Environmental Markets: the Good, Bad and Ugly, an Astor Lecture

By Sayan Roy, WSPM student 2019-20

On the 30th of October 2019, the School of Geography and the Environment played host to the Astor Lecture organized by the Smith School of Enterprise and the Environment. Professor Michael Hanemann delivered this Lecture on the topic of environmental markets, their applications and limitations. Professor Hanemann is currently the Julie-Ann Wrigley Chair in Sustainability at the School of Sustainability at Arizona State University in addition to being the Chancellor’s Professor (Emeritus) at the University of California, Berkley in the Department of Agriculture and Resource Economics. When faced with intractable issues in sustainability, such as the prudent allocation of water resources, economists often provide valuable insights into what markets can offer towards addressing these challenges; Prof. Hanemann’s delineation of what environmental markets are ‘good for’ and ‘bad for’ were instructive.

Fundamental to environmental economics is the notion of the externality and its economic regulation through taxation. This is exemplified by Pigouvian taxes (an instrument of economic regulation) that help arrive at a socially derived optimum for pollution of some kind (an externality). A key takeaway from this lecture was that attempts to address an externality on the basis of a supposedly ‘objective’ scientific determination without paying attention to concerns of distribution stands a great risk of trampling over the real identities and concerns of people. In other words, economic markets treating everyone as equally affected by a given environmental problem is problematic. Prof. Hanemann therefore argued that it was the prerogative of economics to “identify the circumstances that effect equity” in order for governments to effectively deploy the right choice of instruments in economic regulation such as taxes in service of social good. His call-to-arms was for a “meta-theory of which externalities (emphasis author’s) merit an intervention” – ultimately governments have limited financial resources to tackle environmental problems and therefore a sound basis for allocation is absolutely critical.

The lecture also looked at specific examples of water rights and water markets. Prof. Hanemann illustrated that in spite of a robust legal setting in the Colorado river basin in the United States, where any amount of disruption in return flow to the river can be a basis for challenge in water courts, tradable water rights resulted in short-run flexibility (e.g. transfer of water rights from a farmer to a city for domestic water use), but long-term lack of overall use reallocation. In contrast, Professor Hanemann offered the reason for the success of reduction of Sulphur Dioxide globally as being that the overall caps or limits played a much larger role than the actual trading.

The Astor Lecture left the audience to grapple with some complex questions – how do you draft a regulatory agreement on behalf of unborn generations that essentially takes into account inter-temporal considerations? Prof. Hanemann certainly did not shy away from giving definitive statements on complex issues. What do you do if there is a river, forest or mountain that is sacred to a group of indigenous people but has extractive economic value for the rest of society? In his words, it comes down to veto power. If the group that values the resource as sacred can use their veto to block others’ rights to use it in an extractive manner, then it is settled. But in an absence of a veto, society does not value one group’s rights to a (sacred) resource as much as another’s rights to use it for a different (extractive) purpose.

 

Oxford led research on the Nile River enters the global spotlight

The research of Dr Kevin Wheeler has becoming increasingly salient with the forthcoming completion of the Grand Ethiopian Renaissance Dam on the Blue Nile River. As the countries of Ethiopia, Sudan and Egypt continue to negotiate over the initial filling of the new reservoir and the future operation of the largest hydropower dam in Africa, recent proposals have emerged from the countries that reflect coordinated approaches brought forth through Oxford’s long-standing collaborative research with various stakeholders in the region. Over the last month, the politicization of the issue has provoked the involvement of the USA and the World Bank, with commensurate international media attention referencing the work of Dr Wheeler and his regional collaborators (see more here: 1, 2, 3).

[Figure 1] Presenting the Nile Model software.

After presenting at the second annual Cairo Water Week, Dr Wheeler has continued his joint research with the University of Khartoum by organizing a workshop in Sudan with participants from across the region to discuss coordinated strategies for managing multi-year droughts in the Nile. As the first of a series of three workshops funded by GIZ and supported by the Oxford Martin School’s Programme on Transboundary Resource Management, this event brought together faculty and students from local universities with governmental researchers and dam operators from the three countries to share existing drought research and evaluate analytical tools that can be used to explore future cooperative management mechanisms. 

