When Hurricane Katrina’s storm surge – the highest in recorded history at 27.8 feet – hit New Orleans’ St. Bernard Parish in August, 2005, the floodwaters breached levies and poured in first from the north and the east. And then from the west. Homes filled with water up to their 10 foot ceilings in fifteen minutes. In a few hours, the once bustling New Orleans suburb was wholly inundated.
Meanwhile, in the days before and after the category five hurricane left its historic mark, residents of the entire US south would cede their roadways to military-esque convoys of Entergy electric utility trucks headed single file to and from the heart of an infrastructural and humanitarian nightmare.
Days later, over 26,000 homes in the parish were destroyed in a toxic soup of floodwaters and oil. Years later, Entergy would account for millions of dollars in losses of “substantial assets” it described in 2010 as being “damaged, lost or totally destroyed.” And that’s after employing one of the region’s most advanced emergency management systems.
By now it’s well understood that many of these losses – of lives, homes and infrastructure – could have been prevented with greater attention to New Orleans’ aging infrastructure and emergency management.
But what about shoring up the “disappearing coastline” itself – where now-degraded wetlands were once the region’s first line of defense against storm surge and flooding?
Enter the American Carbon Registry’s (ACR) proposed methodology for the Restoration of Degraded Deltaic Wetlands of the Mississippi Delta, written by Tierra Resources and contributors, and released Wednesday for public comment. Assuming it passes technical muster, the methodology could guide the United States’ first approaches to coastal wetlands restoration.
“Wetlands help with flood protection by slowing down the surge,” explains Sarah Mack, Tierra Resources founder and CEO, and former Technical Administrator at the Sewerage & Water Board of New Orleans. “If it’s a forested wetland, the tress or the bushes take the waves off of the surge – the kind of waves that tended to destroy the levies.”
“And in New Orleans, 80 percent of flooding was due to levy breaches,” she concludes.
As if being the “first” anything isn’t stressful enough, any future projects and resulting revenues are anticipated to chip away at the colossal cost of the Deltaic coast’s wetlands restoration – an effort that Louisiana’s Comprehensive Master Plan for a Sustainable Coast last week priced at $50 billion or more. And that’s just the cost of priority projects that State thinks it can actually fund – higher estimates for coastal restoration reach into the $100 billion range.
On top of that, Restoring America’s Estuaries recently estimated that coastal habitat restoration could create more than twice as many jobs as the oil and gas and road construction industries – combined. The report specifically cites restoration efforts underway in New Orleans’ Central Wetlands Unit.
And don’t forget the aims of companies like Entergy, which financed the methodology’s development and intend to one day purchase credits from the projects. Not only do they see the project as having a positive impact on the communities where they operate, but hope they can better insulate their own infrastructure from future natural disasters.
Job creation? Flood prevention? Infrastructure risk mitigation? No pressure or anything.
But in fact, despite the Delta region’s tall order and insufficient resources, methodology developer Mack is optimistic. “The price tag for restoration is so high and the state won’t be able to come up with it all, so carbon finance can play a critical role,” she explains.
Can carbon finance really generate the billions of dollars sufficient to tackle Deltaic wetlands restoration costs, given that the value of all voluntary carbon transactions worldwide was valued at $424 million in 2011?
Not entirely, Mack says, but explains that their 40-year project model – which assumes that the credits could command $12 to $25 – estimates potentially $5 to $15 billions of dollars in funding over time.
That’s assuming that a future project encompasses even ¼ of the four million acres of eligible Deltaic coastal zone. Mack says the projects’ sequestration potential ranges from five to 15 tons of carbon dioxide or the equivalent in other greenhouse gasses per acre – or more, if the methodology eventually expands to include the prevented loss of carbon from wetland soils.
The above-average modeled price takes into account the value that buyers may place on the healthy wetlands’ community-based benefits, and ecosystem and economic services that extend to the broader U.S.
The expected above-average demand for the credits could come from purely voluntary buyers, but Mack – and ACR, too – are also quick to point out that the California Air Resources Board (ARB) has included the methodology on a short list of project approaches to potentially revue for future use in the state’s cap and trade program.
Hence the compliance program-friendly performance benchmark approach to additionality and modular methodology elements that in the future can be applied to coastal wetlands across the U.S.
However, market participants point out that the methodology involves some land use activities, which are penalized in the California regulation’s buyer liability policy. Compliance-grade forestry credits currently incur a price discount – at $7.5 to $8.5, trading at around $2 lower than other eligible offset types – to which other land use credits like these may not be immune.
Whether or not the US-based compliance program will bear the torch for regional restoration, some purely voluntary buyers like Entergy have already come around to the value in valuing wetland services.
“Entergy has billions of dollars in assets, millions of customers and thousands of employees along the gulf coast,” says Entergy’s Mike Burns, “so it’s really no surprise that we’ve been a strong advocate for an aggressive approach for saving the gulf’s coastal wetlands.”
Entergy provided a total of $150,000 in two grants to support the methodology’s development. Not the first time the utility has been an early actor in the carbon markets, Entergy made its first GHG reduction commitment in 2001 and reports 69 MtCO2e reduced or offset in two 5-year periods ending in 2010.
“Entergy has long been an advocate for public policy to combat climate change and I don’t expect our position to change any time soon,” he continues. “And using the local wetlands as a carbon sink to combat climate change fits perfectly with Entergy’s beliefs.”
Burns says Entergy is now “in the process of coming up with a new environmental goal that will obviously include some level of GHG reductions,” but is still in the works.
In the mean time, Tierra Resources and others will continue their work that started soon after the Katrina disaster. Mack founded Tierra resources in 2007, which initiated the methodology development several years before Entergy stepped into the ring. Currently under contract with the St. Bernard parish government, part of her scope of work has been to look at environmental finance and carbon credits as a way to fund restoration projects.
Mack is by now well versed in Louisiana’s risky wetland dilemma, but the methodology’s several modules for different project, baseline and other scenarios could one day be applied to coastal wetlands beyond Louisiana borders – which encompass most but not all of the Mississippi Delta.