I begin with this photo of Santa Fe’s water treatment plant, but the story is about what happens in the forests in the background of this photo. Santa Fe Water Source Protection Fund Laura McCarthy, New Mexico Field Office

Cerro Grande Fire: too close for comfort The story begins in 2000 with the Cerro Grande Fire that burned for 3 weeks just across the valley from Santa Fe. You can see the devastating effects. The fire burned so hot that most of the soil was turned into a thick layer of ash. When the summer monsoon rains came, the ash washed off the slopes. The city of Los Alamos suffered extensive damage to their water supply delivery system from this fire. It cost them $17 million to get their delivery up and running and residents were left without water for months.

Santa Fe Municipal Watershed CITY TNC In Santa Fe, we have the City at the mouth of the forested watershed, a TNC preserve, and the headwaters on National Forest with 7,000 acres of forest that can be managed, and water collection in 2 reservoirs, plus 10,000 acres of headwaters in a federal Wilderness Area. NATIONAL FOREST

Overgrown Forests Good Reason to Worry Dense small ponderosa pines Few fire resistant, large trees Fire regime of 5-8 years Century of fire exclusion This is what the forest looked like in 2000 when Santa Fe started to worry about wildfire in the municipal watershed. The trees were so thick you could not walk through the forest. Without natural fire, which historically would have occurred every 5-8 years, the trees had grown into these dog-hair thickets where sunlight does not reach the ground, and providing poor habitat. And furthermore, the thickets are so dense that winter snowfall, which is the source of most of the water in the reservoirs, gets hung up in the treetops and branches, and evaporates before it ever reaches the ground.

Southern Sangre de Cristo -- A Conservation Priority But why should this be a problem that concerns The Nature Conservancy in New Mexico? The ecoregional assessments that we conducted from 1999-2007 helped us develop this map of conservation priorities. Everything in green is a “portfolio conservation area.” These are the places we have identified as most important for biodiversity conservation, and the Southern Sangre de Cristo Mountains, and the Santa Fe Watershed within them, are included.

Federally Funded Forest Restoration So, back to the story of the Santa Fe Watershed. Here you can see what the restored forest looks like. New Mexico’s senior Senator at the time, Pete Domenici, was determined that Santa Fe would not suffer the wildfire losses that Los Alamos experienced. Senator Domenici got $7 million of federal earmarks to cut and remove the overgrown brush and trees in the lower watershed, and around the reservoirs. Here you see a controlled burn that was ignited after the overgrown brush and trees were removed.

How to Maintain the Investment? Federally Funded Forest Restoration At the end of four years, nearly all of the lower watershed was restored with the earmarked funds. The question then became how to maintain this investment in forest restoration and this is when TNC got involved. We knew that controlled burning – a lot of it, every year – would be necessary to keep the forest open. We also knew that the FS was under pressure to help other communities that faced wildfire threats, and they were telling us they would be hard pressed to sustain funding for the Santa Fe watershed. Around this time, a Senior Managers meeting was held in Quito, Ecuador, and the NM State Director, Terry Sullivan came back and told us about the exciting new water fund. That is when I got the idea of a water fund in Santa Fe. Even though the water provider was a federal agency, we found a way to adapt the model to our situation.

Partners for Water Source Protection The first partner I recruited was the City of Santa Fe, that operated the water utility. I also got the City Fire Dept involved and they helped convinced the water division that the fire problem would come back unless there was consistent, annual management of the restore lands. The next partner was the FS, which is the water provider in this case, and whose budgets we knew were in decline. And then we engaged the Santa Fe Watershed Association which is a citizen-based group and operated a community outreach and education program

Identified Nature’s Benefits Santa Fe Watershed Management Plan 2010-2030 Identified Nature’s Benefits PROVISIONING Fresh Water 30% of Santa Fe water supply REGULATING Timing of water release Surface water year-round Water purification Natural filtration Sediment regulation No sediment in the reservoir Fire protection Insurance against large wildfire Invasive species regulation Few ways for invasives to enter Climate regulation Carbon sequestration One of first steps was to think about the benefits provided to us by the watershed. We used the Ecosystem Millenium Assessment framework to think about what these benefits might be. Beside the fresh water supply itself, sediment regulation and fire protection emerged for us as the most important benefits.

Watershed Management Plan We captured all this in a Watershed Management Plan written by the partners. The plan had four sections, addressing vegetation management, water quality monitoring, outreach and education and the financial structure of the water fund. The City Council formally accepted this plan in Sept 2009, and at that point the Water Source Protection Fund was launched.

Water Source Protection Fund The financial mechanism for the Fund is to collect a fee from water users, and then transfer the funds through a collection agreement from the City to the Forest Service. In our plan we had forecast the costs of annual burning and other treatments, plus the water monitoring and outreach and education, over 20 years. Based on these cost estimates, we concluded that we needed to collect 13 cents from water users for every 1,000 gallons they used. For my household, that would mean an average fee of 65 cents per month. Our first infusion of capital into the fund came from the NM Water Trust Board with a $1.2 million dollar grant that has bought us 3 years to get the fund running, launch the outreach campaign, and restore additional sections of the watershed.

Where are Santa Fe Voters? After hearing a brief description of the Santa Fe Water Source Protection Fund, a strong majority support the idea Before starting our outreach in the community, we wanted to know how the idea would be received. With help from the Campaigns Team and the Freshwater Priority, we were able to run focus groups and a poll to learn what the Santa Fe public thinks of the water fund idea. We ran the poll in mid-March and we found that 3 in 4 voters support the idea of creating a water fund to protect the water source. “Having heard this description, would you support or oppose this program to protect Santa Fe’s drinking

Willingness to pay a monthly fee Strongly Supportive! Willingness to pay a monthly fee We also learned that people are willing to pay for water source protection. We found that 66% are very willing to pay the average fee of 65 cents per month, and 42% would be very willing to pay 2 dollars! The water division is presenting these poll results to the City Council tonight and a very favorable story ran in the Santa Fe paper this morning.

Santa Fe Water Source Protection Fund We’ll see what comes next, and whether this model can now be replicated in the U.S., where national forests are headwater sources for many American cities. Regardless, we have a model that works in Santa Fe and we’ll be gaining experience operating a U.S. water fund. Santa Fe Water Source Protection Fund