 

How can we increase capacity for water-related climate adaptation? Lessons and opportunities from Ethiopian river basins

New blog from Dr Ellen Dyer (University of Oxford) shares insights from a session themed around increasing capacity for water-related climate adaptation, hosted by REACH at the African Climate Risk Conference on 7 October.

Is the River Cherwell a Drinkable River?

By Isabel Jorgensen, WSPM student 2019-20

Citizen science is becoming increasingly popular, particularly for data collection. It is able to improve knowledge and stimulate great public participation and action. However, questions about data quality and accessibility linger. One such example is  Drinkable Rivers, an international organisation based in the Netherlands that aims to increase engagement with water-related issues universally. Drinkable Rivers has the specific goal of making all rivers drinkable again for the benefit of humans, biodiversity, and natural resources more broadly. In this context, the Water Science, Policy, and Management (WSPM) MSc. students set out on a rainy Thursday afternoon in October to discover if the River Cherwell was, indeed, drinkable.


[FIGURE 1] Lukas Larsson and Isabel Jorgensen assessing clarity in the River Cherwell using a Secchi disk. Source: Abigail McGuckin

When we reached our sampling sites near Parson’s Pleasure in University Parks we divided into sub groups. Each group went to a different site in the same general area and evaluated location, surroundings, smell, colour, E.coli, pH, phosphate, TSS, and clarity. The sampling had varying success, partly due to the poor weather conditions, technical difficulties and equipment failures. As a result, the data quality was mixed and findings more reflective of the rainwater due to sample contamination. Nevertheless, these difficulties generated valuable feedback for iterative development of the monitoring methods, and will hopefully improve the process and data quality of future monitoring efforts.  Suggestions ranged from laminating the instruction manual, including multiple pH strips and sealing them, providing a briefing on sampling protocol prior to entering the field, and allowing more specific and spatially extensive observations about the riparian zone. That being said, it was encouraging and satisfying to see the data displayed on the simple and elegant user interface.

Ultimately, whilst Drinkable Rivers is an intriguing initiative to enhance citizen engagement with water science and gather data en masse, it currently suffers from clear (although easily resolved) data quality and sampling issues. If these issues are addressed through proven actions like volunteer training and iterative revision of the methodology, the project is likely to be highly effective at gathering data and engaging local communities, and we may then know if the River Cherwell is drinkable.

 

Remedies for streamflow depletion in the United States

By Isabel Jorgensen, WSPM student 2019-20

The average person uses about 4500 litres of water per day, 96.2% of which is “virtual” water contained in agricultural or industrial products. In the United States, 95% of the national water footprint is due to crop production, with just 7 crops accounting for 75% of groundwater consumption and 50% of surface water consumption. Speaking on 25 October 2019, Dr. Landon Marston, an American researcher from Kansas State University, tells us that this is causing substantial streamflow depletion in the nation’s rivers. He anticipates that streamflow depletion greater than 20% will have significant impacts on aquatic ecosystems.

To address this problem, Dr. Marston explains why we must understand who is driving this overexploitation of US rivers. The answer may seem fairly straightforward: agriculture is responsible for 95% of the nation’s water consumption, 74% of which occurs in just 10% of US counties. However, the problem is not so simple. Certain water-intensive crops are favoured by farmers because they are subsidized (5 billion USD is dedicated towards rice subsidies in Mississippi) or they are lucrative exports (11% of the UK’s blue water footprint comes from the USA, with rice constituting 26% of this). Thus, whilst the repercussions of agricultural water usage manifests in ways such as streamflow depletion, reducing this usage might be seen as economically inviable.

To this end, Dr. Marston proposes two remedies: rotational crop fallowing and improved water productivity. Using the Colorado River Basin as an example, Dr. Marston states that to prevent streamflow depletion exceeding the critical 20% threshold in the upper and lower basin, rotational crop fallowing would respectively need to save 345 MCM (million cubic meter) and 2391 MCM per annum. The room stirs with alarm at some of the figures, particularly in response to a statistic predicting a required reduction of 100% in cattle feed irrigation in the lower Basin to meet ecological needs.

