November 19, 2024

By Olivia Richardson and Talha Awan

The threat of drought looms over Canada’s breadbasket – drought incidence and severity is expected to climb in the Prairies as our climate changes, threatening the ecosystem health, biodiversity, and cultural importance of these vast landscapes. Droughts have devastating financial impacts in the Canadian Prairies. In 2021, Manitoba faced a $75 million decline in crop sales from drought. In 2023, Alberta’s drought insurance payouts broke records by exceeding $326 million, tripling payouts from catastrophic droughts in 2021.

The impacts of drought are costly, but the solutions don’t have to be. Investing in grasslands as a natural climate solution can be one of the most effective ways to mitigate drought risks on Canadian farms.

A new report by the Smart Prosperity Institute and Nature United on Unlocking the Economic Power of Natural Climate Solutions identifies investing in grassland conservation and nature-positive management as strategic opportunities to strengthen economic growth in the Canadian Prairies, while also improving the capacity of farming communities to respond to changing weather patterns. This investment is critically needed as grasslands continue to be lost at an alarming rate – since 1867 over 80% of Prairie grasslands have been lost and between 2016 and 2021 over 1.3 million hectares of grasslands were converted to cropland and urban areas in Canada.

Source: Nature Conservancy of Canada

Grasslands Provide Numerous Benefits In Addition To Drought Resilience

While they have intrinsic value as part of the natural world, the case for investing in Prairie grasslands is strongest when we fully value, fully account, and fully compensate for the economic and environmental benefits that grasslands provide.

Effective grassland management improves water management at a lower cost. Grasslands capture, store, and filter precious water resources in the Prairies through their deep roots, reducing the detrimental impacts of floods and droughts. They recharge groundwater by absorbing and infiltrating rainwater, providing drinking water for thousands of communities. In Manitoba alone, these benefits are valued at more than $15 million per year.

Intact grasslands are cost-effective solutions to improve vital nutrient cycling.   Grasslands play a crucial role in regulating the carbon and nitrogen cycles vital for agricultural production and emissions reduction. Improving land-use practices such as protecting areas adjacent to waterways, integrating livestock with trees (silvopasture) and rotational grazing enhance biodiversity, nutrient cycling, and water retention, improving landscape resilience to extreme weather events. In central Alberta, silvopastures generate additional benefits valued at $27,400 per hectare.

Healthy grasslands are drivers of thriving regional economies. Forage production, like growing hay, on healthy grasslands is critical for ranchers and farmers, contributing over $5 billion annually to the national economy. Sustainable forage management on perennial grasslands can also reduce fertilizer and herbicide applications, support soil health and minimize soil erosion, providing cost savings for producers in addition to resilience from drought.

Strategies for Increasing Investment in Prairie Grasslands

Producers and landowners are often faced with tough choices when, under current market conditions, maintaining grassland ecosystems makes ecological sense but not economic sense.

Payment for ecosystem service markets, such as ALUS, can improve the business case for investing in grassland conservation and sustainable management, enhancing economic and ecological returns for producers and landowners. Other solutions include:

• Carbon credits. With the introduction of the Canada Grassland Protocol, investments in avoided grassland conversion can be made through voluntary carbon credit markets in Canada for the first time. In Manitoba alone, the total value of carbon sequestration in grasslands is conservatively estimated at $867 million per year.

• Biodiversity offsets. Prairie grasslands host rich biodiversity, including North America’s most threatened bird species such as Baird’s sparrow. However, unsustainable land use has contributed to an 87 percent decline in bird populations since 1970. Tools like the Bird Friendliness Index that support the quantification of farm-level impacts on biodiversity are critical to scaling biodiversity monitoring and adoption of biodiversity offsets. An emerging approach to supporting grassland conservation includes Verra’s Nature Framework that drives investments in positive biodiversity outcomes through baselining and measurement of key indicators.

Harnessing opportunities to invest in Canadian Grasslands

The case for investing in grassland conservation and sustainable management is clear. Alignment across industry, governments, and Indigenous leadership on the value of Canadian grasslands has fostered novel solutions to increase investment, but there is an opportunity to leverage this alignment into greater action. Canada’s grasslands policy makers should consider:

Enhancing investment conditions with no-net loss policies. Provincial governments in the Prairies could use existing wetland no-net loss policies and legislation – such as the Alberta Wetlands Policy and the Manitoba Water Rights Regulation – as templates for establishing similar legislation for avoiding grassland loss and restoring impacted grasslands.

Developing markets for ecological goods and services (EG&S) to help unlock the full value of Canadian grasslands. Currently, the value of EG&S is excluded from land assessments and the market value of farmlands, creating a perverse financial incentive to convert grasslands to high-value cropland. Markets for EG&S – such as carbon credits and biodiversity offsets – can shift the economic imbalance through financial incentives that reward nature-positive management of grasslands. More data collection and monitoring is needed to support the development of these markets.

Leveraging public-private partnerships to scale grassland initiatives and compensating producers for the public benefits they provide. Programs such as Growing Roots and the proposed Grasslands Conservation Initiative are examples of innovative cross-sectoral approaches that offer financial compensation for the public benefits producers provide through grassland conservation and management. These approaches diversify conservation efforts, helping private partners meet sustainability and net-zero emissions goals.

By investing in grasslands as an essential natural resource, we can simultaneously address the need to conserve biodiversity, improve water management, and support the drought resilience of Canadian farmers. With the right consultations and careful policy design, better grasslands protections can be good economic policy.