1. by Ching-Wen Cheng (LA), Daniel Gaebel (RPB), Janelle St. Pierre (RPB), and Anna Willow (EE) September 14, 2001 A Multidisciplinary Master’s Project

2. Outline The Hennepin floodplain : An introduction Natural History Policy and Economics Site analysis Proposed restoration plan Education and interpretation Conclusions and Recommendations

3. Client and Advisor Our client, The Wetland Initiative (TWI), is a not-for-profit organization with a mission to enhance water quality of Illinois River. Our advisor, Dr. Michael Moore, a professor in SNRE, specializes in environmental economics and water policy.

4. Location

5. 2,544 acre floodplain of Illinois River Used for agriculture since the early 1900’s The Wetlands Initiative, having facilitated the acquisition of the property, is restoring the floodplain Hennepin Levee District

6. Regional Context Natural History –Geomorphology –Hydrology Human Activity Illinois River Basin –Loss of floodplains –Water pollution –Land Use

7. Animal and plants species that may use the restored Hennepin Floodplain as habitat. Beaver (Castor canadensis) Yellow Monkey Flower (Mimulus glabratus) Canvasback (Aythya valisineria)

8. The ecological sustainability and function of the restored floodplain; The creation of floodplain-based environmental education interpretive program; and The political and economic likelihood of using the floodplain to generate nitrogen pollution credits. Research Goals

9. Policy and Economics Restoration PolicyRestoration Policy Regional and Local IssuesRegional and Local Issues Economics of RestorationEconomics of Restoration Watershed-based TradingWatershed-based Trading

10. Upper Mississippi Basin –Land use –Hypoxia Illinois –Water quality –Urban and rural influences Hennepin Regional and Local Issues

11. Nitrogen Fertilizer Use in the Mississippi River Basin

12. Ecological and economic effects of anthropogenic hypoxic zones in coastal regions.[i][i] System Area Affected Km 2 Benthic Response Benthic Recovery Fisheries Response Kattegat, Sweden– Denmark 2,000Mass Mortality SlowCollapse of Norway lobster, reduction of ocean bottom fish. Black Sea North- west Shelf 20,000Mass Mortality AnnualLoss of ocean bottom fisheries; shift to planktonic species. Baltic Sea100,000EliminatedNoneLoss of ocean bottom fisheries; shift to planktonic species. [i][i] Table adapted from Diaz, R. J. and A. Solow. 1999.

13. Best Management Practices Federal and State Land Retirement Programs –Conservation Reserve Program –Illinois CREP Federal and State Water Quality Regulations –Total Maximum Daily Loading –National Pollution Discharge Elimination System Nitrogen Reduction Policy

14. Opportunity cost of foregone agriculture Nitrogen Reduction Cost of floodplain restoration Economics of Floodplain Restoration

15. Nitrogen Reduction Removing Agricultural Land from Production –Nitrogen Fertilizers –Legumes Denitrification –Capacity –Assumptions Costs –Acquisition –Restoration

16. Present Value and Annualized Costs of Nitrogen Removal Present value cost of restoration = $19,080,377 Annualized cost of restoration = $1,282,501.04 Annualized cost per ton = $2596.16

17. Lead in to nitrogen farming

18. Nitrogen Farming requires 5 components: - Polluted water, -A parcel of land, -Adequate hydric soils, -Energy to achieve and maintain inundation; and -A Credit Market TWI’s Vision: Nitrogen Farming

19. Watershed-Based Trading What is it? Why is it being done? Who is doing it?

20. What is it? - Watershed-based Trading is a market-based system that allows the buying and selling of effluent credits, within defined watershed boundaries, in order to meet water quality standards of individual dischargers and the watershed as a whole. - Credits are generated when a discharger reduces effluent below levels required by regulations, or restoration of natural functions of the watershed reduce effluent levels.

21. Elements of Credit Trading Trading systems: - Open - Closed Trading Partners: - Point sources - Nonpoint sources - Intraplant - Reducers Trading Ratios: - Uncertainty - Delivery - Retirement Trading set-up: - EPA Guidelines - Local regulations

22. Why is it being done? -Cost-effectiveness -Flexibility -Cooperation

23. Who is doing it? The Case Studies: 1) Chesapeake Bay - Nutrient Trading Negotiation Team 2) Long Island Sound - Long Island Sound Study 3) Tar-Pamlico Basin - Tar-Pamlico Nutrient Trading Program

24. Turning to Trading: Common Factors -Recognition of a substantial threat to an important waterway, -Development of coalitions of stakeholders from multiple sides of the issue; and -The political will to create or legislate the administrative capacity to facilitate a trading program.

25. Effects of Hypoxia

26. Application to Illinois Challenges: - TMDLs have yet to be designated - All NPS control measures are voluntary - NPDES permits restrict credit trading Innovations: - Emissions Reduction Market System for the reduction of ground level ozone - Piasa Creek Watershed Project

27. Forces for Change in Illinois -Local Efforts to respond to high levels of nitrogen -Pressure from a coalition of States to address Gulf of Mexico Hypoxia -Sound case studies that demonstrate the benefit of alternative methods of nutrient reduction

28. Conclusion

29. Ecological values Economic sustainability of restoration Cultural resources Design components Multiple Uses of Floodplains

30. Management Recommendations Sustainable funding for restoration Balanced use of floodplain wetlands –Ecology –Economic –Public access and education –Cultural resources Determine appropriate organization for long-term management