Background and review of relevant prior work:

The Syilx people, who have lived in the Okanagan region since time immemorial, know that in this semi arid landscape, water is life.  European settlers brought technologies, particularly irrigation methods and irrigated crops, that have substantially changed the dynamics and seasonality of water flow and accumulation across the landscape.  The combination of climate, geography, and the irrigated agricultural landscape have made the Okanagan one of the most appealing places in Canada to visit and live.  Ongoing immigration and the changing climate are manifesting themselves as an increasing strain on the natural environment and the human systems that rely on the scarce water.  Climate change in particular is opening up the possibility of growing high-value crops on higher-elevation land than was previously feasible, while increasing the frequency of extreme precipitation events and raising growing season crop water demand (Pinna Sustainability, 2020).

Landscapes are complex and evolving social-ecological systems (Parrott & Meyer, 2012).  Interactions between the changing climate and local geography, ecology, and social systems creates a particularly wicked problem.  The Okanagan is one of the most biodiverse places in Canada, and serves as a critical connectivity corridor between the dry interior regions of British Columbia and the similarly dry interior of Washington State.  Human fragmentation of the landscape has already threatened these ecological functions; uncoordinated responses by the land and water users in the valley continue increasing the risk to these functions.  For example, where here to fore undeveloped private land that is becoming suitable for high value crop is available, it is being acquired and converted to agricultural purposes, with water secured as needed through new licences or adding demand to existing delivery systems.  This is all happening within the context of efforts to foster reconciliation between the ever growing population of settlers and the Syilx peoples.  The Syilx have watched the degradation of the landscape that is their home, and are asserting their obligations to care for the land (Okanagan Nation Alliance, 2014).

This project will use the methods of cost benefit analysis (CBA) to assess several feasible water infrastructure investment/ecosystem restoration strategies as alternatives to the likely evolution of unplanned water and land use.  Unlike the common practice used for CBAs, this work will follow a ‘bottom-up’ approach (Carolus et al., 2018).  The partnership with the Okanagan Basin Water Board provides a unique opportunity to undertake such an approach.  The Water Stewardship Council (WSC) is a technical advisory body to the OBWB, which brings together representatives from government, industry, and citizenry throughout the Okanagan to share knowledge and provide independent advice and policy recommendations for sustainable water management (Okanagan Basin Water Board, 2023).  The WSC captures a broad cross section of the interests throughout the valley that can affect and/or are affected by the changing climate and water management decisions made in response to this changing climate.   Understanding and responding to the changing climate has been an important theme in many of the projects undertaken by the WSC, with consultation, engagement and knowledge-sharing a key part of these projects.  They are, therefore, an ideal partner for a ‘bottom-up’ approach to CBA.

Proposed research:

Objectives

Climate change is increasing the demand for irrigation water in the Okanagan Valley, as growing seasons become longer and warmer, and agriculturally suitable regions shift northward and into higher elevations. At the same time, unprecedented population growth is generating serious concerns about how future access to water will be prioritised and protected in this already water-stressed region. Agriculture has played an undeniable role in shaping the Okanagan culture, landscape, and economy. Still, researchers and practitioners have not comprehensively evaluated the benefits (and costs) of agricultural water use. This work is critically needed to inform policy aimed at protecting access to water for the farming sector, prioritise investments in infrastructure and ecological restoration, and address anxieties around the future water supply.

This project will address the following three questions:

1. What is the economic value of irrigated agriculture to the Okanagan region (direct: e.g., increased yield, higher value crops; indirect: e.g., food processing, Agri-tourism; induced: e.g., business investment; external: aesthetics, climate moderation, culture, fire breaks)?
2. What is the opportunity cost of using water for irrigation in the Okanagan (e.g., infrastructure construction and maintenance, alternative water uses no longer available, riparian ecosystem damage)?
3. How can future water allocations and investments in irrigation infrastructure maximize the contribution that irrigated agriculture makes to the Okanagan economy, given forecasts for climate change-induced expansion of irrigated areas, and how are climate change impacts distributed among the different communities and sectors of the valley?

