Market Conditions Aid in Protecting Critical Resources

Publication Date: April 2, 2012

By Matt Blanchard for the William Penn Foundation

After years of being outnumbered and out-financed by development interests, Peter Howell and his staff at the Open Space Institute awoke one day to find themselves in a very different world. Almost overnight, the collapse of the real estate market in 2008 knocked housing developers – their greatest competitors – clean out of the land-acquisition game.

“It used to be land trusts would show up at the doorstep of a farmhouse and the developer would be there with a pot of cash twice as large,” Howell explains. “Now the market has collapsed and that buys us valuable time.”

Conservationists have time, yes, but not money. In the same way development capital has dried up, the recession has triggered steep declines in federal, state, and county government funding for open space preservation. Despite a wealth of opportunities, the hardworking local land trusts who assemble conservation land deals are facing the toughest times in a generation.

That’s where Howell and his team come in, providing shots of capital to push conservation deals over the finish line. OSI serves as an intermediary, using regrants and loans to apply capital to conservation deals. The organization has been tasked with deploying $5 million from the William Penn Foundation to targeted land conservation efforts in eastern Pennsylvania and Southern New Jersey.

Howell, who’s worked in the business world and for major environmental philanthropies, is guided by a bold logic for conservation in a downturn: focus, focus, focus. Rather than scattering scarce dollars across the region, he argues for targeting blocks of contiguous property large enough to preserve an ecosystem or protect a local farm economy.

"This is about focus, aggregation, and achieving a scale that really changes an area,” Howell says. “It's about creating that example, that others can see, a narrative that can inspire others to do the same.”

So where should land conservation be focused?
We’re focused on two regions of exceptional ecological and natural resource values that have a critical relationship to Philadelphia. The first is the Highlands region of Pennsylvania which is the source of drinking water for millions of people downstream, as well as a recreational mecca. The second is the New Jersey Bayshore, which is amazing both for its natural landscape values and because it’s an agricultural breadbasket, producing lots of farm products for Philadelphia and other cities.

The Foundation had previously done land acquisition in as many as 30 different small project areas throughout its grantmaking area with little cumulative impact in any one place. One of the charges we took on was, how do we focus these dollars in fewer places, the most important places, to make the biggest impact possible?  We are doing that by targeting a handful of project areas in two of the region’s most intact landscapes: the Bayshore and Highlands. (Map at left, larger version here.)

What are the accomplishments of the fund so far?
To date, the Fund has provided $1.1 million in grants and loans for 8 projects in both regions that will conserve about 1,700 acres with a total value of about $8.1 million. That's about 7 matching dollars for each dollar invested. In the Bayshore our initial project was helping The Nature Conservancy’s acquisition of 325 acres of forested lands. In the Pennsylvania Highlands we assisted the Lancaster County Conservancy's acquisition of 408 acres in the Welsh Mountain region of eastern Lancaster County.

How do you see OSI’s philosophy of focus playing out on the ground?
The Bayshore’s Cohansey River corridor [spanning Salem and Cumberland Counties] could be a great example. You’ve got farms right up against already-preserved natural areas, with a strong interrelation between the two, and if enough land becomes available there’s the potential to preserve the entire river corridor, protecting both regional water quality and hemispherically important habitat. Luckily there’s a local organization that’s pulled together some money and galvanized local interest in the region. It’s possible the group could use an early commitment toward a signature project to stimulate more state or county funding and bring the river corridor vision to fruition. We have to be thinking not just about an individual project but what kind of resources and constituency it can leverage for more nearby. By strategically selecting projects, we can allocate the Foundation’s funds to the opportunities where the greatest conservation impact is possible.

Are there other innovations in land conservation that can help during this downturn?
The typical model of conservation is I go to a person or a foundation and they pay, or I go to a county or federal government and they pay. But new models are starting to look at market mechanisms: How do we monetize the ecosystem values of the land and its resources?

There’s a great example in the Brandywine Valley of Chester County. The city of Wilmington has water quality issues, and has done enough research to know that its water quality is tied in some part to protection of the headwaters of streams that flow into the Delaware, including streams in the Pennsylvania Highlands. It has, on occasion, put money into buying land upstream. And it has put money into buying easements on farms to prevent that upstream land from being developed. Could they also buy easements that forbid the use of pesticides on a farm? Or prevent manure from running into streams?  And can they expand the program beyond what is a small commitment right now?

We’re now seeing highly-detailed easements with land management plans written into them. And this idea of downstream water users protecting land in order to protect their own water quality – that’s the kind of conservation innovation you want to see, because it establishes a market mechanism. Spending a little money upstream to preserve land means you don’t have to build a $15 million dollar filtration plant downstream.

I read something very interesting about a bowhunter who was willing to preserve his land, but only if he could keep hunting on it.
That’s an innovation we call “retained rights”. The owner was an avid bowhunter who owned a beautiful wooded wetland in the Bayshore. He was willing to sell, but wanted to retain hunting rights after he sold it. That’s great for us because, as conservationists, we can live with people retaining rights that don’t compromise conservation quality. The owner gets to continue doing what he loves, and his retaining the right to hunt reduces what we have to pay for the land. In other cases it might mean allowing recreation access for hiking, whatever it takes to prevent landowners from parcelizing the property.

We’re now four years into the downturn. What’s your sense for conservation in the market right now?
It’s true that at a moment of historic opportunity, we're hamstrung by the lack of public funding. But land trusts are showing their creativity, cobbling different funding streams together, getting donations from landowners and exploring new ways to finance land protection.

To borrow a financial term, there’s a flight to quality in this market. Where can you find landowners that will make donations? Where can you leverage the most matching funds? Where does the landowner have to make a bargain sale? This is like a whole different era. And again it’s just like in finance. Don’t overvalue property and don’t fall for the chaff. Keep focused on the wheat.

Learn more about the Bayshore-Highlands Fund here.