In 2016, the North Carolina legislature commissioned a six-year nutrient management study for the purpose of reevaluating the nutrient management strategies for the Jordan Lake and Falls Lake watersheds.
In year two of the Falls Lake study, researchers at the Environmental Finance Center at the University of North Carolina at Chapel Hill (EFC) examined alternative sources of revenue, including revenue generated from recreational activities in parks and waterways, for funding nutrient reduction and water quality improvement projects. The research sought to discover examples of programs that employ usage fees to fund water quality improvement projects. Usage fees refer to charges imposed on persons that use the benefits offered by state, local, and federal protected areas. These can include boating fees, hunting and fishing licenses, and park entry fees.
There are a few states that use revenue generated from usage fees to fund water quality improvement projects, but this is mostly an unexplored area of environmental finance. The revenue from usage fees at both state and national parks is utilized for park maintenance. Even habitat restoration projects funded by usage fees are required to be directly related to wildlife-dependent recreation such as hunting, fishing, and wildlife observation. Park users are generally willing to pay entrance fees when they know that park expenses are going toward maintaining and improving services that are available to guests.
There are, however, several programs across the U.S. employing innovative methods to generate revenue specifically for water and aquatic habitat restoration efforts. Some U.S. watersheds are known for garnering political and fiscal support for restoration. The Chesapeake Bay, for instance, provides economic and ecosystem services to surrounding states, and thus those state governments have devised programs that source revenue from taxpayers who care deeply about environmental revitalization. Other smaller watersheds have issued permits to anglers who specifically want to improve the aquatic habitat and fish stock in their communities. Models of these various programs are described below.
The Chesapeake Bay Trust Fund- A Grant-Making Institution
With the passage of the Chesapeake Bay Restoration Trust Fund Act of 2007 (Trust Fund), Maryland State leaders laid the foundation for an ambitious strategy for restoring and protecting the Bay. This not-for-profit grant-making organization supports programs, projects, and best management practices that effectively reduce nonpoint-source emissions of nitrogen, phosphorus, and sediment. The Trust issues approximately 400 grants a year, totaling between $10 and $14 million [1].
The Trust Fund garners funding for the grants from a variety of sources:
- The “Treasure the Chesapeake” vehicle license plate program [2].
- Donations made through the Chesapeake Bay and Endangered Species Fund on the Maryland State income tax form.
- Donations from individuals and corporations, and partnerships with private foundations and federal, state, and local agencies.
Maryland residents can purchase Chesapeake Bay-themed license plates from Motor Vehicle Association (MVA) offices. Individuals who purchase license plates not only get a desired look for their car and the satisfaction of having provided funds for a restoration project, but they also get discounts from local businesses allowing them to earn back their $20 quickly. Of the $20 that a customer spends on a license plate, $10 is kept by the MVA, and the other $10 is directed to the Trust Fund. Other states, including North Carolina, offer specialty license plates that help fund environmental programs. Among North Carolina’s numerous license plate options is a unique “Protect the Coast” version. Choosing this plate means that $20 of a $30 annual fee will go toward the North Carolina Coastal Federation and its environmental protection and education programs.
Income tax check-off programs allow an eligible organization to appear on an individual tax form and for the taxpayer to donate a portion of their income tax refund to a cause of their choice. For Maryland taxpayers, the organization is listed as the Chesapeake Bay and Endangered Species Fund [3]. The funds raised from the tax check-off program are split evenly between the Chesapeake Bay Trust and the Maryland Department of Natural Resources. Fifty-percent of those funds are directed to the Wildlife and Heritage Service at the Maryland Department of Natural Resources. The Trust collected $400,000 in individual donations from the tax check-off program in 2019 [1]
The Trust is also supported by direct donations through Maryland’s online boating, fishing, and hunting license system. Hunters and anglers who obtain licenses online through the Maryland Department of Natural Resources’ (MDNR) registration system can choose to make a contribution to support the Healing, Hunting and Fishing Fund. The Trust is allowed to use these dollars to provide grants that promote the enhancement of water quality, for restoration of aquatic resources, and for reforestation.
