The Economic Value Of Green Infrastructure: Calculating A Return On Investments In Parks, Watershed Restoration, Farmland BMPs, Open Spaces
By Brenda Wilt, Assistant Editor, PA Township News
Nearly everyone appreciates nature, but few of us can put a specific dollar value on a trail or park. Conservation organizations have developed a new model for evaluating natural resources that shows exactly how much impact they have on a local economy.
Townships can use this data to prioritize conservation activities, save taxpayer dollars, and provide a better quality of life.
Most people, when asked about the value of open space, forests, streams, and other natural resources in their community, would probably talk about the aesthetic and recreational benefits of nature.
Few, if any, would try to put a dollar value on environmental resources. Is it even possible to gauge the economic value of a riparian buffer or a creek or stream, for example?
According to John Rogers, president of Keystone Conservation Trust, it is not only possible to quantify the dollar value of natural resources but also imperative that communities do so to ensure their future health and sustainability.
Failing to understand how natural systems support the municipal budget and contribute to the local economy can lead to land development decisions that end up costing more than they generate in tax revenue.
“Because Mother Nature doesn’t write receipts, nature’s financial value is often overlooked or undervalued in policy debates, business decisions, and personal choices,” Rogers says.
All is not lost, though. By looking at natural resources from an economic perspective and then using that information to inform policy decisions and promote environmentally sound practices, townships can balance growth with open space to achieve the best of both worlds.
What Is Nature Worth?
How, exactly, do you determine the economic value of natural resources, though? After all, most open spaces, creeks, wetlands, and so on aren’t generating any revenue.
The Keystone Conservation Trust and its environmental partners look at the services that natural systems provide free of charge.
For example, open lands provide water supply, stormwater and flood control, pollination, aquatic resources, nutrient absorption, erosion control, air pollution removal, and habitat. Open space also provides opportunities for outdoor recreation and exercise.
The financial value of these services is based on what people and governments have been willing to pay to replace these services when land has been developed, Rogers says. This includes replacement costs, tax benefits, regulations, and fines.
“Placing a dollar value on natural system services helps policymakers, businesses, and residents see open space and nature as a portfolio of financial assets, rather than a commodity or added expense,” he says.
Natural system services work 24 hours a day, 365 days a year. Once lost, Rogers says, these services are difficult to replace and must be paid for by taxpayers.
Consider trees and forests, for example.
Will Rogers, president of the Trust for Public Land, writes in “Economic Benefits of Parks and Open Spaces” that trees control erosion, help remove air pollution, mitigate global warming by absorbing carbon dioxide and other greenhouse gases, and help cool homes and other buildings.
Citing the nonprofit organization American Forests, Rogers says that trees in metro areas are estimated to contribute $400 billion in stormwater retention alone.
To begin putting these economic realities into use, the Keystone Conservation Trust and various environmental groups have created return-on-environment (ROE) studies.
Just as return on investment studies gauge the impact of banks’ and businesses’ financial practices, return on environment studies evaluate the economic impact of natural resources on a community.
So far, the trust and its partners have conducted return-on-environment studies in seven Pennsylvania counties — Berks, Carbon, Cumberland, Dauphin, Lehigh, Monroe, and Northampton — and hope to do five more counties this year.
The ROE studies suggested that natural systems provide nearly $1 billion in services each year for each county.
According to John Rogers, these ROE studies:
-- Explain nature’s financial value in easy-to-understand terms;
-- Convey the economic significance of protecting and restoring nature to policy makers, investors, and homeowners;
-- Underscore nature’s connection to quality of life, public health, cost of living, economy, and sense of place; and
-- Can be immediately applied to policy decisions involving land use, economic development, infrastructure, water resources, tourism, and recreation.
Quantifying Economic Value
Let’s examine a few of the ROE studies performed by the Keystone Conservation Trust and its partners.
A study for the Lehigh Valley looked at the value of open space in four areas: natural system services, air quality, outdoor recreation, and property value.
-- Natural System Services — The study showed that the highest natural system services come from wetlands,
riparian corridors, and forests, which provide roughly $355.5 million in economic value every year.
Green infrastructure along streams, for instance, allows local governments to avoid expenditures of more than $110 million a year on water supply ($45 million), flood mitigation ($50.6 million), and water quality ($14.7 million).
Natural areas in the Lehigh Valley also provide more than $22.4 million a year in pollination and $2.5 million in biological control to agriculture, backyards, and landscapes.
They also contribute $219.5 million each year in habitat for insects, birds, animals, and flora, plus nearly $800,000 in soil fermentation and retention.
