague and the Bay Bank are working to recruit buyers for the Rudolph’s voluntary habitat credits. These potential buyers include private individuals and government agencies..
For this project, buyers are purchasing the credits directly from the family. Because of this, the landowner and their service provider, the Cacapon and Lost Rivers Land Trust, is negotiating directly with the buyers.
Though landowners and buyers can connect through the marketplace, Sprague is not sure who will be responsible for negotiations between the two parties in the future. He says that some agencies and foundations may prefer to work directly with the Bay Bank but that Trout Unlimited could also be responsible for this piece of the transaction.
“There is potential for confusion down the road about who they are working with but at this point, we are just trying to get transactions going,” says Sprague. “We are being pretty open to how that works.”
The credits that remain unsold later this summer from the pilot project will be up for sale in an auction format. The auction will present the property and the different available credits to the foundations, agencies, corporations and individuals that the Bay Bank and its partners have recruited. In addition, the Bay Bank has seat funding from the National Fish and Wildlife Foundation to purchase credits. The National Resources Conservation Service has also provided a certain amount of matching funds for the yield of the auction.
By the time of the auction, Sprague thinks that other conservation projects will have yielded credits that can also be put up for auction, providing even more options for potential buyers.
However, in the future, Sprague hopes that an auction will not be required for every conservation project. A more stable business model will be required to attract landowners, such as building a conservation fund with a land trust, watershed group or a foundation as the fund holder. This group would be responsible for purchasing the generated credits.
In fact, one of these funds is in the works right now. The Bay Bank is working with Trout Unlimited and other partners to build a conservation fund for Frederick County, Maryland and the Potomac Basin. Using this fund, the Bay Bank will be able to display the amount of funds available for a specified credit type to interested landowners.
“Hopefully that will be a strong cue to get land owners interested,” says Sprague.
While Trout Unlimited may be responsible for building similar funds in the near future, Sprague sees other land trusts, watershed groups and foundations holding this position as well. “We think that a fund holder approach can be a good way to encourage this voluntary market to sustain itself,” says Sprague.
What Lies Ahead?
This is just the beginning for the Bay Bank. The completion of their first pilot project will allow them to assess areas where they still need to grow.
Currently, they are focusing on developing a stable funding source. More landowners will be willing to go through evaluating their property and adopting a management plan if there is an established buyer before the process begins.
One thing the Bay Bank does indicate is the continued development of credits that deliver co-benefits. As a habitat credit, the Bay Bank’s primary motive is biodiversity. However, protecting a habitat will also have positive implications for the watershed overall.
From the point of view of the Bay Bank, this approach to conservation ensures not only standing trees but well-maintained areas of land that provide a whole host of ecosystem services.