Advances in hydrology, water engineering and complementary crops

First, understanding and management of the hydrology of Midwestern US agricultural watersheds are in a phase of rapid expansion and innovation. Advancements in spatial mapping and computing enable low-cost identification of critical areas within watersheds that have disproportionate impacts on water resources (Galzki et al., Reference Galzki, Birr and Mulla2011). New approaches to the hydrological engineering of watersheds, such as controlled drainage, are enabling high levels of water storage in ways that can also expand and stabilize total watershed agricultural production in variable rainfall regimes (Drury et al., Reference Drury, Tan, Reynolds, Welacky, Oloya and Gaynor2009). Importantly, total agricultural production can be expanded by growing new crops that are adapted to critical sites for water conservation in watersheds (Guo et al., Reference Guo, Cibin, Chaubey, Gitau, Arnold, Srinivasan, Kiniry and Engel2018). These sites are typically marginal for production of conventional row crops, but not for certain perennial biomass crops. For example, shrub willows and prairie cordgrass are two novel biomass crops that can produce large yields in wet areas of a field that may result from controlled drainage. Both are receiving intensive development in terms of genetic improvement, production methods and end-use markets (Volk et al., Reference Volk, Heavey and Eisenbies2016; Boe et al., Reference Boe, Johnson, Owens, Lee, Guo and Gonzalez-Hernandez2017). In addition, perennial crops such as alfalfa and horticultural crops are increasingly targeted to critical watershed areas (Jordan et al., Reference Jordan, Clower, Manson, Bonsal and Immich2015), providing economically viable production options while efficiently improving water resources (Wilson et al., Reference Wilson, Dalzell, Mulla, Dogwiler and Porter2014).

The emerging sustainable bioeconomy

Development of these highly-multifunctional watersheds depends on crops that can thrive under the hydrological regimes created by water storage, as we have noted. Crucially, demand for such crops (e.g., prairie cordgrass and willow) may well expand considerably in the coming decade, as a new, more diversified agricultural bioeconomy emerges, based on new crops and new bio-based food, nutrition, health, and industrial products, propelled by entrepreneurship and technological innovation in biomass and bioproduct processing and manufacturing (Chen and Zhang, Reference Chen and Zhang2015). Broadly concerted efforts to expand this bioeconomy across supply and value chains are needed to realize its large potential for sustainable economic development (Rogers et al., Reference Rogers, Stokes, Dunn, Cai, Wu, Haq and Baumes2017) and thereby create demand for crops that thrive in new hydrological regimes. Importantly, the emerging bioeconomy also includes food and bioproducts containing sustainably-produced raw materials from conventional crops. If produced in highly-multifunctional watersheds, food and bioproducts from these crops can acquire highly-marketable sustainability attributes (Bonner et al., Reference Bonner, Muth, Koch and Karlen2014)

Collaborative governance of large watersheds

Collaborative governance at large watershed scales is now recognized as highly advantageous, in recognition of the complexity and interdependency of resource management in watersheds, widely dispersed power and responsibility for such management and the potential for mutual gain through coordinated actions (Head et al., Reference Head, Ross and Bellamy2016). Effective and adaptive collaborative governance regimes require shared norms of inclusion, communication, fairness and power-sharing. A supportive resource base is needed at technical, political, legal, economic, cultural and financial levels, including collaboratively-oriented leaders in organizations across sectors and scales who can build trusting working relationships. A shared understanding of watershed goals, and a strong focus on ongoing monitoring, learning and experimentation are critical. Large-watershed management initiatives are being actively piloted by state agencies in the Midwest, e.g., by Minnesota's ‘One Watershed, One Plan’ Initiative (http://bwsr.state.mn.us/planning/1W1P/1W1P_Factsheet.pdf) and the ‘Iowa Watershed Approach’ (http://iowawatershedapproach.iowa.gov/). Both initiatives aim to create adaptive planning and coordinating institutions for all major watersheds in each state, by focusing resources from many sectors. Both emphasize the integration of local watershed planning with state-level strategies and resources to advance state-level goals for water-related services, e.g., the Iowa Nutrient Reduction Plan. Both recognize the importance of locally-controlled actions, and the need to link local watershed institutions into a state-level network that ensures that local action is prioritized, targeted and comprehensively monitored so that both local and state-level goals are efficiently advanced. Such watershed governance arrangements could aggregate sufficient economic and political power to drive land-use change for climate adaptation by activating cycles of adaptation in response to expanding need for adaptation.