Knowing he has captured his audience, Dr. Marston poses the question: “what if all water users adjusted their water use to match their industry benchmark level?”. His team’s forthcoming paper answers this question at length, but he gives us a preview. By using benchmarks to define scenarios of improved water productivity, they found that water savings would be greater in agriculture than in all other industries combined, and that alfalfa (a cattle feed crop) has the biggest potential to contribute towards this aim. Moreover, he notes that some basins have a greater potential to benefit from water savings (i.e. a different water elasticity) in regards to streamflow depletion. Recognising the serious implications for the cattle industry that his research has, and coming from a farming background himself, Dr. Marston drives home the point that the ultimate driver is our desire for cattle products. If we really want to see changes in agricultural water usage, we must align our consumer choices with these aims.

In short, agricultural water represents a major drain on US water resources, but also has huge potential for water savings through remedies like fallowing and increased productivity. Creating these water savings is critical to protect the ecological viability of the nation’s rivers and prevent significant ecosystem impacts that have consequences for other users. Moreover, and possibly most importantly, whilst fallowing and improving productivity show large potential water savings, these can only become actual water savings with proper policy and regulation. With two papers forthcoming (Richter al., in revision, Nature Sustainability and Marston et al., in preparation), Dr. Marston has certainly whet our palates for their findings.

 

Rivers are changing all the time, and it affects their capacity to contain floods

The rainfall that has inundated the North of England is the latest in a long line of flood events that are becoming the country’s new normal. Indeed, across the world, flooding is expected to become more frequent and more extreme as the planet heats up…

Read more here.

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Jubilee River Scheme: A Flagship or a Failure?

By Harnoor Kaur, WSPM ’19-’20

On 18th October 2019, WSPM students explored the Jubilee River Scheme in Maidenhead and Eton. The “Jubilee River” flood alleviation scheme opened in 2002 with the goal of averting flooding in Maidenhead, Windsor, Eton and Cookham by creating an artificial waterway parallel to the River Thames; the new channel allows additional capacity of water to flow through during times of flooding, bypassing over 3,000 properties in the area.


[Figure 1] The main channel of the River Thames at Maidenhead. The Jubilee River channel leaves the Thames upstream of Maidenhead and re-joins it downstream of Windsor.

During the field trip, the UK Environment Agency described the planning and creation of the Jubilee River Scheme. The scheme’s parallel channel has helped avert floods 30 times since 2002 and has prevented damage to property and life during the floods of 2003, 2012, and 2014. Additional benefits of the project were also highlighted: this £110 million project has provided the local community with new water and recreational services—religious & community feasts, embankments, footpaths, landscaping, navigation, water quality assurance—beyond flooding prevention.

 

[Figure 2] The WSPM class exploring the Dorney Wetlands.

In assessing residents’ perception of this project, the Agency found people living in the flood zone were extremely satisfied, while those living downstream of the installation were not. However, this was not a formal survey, and they did not conduct an inquiry to understand and incorporate residents’ opinions into the project.  The Environment Agency believes the scheme has led to greater resilience to floods, and has thus labelled the project a success.

Though the project was a flagship in the field of flood risk management in England, Ewan Larcombe, a local activist whom we met, viewed the scheme as a “structural” failure. Larcombe claimed that the design capacity of the project was disclosed to be 215 cubic kilometres during the Public Enquiry, but upon inauguration, it was only 170 cubic kilometres. He considers that the scheme led to structural flooding because the Agency undermined the construction by extracting excessive soil & gravel in Eton.

Larcombe has broader concerns that the issues of structural integrity and lack of integration of public input are more of a standard operation for the Environment Agency than one-off issues with the Jubilee River Scheme. For example, the Myrke Embankment, built in 1999, had a ratio of bend radius to watercourse at 2:1, which is greater than the required 10:1. Also, the backfill material of unconsolidated gravel was not favourable for compaction and foundation support, thus making the embankment prone to flooding during high waters. Additional fixes to repair the bend added to the expense of the project.

With regards to residents’ perception, the populace of Wraysbury and Datchet has felt that their reservations regarding extensive construction have been disregarded during the project appraisals. Even Larcombe pointed out that his parish in Slough was neither consulted nor briefed on the construction of the Jubilee River.

To counter his controversial claim, Larcombe has taken positive steps to create changes by joining the Thames Regional Flood and Coastal Committee (RFCC), established by the Environment Agency as a mechanism for ensuring flood projects link relevant stakeholders and consider both communications of risks and assessment of risk-based investments.  Now he is working with the agency to solicit and incorporate people’s opinions in different phases of project planning such as initial decision-making and post-implementation monitoring. 