-- Air Quality — The ROE study estimated that the air quality services provided by pollutant-removing trees total $48.2 million a year.
Tree-covered areas store 5.5 million tons of carbon over the life of the forest, saving municipalities about $2.2 million each year in costs to mitigate damage by carbon emissions.
Photosynthesis also removes carbon dioxide from the atmosphere, releases oxygen, and sequesters an additional 181,000 tons of carbon each year, providing about $3.6 million in health and other benefits to residents.
All told, the Lehigh Valley avoids health care costs and air quality damage to the tune of about $54 million a year, thanks to open space.
-- Outdoor Recreation — The study found that about $795.7 million is spent on outdoor recreation each year in the Lehigh Valley, which includes the actual amount spent on outdoor activities plus their total impact on the economy.
Recreational activity in open spaces creates more than 9,600 jobs inside and outside the region and generates about $58.9 million in state and local taxes.
-- Property Value — Studies have shown that proximity to open space, parks, trails, and other natural areas can raise home values. In the Lehigh Valley, homes within a quarter-mile of protected open space enjoy an average premium of $14,600 in value.
The premium ranges from $2,600 in rural townships to $28,200 for homes in cities and boroughs, which typically have less open space overall.
In Cumberland County, data collected in 2015 for an ROE suggested the following values for the county’s natural assets:
-- $739.1 million in annual savings for natural system services;
-- $521 million in outdoor recreation revenue;
-- $174.8 million in annual avoided expenditures for water supply; and
-- $53.3 million in avoided health care costs due to air pollution.
An ROE study conducted for Dauphin County in 2016 showed a total of $939.2 million in economic impact, including:
-- $537.7 million in avoided costs through natural system services, such as habitat ($246.7 million), flood protection ($195.4 million), water quality ($53.2 million), water supply ($39.1 million), pollination ($36.5 million), and air pollution removal ($1.9 million) and carbon sequestration ($7.2 million) by trees; and
-- $359.4 million in annual revenue through outdoor recreation expenditures, $16.5 in state and local taxes associated with outdoor recreation activities, and 3,440 jobs in outdoor recreation.
Natural assets in townships
Keystone Conservation Trust has also done return-on-environment studies for some townships, including Kidder Township in Carbon County.
The 70-square-mile community encircles Hickory Run State Park, with thousands of acres of State Game Lands, and acts as a gateway to the Pocono Mountains.
The ROE estimates that the township’s open spaces provide economic value to the tune of $166.91 million each year in benefits and avoided costs. These include:
-- $139 million in natural system services, such as habitat ($73.6 million), pollination ($7.4 million), erosion control ($203,000), and biodiversity ($89,000);
-- $39.6 million in stormwater and flood protection, plus $8.6 million in water quality, $5.5 million in water supply, and $1.6 million in aquatic resources;
-- $2.4 million in avoided health care costs for air pollution removal by trees, including $1.6 million in carbon dioxide and $725,000 in other air pollutants; and
-- $11 million in economic impact from outdoor recreation.
Bob Dobosh, Kidder Township’s code official and environmental advisory council member, says the municipality is planning to do an updated natural resources inventory for its comprehensive plan to see if any adjustments need to be made.
“We’d like to get some Wilkes University students to help do some on-site inspections this summer,” he says.
Outdoor recreation is the main industry in the Poconos, and visitors and seasonal residents of the township come to enjoy the forests and high-quality trout streams, Dobosh says. Consequently, natural resources are at the top of the township’s list for preservation.
“We identified areas that need to be protected, especially wetlands,” he says. “People think it’s a swamp and of no value. Actually, a wetland is a natural sponge that holds runoff; without it, you don’t have clean water.”
As a result of the ROE, the township made natural resource protection a priority in its zoning and subdivision and land development ordinances and included riparian buffer regulations in its official map.
Putting ROEs To Work
Updated ordinances and enhanced comprehensive plans are the intended results of return-on-environment studies, Keystone’s John Rogers says. They are not intended to inhibit growth but help counties and municipalities achieve a balance between development and open space.
Keystone Conservation Trust suggests the following 10 actions to put ROEs to work in a community:
-- Include ROE data in decision making and begin every land use, economic development, tourism, and recreation planning process with a clear understanding of the financial value of the current natural assets.
-- Map the relative financial values of natural system services and develop strategies to maintain, restore, and enhance them.
-- Protect and restore riparian buffers and wetlands from disturbance and connect and restore open space corridors.
-- Develop a balance sheet for all new development that reflects the full cost of benefits, as well as the loss, in natural system services that will be paid by taxpayers.
