Research & Policy

What is the Value of Clean Water?

Photo Credit: Jamie Belanger

What Is the Value of Clean Water?

The 282,000-acre Sebago Lake Watershed provides drinking water to more than 200,000 people in the Portland, Maine area. It does so thanks to abundant intact forests that filter the water. The Portland Water District (PWD), the region’s water authority, in partnership with local land trusts, invests in protecting those forests and has received a federal filtration exemption, one of only 50 cities in the U.S. to secure such a waiver.

But only 10% of the watershed is protected. What would happen if more of that land was developed, and how would water quality be affected?  What would be the economic cost to the region, and what economic incentive might its residents have to prevent that from happening?

These are just some of the questions that a new study released by the University of Maine seeks to answer (link to Sebago Lake Report).

The study, which was commissioned by the Nature Conservancy and Highstead Foundation in coordination with members of Sebago Clean Waters, utilizes economic approaches, and current land use, ecosystem service, and conservation data to assess the costs and benefits of natural water filtration and its complementary benefits, such as recreation, clean air, climate mitigation, and fish and wildlife habitat.

Last year, the Sebago Clean Water initiative received seed funding from the U.S. Endowment for Forestry and Communities, and with their EPA and NRCS partners, they are investing in innovative, replicable models for conserving healthy, forested watersheds across the U.S.

“Maine has a long history of innovation in the conservation world,” observed Spencer Meyer, senior conservationist with Highstead, one of several organizations, including the Open Space Institute, that formed Sebago Clean Waters (link to Sebago Clean Waters Overview) to increase the pace of forest conservation in the watershed. “Now we’re building on that rich history and looking for new ways to finance the protection of these forests and the suite of benefits they provide.”

Currently, 84 percent of the watershed is forested. Between 1987 and 2009, the region lost 3.5 percent of its forest cover, and while development is not rampant, the long-term population growth in the region could result in increased development and reduced water quality. Research suggests that water treatment costs generally start to measurably increase when forest cover drops to between 60 and 90 percent. The University of Maine study found that a decline of forested area to 76 percent in the Sebago watershed could lead to noticeable increases in pollutants, such as nitrogen, sediment and phosphorous. Of course, the depth of impairment depends on the kind and location of development – sustainable agriculture does not have the same water quality impacts, for example, as sprawling, high density residential development.

The study estimates that keeping the amount of protected forestland above 76 percent threshold would cost approximately $193 million. But according to the study, the benefits of protecting those 160,000 acres would far exceed the cost: every dollar invested in forestland conservation would yield $4.80 to $8.90 in benefits, including the avoided cost of water treatment and various “ecosystem services” that include recreation, habitat protection, and carbon sequestration. The authors acknowledge that "ecosystem services" can be hard to value and accordingly suggest this broad range of values to reflect this uncertainty.

The central question the study examined is whether the PWD at some point will have to build a chemical filtration plant costing about $150 million. To finance its construction, the authority would need to raise water rates by roughly 84 percent, which would translate into $1.7M per year in additional water rates for the 10 largest authority customers. If you include the top 50 customers, the number increases to $2.1M annually.

Water users thus have a strong financial interest in avoiding construction of the filtration plant and, the study authors theorize, should be prepared to co-invest in watershed protection some amount less than the anticipated cost of the plant. The study estimated, for example, that if all water users committed the savings from not building the plant, there would be enough funds to conserve 14,000 acres a year, or the target 160,000 acres, in 25 years. It’s uncertain just when forest cover will decline to the point of requiring filtration, so the cost is potentially far off into the future. Yet the costs of inaction could be significant.

Currently, the Water Authority is spending approximately $250,000 annually for conservation of forestland that is important for water quality.  PWD will commit up to 25 percent of the purchase price, with the region’s land trusts raising the remainder from other public and private sources.  

For example, with OSI and PWD support, the Loon Echo Land Trust, Trust for Public Land, and the Town of Sebago are working to create the Sebago Community Forest, which would protect a critical forested parcel for water quality.

“The Portland Water District has played a leadership role in initiating protection of the watershed,” notes Jennifer Melville, Vice President for the Open Space Institute, which  supports conservation of the watershed’s forests through grants to area land trusts for land protection and capacity building. “We want to build on this strong commitment by securing increased support from businesses and individuals in the region, water users, and foundations to accelerate the rate of land protection and ensure that the Sebago watershed continues to produce clean water.”

Many commercial water users, such as breweries and biomedical facilities, rely on Sebago’s clean water to promote their brand, as well as to produce high quality products. Recognizing these values, Sebago Clean Waters is investigating the feasibility of creating a “water fund” that works with these users and others to make voluntary contributions to ensure a clean water supply in the future. The effort would also leverage investments from federal, state, and private sources, including Maine’s mitigation fund, state revolving funds, Land for Maine’s Future, federal Forest Legacy Program and others.

“By protecting this watershed, we can ensure clean water at far less cost than might be necessary in the future and get so many co-benefits in the process: recreation, wildlife habitat and climate control,” said Meyer. “This is once in a lifetime opportunity that we believe Mainers and others won’t pass up.”

 

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