Methodology

This project will generate a Cost-Benefit Analysis for strategically selected scenarios of irrigated agriculture development in the Okanagan Valley. Cost benefit analyses (CBA) and the methods used to support them, have been steadily progressing over the last century (Flynn, 2018).  In spite of method refinements that have reduced uncertainties in the values attached to components included in a CBA, practitioners see CBA having far less influence on policy than it could have (Dehnhardt et al., 2022).  Some argue that the method is fundamentally flawed in how it treats humans as simple consumers of the services a project provides, rather than as citizens who care about how a project fits into their community or society (Lewinsohn-Zamir, 1998; Sagoff, 1988, 2007).  One aspect of this critique is that the methods of CBA, particularly those used to measure the value people place on environmental services, have become the domain of technical experts who purport to better measure the value of these services than the citizens who are actually impacted by a change in these services.  Deliberative methods are offered as superior alternatives (Kenter et al., 2016).  A similar challenge in linking detailed technical analyses with decision making processes has motivated the development of participatory modeling approaches to environmental management problems (Basco-Carrera et al., 2017).  Bottom-up CBA, as described by Carolus et al (2018), is an approach to CBA that offers an alternative to the technocratic top-down approach commonly employed.  As described by Dehnhardt et al (2022), engagement throughout the process enhances both understanding of the methods used and ownership of the results, increasing their salience in the decision-making process.

Boardman et al (2017) describes ten steps in a cost benefit analysis:  (1) Explain the purpose of the CBA; (2) Specify the set of alternative projects; (3) Decide whose benefits and costs count (specify standing); (4) Identify the impact categories, catalogue them, and select metrics; (5) Predict the impacts quantitatively over the life of the project; (6) Monetize (attach dollar values to) all impacts; (7) Discount benefits and costs to obtain present values; (8) Compute the net present value of each alternative; (9) Perform sensitivity analysis; and (10) Make a recommendation.  Taking a bottom-up approach does not change these steps, but adapts them to involve key parties throughout.

A typical CBA conducted to meet a regulatory requirement starts after the project and its alternatives have already been specified.  The bottom-up approach starts not with a project, but with an environmental problem or concern.  The parties that can affect and/or are affected by the environmental problem or concern are brought together to identify solutions; additional parties can join the process should it become apparent that their perspectives would benefit the analysis.  Once projects have been identified, further consultations with these parties, along with key local informants and experts, are used to develop a catalog of possible impacts and determine an approach to quantifying these impacts over an agreed planning horizon.

Identifying and quantifying impacts are common steps in many approaches to assessing potential projects.  An alternative approach that planners sometimes prefer is multi-criteria analysis (MCA) (Mouter et al., 2013, 2020).  One key difference between these approaches is how weights are assigned to the various impacts in order to aggregate them and arrive at a recommendation.  In MCA, the weights are arrived at through some engagement with experts.  In CBA, the weights are arrived at by assigning credible monetary values to the impacts felt by people affected by the project.  This monetization step is often poorly understood and treated with suspicion.  Transparently assigning monetary values to these impacts and working with participating parties to assess the validity of these values will both increase trust in and understanding of the methodology used, and ensure that the analysis incorporates local knowledge that accurately reflects the local reality.

Aggregating the monetary values of potential impacts and, particularly, adjusting them for when they occur, discounting, also raises concern with potential users.  How to appropriately discount costs and benefits that occur in the future has been debated for decades, with no definitive resolution (Lampert, 2019; O’Mahony, 2021).  With a bottom-up CBA, choosing an approach to deal with impacts that occur at different times will be decided collaboratively.  Similarly, which aspects of the analysis should be the focus of the sensitivity analysis will be decided together, so that the sources of uncertainty that the participating parties are most concerned about receive the focus.

The final step in a bottom-up CBA – namely, making a recommendation – would itself also stem from a collaborative approach.  The participating parties will all be familiar with the results.  Through the process they will also know how their individual interests will be impacted by the different solutions that have been investigated.  Unlike top-down CBA, where the result is usually a positive or negative net present value or a benefit cost ratio that is less than or greater than one, a bottom-up CBA provides participants with more detail about possible impacts; inviting participants to collectively deliberate over these results, which can lead to a recommendation that people can ‘live with’, the essence of solutions to wicked problems.

While the participants in bottom-up CBA have benefitted from participating in the research process and in the opportunity to learn more about how impacts are distributed, the general public has not.  Net present value and benefit cost ratios are not concepts the public at large is familiar with, and the methods of nonmarket valuation that attach monetary values to environmental services are treated with suspicion, if not outright rejected.  Economic impact analyses (EIAs), developed in tandem with CBAs, have been suggested as contributing to the communication of results (Weisbrod et al., 2016).  Our bottom-up approach will integrate an EIA withing the CBA; this approach will both inform the participants about how such an analysis is conducted and provide a resource for communicating with the public.

