Forest Watershed ServiceS Transaction
Financial incentives to maintain working forests in Washington

In the face of inevitable growth in the region, Washington State forestland owners have experienced increased pressure to convert working forests and conservation forests to development and other non-forest uses.  In response, Commissioner Peter Goldmark and the state Department of Natural Resources are exploring strategies to help forest landowners access more diversified sources of revenue to support maintaining their lands in forestry, and thereby protecting forest watershed ecosystem services such as clean water, flood protection, stream shade, and biodiversity.

The Watershed Services Transaction Demonstration Project was launched by DNR, in partnership with the University of Washington, School of Environmental and Forest Sciences' Northwest Environmental Forum in June 2011.  The multi-stakeholder Forum focused on forest watershed services, and included project partners from the two participating pilot watersheds, Snohomish Watershed and Nisqually Watershed. The two-year project—2011 and 2012—envisions one year for organization and start-up; the second year for detailed analysis,  implementation, and documentation.

Two watershed endeavors
DNR and stakeholders in the two watersheds will take advantage of the opportunities presented by as-yet untapped potential for the development of ecosystem services markets and transactions involving forest landowners as the “sellers”, and the “buyers” of forest watershed ecosystem services such as utilities that provide drinking water, flood management agencies, and tribes that want specific salmon habitat protections. The project’s working assumption is that the investment by the buyers in watershed ecosystem services may compare favorably with traditional investment in constructed water facilities.  Implementation of the pilot project will result in public and transparent transaction evidence regarding what services are provided, the forest landowners who provide them, and prices paid. Key lessons we hope to learn from this project include:

• Specific land management practices that produce measurable water and habitat benefits on site and downstream
• The economic value of the benefits and the cost to provide them
• The nature of effective contractual agreements among market participants
• The monitoring program that will be necessary
• Opportunities for broader application in Washington State

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