-- Estimate the annual return on environment for all new proposed ordinances, greenways, and open space referenda.
-- Develop stewardship buffer zones along riparian areas and around parks, trails, and natural preserves.
-- Teach the principles of good stewardship to landowners. Create a habitat benefits calculator to help residents understand the value of backyard stewardship.
-- Offer stormwater fee abatements and free trees to encourage citizens to protect and restore critical natural system services. Offer free training for landscaping with native plants.
-- Involve schools by initiating environmental education programs to help students appreciate the value of nature.
-- Create nature literacy programs for schools and libraries that explain the value of nature and what people can do to make a difference.
Townships with a lot of open space may have an easier time of putting these ideas into practice. Even urbanized townships, however, can recapture some of the natural system services they may have lost through development, Rogers says.
“Find areas where you can plant native trees and plants next to parks, streams, or trails,” he says. “Educate homeowners about landscaping with native plants, especially if they live along a creek or stream. Naturalize passive park areas by turning them into meadows to support wildlife and pollinator habitats.”
The work of Keystone Conservation Trust and its environmental partners shows that it is difficult to have a strong economy without a healthy environment and plenty of open space, Rogers says.
More and more businesses want to locate in areas with access to natural resources and a focus on sustainability.
Making natural resources a factor in land use decisions simply makes good economic sense, he says.
“Use open space as green infrastructure to provide services that nature often does much better to begin with, such as stormwater control and pollution reduction,” he says. “You will not only save taxpayer dollars but also provide a better quality of life.”
Environmental Groups Use 'Eco-Pricing' To Put Value On Natural Resources
Knowing the economic impact of its natural resources can help a township make smart land use decisions. How, exactly, do you determine the dollar value of the services provided by trees, streams, and wetlands, though?
The value of the services that natural systems provide, such as clean water, pollution reduction, and stormwater control, is the amount that people have been willing to pay for these services in the past and in other places.
Environmental groups use a process called “eco-pricing” to determine what that amount is.
For example, one of the environmental challenges many townships in the Chesapeake Bay watershed face is reducing the amount of nitrogen that enters waterways. The cost of paying for this can be expressed as the cost per pound of nitrogen that is removed.
Different natural systems, such as wetlands, forests, and riparian buffers, remove nitrogen at different rates per year.
Using the average cost of nitrogen reduction practices, an annual eco-price value can be calculated for each natural system.
Similar calculations have been done on a variety of natural systems and the services they provide, allowing environmental groups to estimate the economic impact of a community’s natural resources on the local economy.
(Reprinted from the April issue of PA Township News as “The Value of Nature: Can Parks, Streams, And Open Spaces Help Boost A Township’s Economy?” For information on how you can get your own copy, visit the PSATS PA Township News webpage.)
The return on environment studies mentioned in this article are an initiative of Keystone Conservation Trust and Audubon Pennsylvania as part of the Kittatinny Ridge and Appalachian Trail Conservation Project.
The Kittatinny Ridge curves with the mountain ridge starting at the Mason-Dixon line in Fulton and Franklin counties, moving northeast through Cumberland, Perry, Dauphin, Lebanon, Berks, Schuylkill, Lehigh, Carbon, Northampton, Monroe and ending at the Delaware River.
So far, the Keystone Conservation Trust has completed or is about to complete 8 county return on environment studies within this area-- Berks, Carbon, Cumberland, Dauphin, Lehigh, Northampton, Monroe and Perry-- as well as 8 townships.
The ROE studies for several of these counties have been supported by a combination of sources, including the William Penn Foundation, the Foundation for Pennsylvania Watersheds and individual counties.
The Lehigh and Northampton county studies, for example, were an initiative of the Lehigh Valley Planning Commission.
When the Trust completes an ROE study, it not only makes available a written report summarizing its findings, but also lots of background data and GIS information.
That data can then be used by the county or township to analyze various options for making investments in green infrastructure in the future.
Examples include Warrington Township, Bucks County which is using the information to evaluate options for 50 or 100 foot wide riparian stream buffers.
In Northampton County, the data was used to help justify a $2.2 million investment in open spaces preservation.
For more background on the ROE process, read “Can Money Grow On Trees?” by John Rogers, Keystone Conservation Trust, PA Recreation And Parks Magazine, December 2016.
For more information on this initiative, contact Jeanne Barrett Ortiz, Kittatinny Ridge Program Manager, 215-519-5648 or send email to: email@example.com. or John Rogers, Keystone Conservation Trust, or send email to: firstname.lastname@example.org.
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[Posted: Oct. 11, 2018]
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