Carolus et al (2018) set out three conditions that should be satisfied for a bottom-up CBA.  The first is that there are no pre-defined choices.  There is broad agreement that climate change together with continuing population growth will put increasing pressure on water resources in the Okanagan Valley.  However, there is no single project or collection of projects that have been put forward as solutions, as yet.  Thus, a consultative process to identify infrastructure and/or ecosystem restoration projects that should be evaluated – the recommended approach in a bottom-up CBA – fits the Okanagan context.

The second condition is that the relevant stakeholders can be identified.  The Water Stewardship Council (WSC) of the Okanagan Basin Water Board (OBWB) has existed for many years, and brings together a variety of stakeholders who variously have the ability to affect how water is managed and/or will be affected by how water is managed.  The WSC itself therefore already contains many of the stakeholders who should be included, and is in a good position to identify others that should be part of the process.

The final condition is that an appropriate representative scale can be identified.  The Canadian portion of the Okanagan Basin is the area represented by the OBWB.  As a watershed, these boundaries contain most of the system connections through which the impacts of water management changes will propagate.  The composition of the WSC reflects this boundary, thereby matching the stakeholders to the scale of the analysis.

Novelty

Carolus et al (2018) describe three principle roles that a bottom-up CBA can play in supporting the selection of responses to the identified environmental problem.  One of these is the integration of local knowledge.  The WSC and its members have been directly or indirectly connected to research on the impacts of climate change in the Okanagan Valley for decades.  Examples include downscaling climate data and using the results to predict changes in crop water demand (Neilsen et al., 2010, 2011), engaging citizen groups in dialogues about future water supply and demand (Harma et al., 2012), organizing a ‘drought tournament’ to engage stakeholders in a fun competition to explore responses to a hypothetical drought (Hill et al., 2014), and supporting the collection and dissemination of climate projections for the Okanagan region (Pinna Sustainability, 2020).  Therefore, the OBWB and the WSC already connect much of the relevant local knowledge, and have a history of communicating that knowledge.  Bringing this expertise together in support of a bottom-up CBA adds one more dimension to what the WSC already does.

A second unique role that a bottom-up CBA can accomplish is facilitating stakeholder dialogue.  The WSC has a long history of facilitating stakeholder dialog.  CBA provides a structured and rigorous process for collecting values for the possible impacts included in the analysis.  A considerable amount of work has already identified the interactions between water use, land use, and various associated environmental services.  The challenge is identifying the best balance between consequences of various possible decisions.  Guiding the participants through the process of monetizing impacts, with most of the nonmarket impacts monetized using benefit transfer methods (Johnston et al., 2015), will provide a structured method for comparing impacts.  Monetization provides an answer to the question “how many trips to the local coffee shop will people give up to protect a hectare of a wetland?”  While the answers provided by CBA may not be satisfying, in that case the question becomes “why is the value different in the Okanagan than elsewhere?”

Finally, while a bottom-up CBA has the same potential benefit as other participatory processes, wider acceptance [among the participants] and [possibly] better implementation is likely.  To the extent that the options evaluated must still pass through a political process, communication with members of the public who were not participating in the analysis must still occur.  As noted in Dehnhardt et al (2022), simple fact sheets may not be sufficient to communicate results with the general public.  Therefore, an economic impact analysis conducted in parallel with the CBA (Weisbrod et al., 2016) will ensure that the results of these analyses are regionally meaningful, particularly when compared to other EIAs conducted in the region.

In conclusion, there are several novel contributions that will be made by this project.  One lies in the application of a bottom-up CBA in a Canadian context.  This participatory approach to CBA is new.  Further applications will refine the methodology, identifying adaptations needed for different social-ecological contexts.  To measure effectiveness of the approach, surveys similar to those conducted by Dehnhardt et al (2022) will be used.  A second novelty lies in the complex context of the Okanagan.  The intersection of climate change and population growth within a highly diverse and fragile landscape is not present in the case studies previously reported (Carolus et al., 2018; Dehnhardt et al., 2022).  Cataloguing and forecasting the impacts of the identified solutions will draw more heavily on local technical expertise than was undertaken in these other studies.  A third novelty stems from the final communication step.  The previous work stopped at the same place that most CBAs stop, with a report for the decision makers.  The bottom-up CBA report had much more relevance than the more typical top-down CBA for those involved in the process.  However, beyond expressed concerns about communicating the results, no further work was done.  This project will expressly explore communication of results through the integration of an economic impact analysis into the process.

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