Ecosystem Services – A New Tool for Mitigating Water Development?

Posted on April 9, 2012 by Martha Pagel

The use of ecosystem services as a tool for compensatory mitigation is off to a slow start in Oregon.  It remains to be seen whether state agencies will effectively embrace and implement this relatively new approach to setting priorities and standards for mitigation programs. A specific question from the standpoint of water use and development is whether a wide range of ecosystem services can be used as an alternative to “bucket-for-bucket” in-stream flow replacement as mitigation to offset new water development.

The concept of ecosystem services – defined as “the benefits human communities enjoy as a result of natural processes and biodiversity” – has been recognized in Oregon law since 2009. (ORS 468.581(3)). The law establishes a general policy to support the maintenance, enhancement and restoration of ecosystem services in Oregon (ORS 468.583). Agencies are “encouraged” to use ecosystem services markets as a means to meet mitigation needs for various programs, and are directed to consider mitigation strategies that recognize the need for biological connectivity and ecological restoration efforts at a landscape scale rather than exercise an “automatic preference for on-site, in-kind mitigation” in making mitigation decisions (ORS 468.587(2)). See “Adventures in Water Quality Mitigation” for additional background.

Despite this policy and directive, the Oregon Water Resources Department (OWRD) has not yet taken any actions to modify its mitigation policies relating to issuance of new water right permits.  Under long-standing procedures, OWRD requires mitigation for new uses that are determined to have the potential to interfere with in-stream flows needed for fish that are listed as sensitive, threatened or endangered under state or federal programs.  (OAR Chapter 690, Division 33).

The need for mitigation arises most often in the context of reviewing applications for new ground water use. When the ground water source is determined to be in hydraulic connection to surface waters providing habitat for the listed fish species, mitigation may be required to offset the expected surface water depletion. Based on guidance from a biological opinion issued in a specific water right permit matter some years back, OWRD typically requires “bucket-for-bucket” mitigation in the form of in-stream flow restoration at or above the stream reach that will be affected by the ground water use. 

Applicants generally obtain mitigation water by acquiring and cancelling other existing water rights for surface water use.  In practice, the system results in a de facto cap and trade program, conditioning approval of new water rights on the cancellation of existing rights. 

In a few regions of the state – most notably the Deschutes Basin in Central Oregon – the bucket-for-bucket replacement approach works because mitigation water is generally available through voluntary markets.  This somewhat unique set of circumstances arises because of population growth and land use changes in an area of relatively marginal farming productivity.  As farm lands are converted to housing and urban uses in and near the cities Bend, Redmond and Prineville, the existing water rights become available for mitigation purposes.

In other parts of the state – most notably the highly productive and water-efficient farming region in the mid-Columbia Basin – the fact situation is quite different.  There is very little mitigation water available because existing water rights are needed to maintain existing agricultural production levels.  The frustration for economic development interests is exacerbated by the enormous volume of flow in the Columbia River and huge reservoir pools created by the federal hydropower system, both of which are untouchable because of the regulatory limitations on new withdrawals.   

The issue of ecosystem services as a potential alternative for mitigation took center stage briefly in the 2012 legislative session – but the discussion resulted in no action. HB 4126 would have spurred availability of ecosystem services markets by focusing on improved methodologies for quantifying and applying ecosystem services “credits.” Another bill that was hotly debated but eventually died in committee was focused directly on the Columbia Basin problems.  HB 4101 would have required OWRD to “consider new mitigation options for new surface water diversions” in the Columbia River Basin. The mitigation wording was specifically intended to open the door for alternatives to the “bucket-for-bucket” approach.  By putting the ecosystem services concept to work, mitigation alternatives could reasonably include investment in high value habitat restoration, including temperature reduction or other water quality improvements in priority tributaries to offset direct withdrawals from the Columbia River. 

For many of us directly involved in the Columbia River debates in Oregon, this new approach could be a key to unlocking access to the river for new economic use.  Without this policy change, Oregon water uses will continue to see little or no new irrigation development in the area because of the lack of traditional mitigation sources.  The Governor and legislative leadership are already working on a revival of the HB 4101 discussion in 2013.

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