Can boating raise funds for water quality improvement?
Also administered by MDNR, the Maryland Waterway Improvement Fund (WIF) supports the development, enjoyment, and use of Maryland’s waters for the benefit of the general boating and cruising public. It is primarily derived from a 5 percent vessel excise tax (VET) on boat purchases and titling.
WIF grants range from as little as $2,900 to as high as $2.8 million, with an average around $150,000. The grants can go toward projects that improve water quality through activities such as monitoring of submerged aquatic vegetation, living shoreline projects, and green energy projects. There are several examples of WIF grants that have direct relevance to projects that can help support water quality improvement. For instance, the Kent Narrows and Ferry Point Park shoreline restoration project involved the dredging of a channel to stabilize and restore the shoreline at Ferry Point. The restored shoreline now provides habitat for wildlife species and protects an economic center from damaging waves and wind.
Preserving Land and Protecting Waterways Through Dedicated Revenue Streams
In 1969, the Maryland General Assembly established Program Open Space (POS) with the purpose of increasing the acreage of state parts and natural resource areas. When a person buys a house or land, a 0.5 percent state property transfer tax is collected which funds Program Open Space. This directly ties development to available funding for open space and recreational facilities for the public good. In the 2006 fiscal year the Maryland real estate market generated tax revenues of $270 million. POS receives 75 percent of the transfer tax revenues.
Today, most Maryland residents live within 15 minutes of an open space or recreational area funded by POS. The program currently protects 394,00 acres of land and is responsible for establishing the Greenways and Green Infrastructure Network.
In North Carolina, state statutes require voter referendums for land conservation and parks and open space[7]. If a local government aims to pledge its taxing authority to general obligation bonds for land conservation, it is required to hold a referendum.
What about voluntary permits for wildlife enjoyers?
The Pennsylvania Fish and Boat Commission runs a voluntary permit program aimed at raising funds for fish habitat work, research, and stream habitat improvement. Permit holders are given a physical license with the program’s name on it. As with fishing licenses, anglers can buy them in one-, three-, five- and 10-year increments. Revenue from this permit strengthens streams, rivers, lakes, and wetland habitats. This waterways/conservation permit contributed to 16 percent of the total revenue brought in by all 4 permits.
Some examples of the projects funded by this permit are listed below:
- $11,000 for stream habitat improvements on a section of water set aside for children and people with disabilities.
- $10,000 to install boulder clusters and improve fish habitat.
- $10,000 to stabilize an eroding shoreline.
[1] Staff from Chesapeake Bay Trust [2] https://cbtrust.org/purchase-a-bay-plate/ [3] https://dnr.maryland.gov/wildlife/pages/tax_checkoff.aspx#:~:text=As%20a%20Maryland%20taxpayer%2C%20you,you%20would%20like%20to%20donate. [4] Chesapeake Bay Trust, Healing, Hunting, and Fishing Fund, https://cbtrust.org/veterans/ [5] University of Maryland Environmental Finance Center, Vessel Excise Tax and Impacts Through the Waterways Improvement Fund, https://arch.umd.edu/sites/default/files/docs/publications/VET%20and%20WIF%20Final%20with%20Case%20Stories%201.5.17.pdf [6] Maryland Department of Natural Resources, Land Acquisition and Planning, https://dnr.maryland.gov/land/Pages/ProgramOpenSpace/Program-Open-Space-101.aspx [7] The University of North Carolina Environmental Finance Center, https://efc.web.unc.edu/2021/06/01/land-ing-the-vote-ballot-measures-for-land-conservation/ [8] Pennsylvania Fish and Boat Commission, Voluntary Permits, https://www.fishandboat.com/Transact/AnglerBoater/AnglerBoater2019/Documents/2019-0910so04-voluntarypermits.pdf