[Figure 3] Jubilee River in Eton.

Like any other project, the Jubilee River Flood Alleviation Scheme has its advantages and disadvantages. Through this field-trip, the students discovered the different approaches to flood risk management including the importance of public participation.

 

Oxford University Innovation licenses sensors for bacterial sensing in food and water

Point of measurement devices which can accurately detect and quantify the levels of bacteria in food and water forms the basis of a new licensing deal between Oxford University Innovation (OUI), the research commercialisation arm of Oxford University, and electrochemical sensor manufacturer Zimmer and Peacock (ZP). The sensors were developed by Professor Richard Compton and Dr Sabine Kuss a Marie Curie Fellow in Oxford’s Department of Chemistry; the Compton Group having a long history of developing commercial electrochemical sensors.

ZP will develop palm-sized devices to utilise electrochemical sensing to analyse a liquid sample, in a similar way to blood sugar monitoring, and delivers results to a smartphone in 30 minutes. The Compton Group and ZP deal builds on a pre-existing relationship following the prior licensing of several technologies in the food market.

Dr Martin Peacock and Mr. Even Zimmer, the founders of Zimmer and Peacock, said: “It’s great to be able to use our capabilities to develop this new technology from Richard’s lab. We will be developing and marketing this technology to enable customers to make their own detection of quantification of bacteria in food and water. Electrochemical sensors are well suited to compact electronics that can be coupled to smartphones to give a simple numerical reading. This will change an industry, which is currently waiting for 3 days to know whether their products have pathogen Contamination”.

Prof Compton expressed his excitement, stating “I am looking forward to working with Even and Martin’s team at ZP to further develop these sensors from my group. They understand the science, the market, and have an impressively dynamic and proactive approach.” Dr Kuss continued, saying that “We know that ZP are determined to make products that are easy to use and will help to keep the public safe from water and food borne illnesses.”

Dr Jamie Ferguson at Oxford University Innovation, added: “We have a longstanding relationship with ZP and have seen success together on several food sensors. ZP bring a wealth of experience in developing the microfluidics and electronics to bring this latest development from the Compton Group to market. I look forward to hearing how the customers trials progress. We know that ZP will ensure that this technology becomes a solution that customers want to use.”

Find out more here.

 

Gigantic Nile dam prompts clash between Egypt and Ethiopia

Dr Kevin Wheeler discusses rainfall and impact to the GERD dam.

Read more here.

Behavioural Start to Water Quality Series

This year, the Oxford Water Network is organizing a seminar series on water quality, led by Dr Katrina Charles. The series focuses on the interdisciplinary challenge of achieving safe water quality. Some might think of water quality as a technical subject, focused on how to measure or treat dangerous chemicals or pathogens. Actually, water quality research is much broader and has political, environmental, and behavioural aspects that must be considered. All of which will be taken into account throughout the series this year.

People’s behaviour and water quality in households was the focus of the first talk in the series, given by Dr Robert Dreilbelbis of the London School of Hygiene and Tropical Medicine. Because expanding piped water access is expensive and progress is slow, intermediate options for pathogen treatment for household water use have been explored. While these options include filtration, solar disinfection, and purifiers, the most widely used option is simply boiling the water at the point of use. But the bigger issue is not how to clean the water, it’s how to get people to make the effort to clean it. This is where Dr Dreilbelbis’s research comes in.

Very few households that need to improve their water quality make an effort to do so, and previous work on ‘education’ around these issues has not produced significant behavioural change. Dr Dreilbelbis thus wanted to explore how changing a household’s understanding of the threat from their water could impact behavioural change by examining three options of outreach: firstly, just using standard educational messaging; secondly, using education plus laboratory confirmed results for their household water; and thirdly, using education plus providing test kits and training so households could evaluate their own water quality. Behavioural modelling indicates people are most likely to make changes when they feel there is a high threat and they have the agency to take impactful action. This project in rural India found that demonstrating that there was a real threat through either laboratory or at home testing did lead more participants (28-38%) to change their behaviours and use adequate water purification methods. Given the low costs of test kits and how that allows households to participate in the tests themselves, this seems like an effective way forward to improve water quality in households. However, more research is needed to demonstrate what is needed to sustain those changes.