Small watershed-scale cooperative organizations

These have arisen as a key means for organizing and implementing cooperative production of water-related services. Cooperatives promote spatial coordination of management that helps meet water conservation goals more efficiently (Pennington et al., Reference Pennington, Dalzell, Nelson, Mulla, Taff, Hawthorne and Polasky2017). Essentially, cooperatives efficiently coordinate and aggregate actions by individual landowners to enhance conservation outcomes of these efforts, enhance negotiating power of these landowners and minimize costs and risks for individual landowners. For the cooperative production of water-related services by small watersheds, legal cooperative structures would design and execute land-use change across the watershed to achieve conservation goals, receive and distribute payments from beneficiaries and investors, and work with independent agencies certifying performance in relation to conservation goals. Such cooperative watershed management has been championed by influential agricultural groups (Duncanson et al., Reference Duncanson, Moseley and Yoder2014). In Western Europe, such cooperatives have had many successes (Franks, Reference Franks2010). Supported by significant subsidies to groups of farmers that contract to carry out coordinated management, these groups have taken collective action to enhance water-related services, such as improving water infrastructure and making broad changes in fertilization practices. Importantly, the groups have successfully negotiated with regional and national governments, winning increased autonomy to take action by local innovation rather than prescribed solutions. These examples show that such cooperatives can help farmers negotiate mutually acceptable terms for the provision of water-related services to large-watershed governance organizations. Similar incentives are largely absent in the USA, but experiments in small-watershed cooperatives are starting to appear, e.g., agricultural nutrient management cooperatives in California, begun in 2016 (https://www.rcdmonterey.org/nutrient-management-cooperatives-development).

Cooperative production of water-related services could be facilitated by new methods for coordinating collective action. These methods assure individuals that if they contribute to a collective effort, their actions will not be futile, thus addressing the ‘assurance problem’, i.e., the fact that individuals have little incentive to contribute to a collective effort unless they have the assurance that others will also contribute. Such conditional contributions can be formalized by the use of assurance contracts (Tabarrok Reference Tabarrok1998), which require participants to take action only if other actors also agree to act, in sufficient numbers to solve a common problem. These methods can help watershed-based cooperatives organize to meet a goal for water-related services (e.g., a certain quantity of water storage). Using this approach, no landowner need take costly measures to meet the goal unless others in the watershed are also willing to do so, in sufficient numbers to meet the goal.

Novel social and economic coordination mechanisms

Rapid innovation is underway in coordination mechanisms that can support the emergence and operation of highly-multifunctional watersheds. Relevant mechanisms include the emerging practice of transdisciplinary landscape design; applied to watersheds, this practice engages a wide range of societal sectors in a multi-stage process (Opdam et al., Reference Opdam, Westerink, Vos and de Vries2015) that begins with the development of a shared, systemic understanding of the watershed in social and biophysical terms. Deployed in a collaborative context that engages multiple stakeholders, this understanding supports co-design of targeted land-use change to address current and anticipated problems. Co-design is supported by emerging ‘geodesign’ technologies that integrate geographical information systems, spatial computing and simulation, to provide visualization of landscape designs and rapid model-based feedback on design performance (Slotterback et al., Reference Slotterback, Runck, Pitt, Kne, Jordan, Mulla, Zerger and Reichenbach2016). These computational methods and decision support tools are critical to enhance efficiency and reveal the complexity of watershed-scale systems, including unanticipated dynamics and feedbacks.

Second, a range of new economic mechanisms enables public and private investors to obtain attractive returns on investments and thus provide flows of capital to support efficient production of hydrological services within watersheds. For example, areas within large watersheds that are exposed to major water-related risks (e.g., of water scarcity, poor water quality, or flooding) are increasingly cooperating with other areas within these watersheds to reduce their risks. In essence, certain sites in watersheds can provide comparatively low-cost ‘green infrastructure’ that can be of high value to climate-vulnerable in these watershed areas. For example, in Iowa, the city of Cedar Rapids is paying to farms to install conservation measures that store water and protect drinking water (http://www.cedarrapids.org/residents/utilities/middle_cedar_partnership_project.php). Such cooperation can be mediated by environmental credit trading schemes for managing stormwater flows and nutrient emissions in watersheds that create flooding and pollution risks, such as the Washington DC stormwater retention credit program (https://doee.dc.gov/src). Environmental credit trading is complemented by other emerging economic coordinating mechanisms, e.g., outcome-based and avoided-cost markets (Reed et al., Reference Reed, Moxey, Prager, Hanley, Skates, Bonn, Evans, Glenk and Thomson2014; Whelpton and Ferri, Reference Whelpton and Ferri2017); all of these enable public and private investors to reduce risks and obtain attractive returns on investments and thus provide flows of capital to support efficient production of hydrological services within watersheds.