Dow-TNC Collaboration Analysis Summary
Pilot 1: Dow Texas Operations, Freeport, TX
Air Pollution Mitigation Analysis
Businesses typically reduce their impacts on air quality through traditional “gray” engineering
solutions, reducing emissions through the deployment of end-of-pipe control technology or
changes in operations. However, forests — by modifying the environment and removing
pollutants from the air — could be part of a “green engineering” solution. Investing in largescale reforestation may provide businesses with a cost-competitive alternative for maintaining air
quality that also produces a range of additional benefits, such as green space supporting
recreation, wildlife habitat and aesthetic amenities, and reduced urban storm water runoff.
Understanding the value of these ecosystem services could support more informed corporate
decision-making, enabling comparison of ecosystem-based solutions with traditional ones. This
type of informed decision making is a key goal of the current collaboration on improving
ecosystem services valuation between The Dow Chemical Company and The Nature
Conservancy.
Through this pilot analysis, the Conservancy and Dow will develop and test a methodology for
the use of reforestation as a new business strategy for air quality maintenance, with the aim of
having valuation inform broader “green” (reforestation) and “grey” (end-of-pipe technology)
infrastructure assessments and decisions. At Dow’s Texas Operations in Freeport, TX, this
methodology could inform decisions about investment in air pollution control solutions through
comparative analysis and valuation of planting trees versus other engineered controls.
The Context
Global Context: The Benefits of Urban Forests to Pollution Reduction
Forests in or near cities generate a variety of benefits for people.i These benefits include
improvements in air quality, which trees provide directly by taking up airborne gaseous
pollutants (ozone, NO2, SO2, and CO) and intercepting particulate pollutants.ii Some forests also
reduce ground-level ozone formation (a smog-related pollutant) by mediating the urban heat
island effect — the increase in air temperature in built-up environments, which contributes to
ground-level ozone formation. Reduced air temperatures and the shading of buildings by trees
also reduce energy use for space cooling, which in turn may reduce pollutant emissions from
power plants.iii
On the other hand, trees naturally emit volatile organic compounds (VOC), which may lead to
increased formation of troposphere ozone for other forests. Emissions from tree maintenance
activities can also contribute to air pollution.iv The net impact of a specific change in a forest on
ambient concentrations of particular air pollutants depends on ambient pollutant concentrations
(specifically, their downward flux), tree species, canopy area and structure, length of the in-leaf
season, photosynthetic activity and intensity of tree maintenance. Air quality benefits from tree
planting can be maximized by choosing low VOC-emitting species and planting self-sustaining
forests rather than input-intensive street trees.v
Figure 1: Location of the Houston-Galveston-Brazoria (HGB) non-attainment area for the NAAQS for
ozone (8-hr)vi
Several dozen studies in the United States have documented that forests remove large quantities
of particulate matter, ozone, nitrogen dioxide, sulfur dioxide and carbon monoxide from urban
areas.vii The U.S. Forest Service has developed a model — the Urban Forest Effects or UFORE
model — that estimates the quantities of these pollutants removed and of VOC emitted, by a
given forested area.viii
Local Context: Ozone Non-Attainment and Deforestation in the HGB Region
Dow Texas Operations is located in the U.S. Environmental Protection Agency (EPA)designated Houston-Galveston-Brazoria (HGB) non-attainment area for ground-level ozone that
has been in violation of National Ambient Air Quality Standards (NAAQS) for ozone since the
establishment of those standards in 1979. The HGB area was one of only two areas nationwide
that failed to meet the revised 1997 NAAQS for ozone by the 2007 deadline, which has resulted
in TCEQ and EPA evaluating the mandatory imposition of Clean Air Act (CAA) penalty fees
($5,000/ton) on all large sources in the HGB area that exceed their allowed emission limits, often
called 185 fees.
Forest cover in the HGB area has been declining primarily due to rapid urban expansion. For
example, between 1992 and 2000, forest land cover types in the region declined by an estimated
17 percent (310,000 acres or 486 mi2), resulting in a net loss of more than 78 million trees.ix The
Houston-Galveston Area Council estimates that between 2008 and 2035, 46% (289,500 acres or
452 mi2) of bottomland and 55% (270,400 acres or 423 mi2) of upland forest will be lost in the
HGB area.x While strong forest protection policies could potentially reduce by one-half the
future loss of forested lands in the HGB area, even under a maximum protection scenario, some
additional 300 mi2 are expected to be lost between now and 2030.xi In addition, the extreme
drought conditions experienced in 2011 in the region led to additional large losses of trees.
Risks and Opportunities to Businesses
The ongoing trend of forest cover loss in the Houston area is expected to increase ozone
concentrations by increasing the urban heat island effect — and thus ozone formation — and by
reducing removal of ozone and nitrogen dioxide by trees. In addition, increasingly stringent NOx
and VOC emission caps in the HGB area aimed at bringing the area into compliance with
NAAQS for ground-level ozone are likely to require increasingly costly operational or
equipment changes on the part of regulated sources of ozone precursor emissions, for both
existing and future new facilities.
Dow already is impacted by NOx and VOC emission limits, and has made substantial
investments in technology to allow facility operation and expansion while meeting emission
restrictions. Under the tightening emission limits, total compliance costs have dramatically
increased and are expected to continue increasing, possibly significantly so, due to increasing
marginal cost of emission control.
Innovative Solutions
This pilot is testing if reforestation could be part of a cost-effective air pollution abatement
strategy for Dow. If so, the reductions in ambient ozone concentrations and precursors that
reforestation might yield could then be used to generate emission offsets/credits for Dow. These
could be used internally to offset increases in emissions from Dow operations. The reductions
might also be traded on the NOx and VOC markets in the HGB area. Dow already is engaged in
emission trading under the caps, so the mechanism and expertise are already in place to take
advantage of the credits that might be generated through afforestation. The U.S. EPA has
identified large-scale tree planting as an approved measure for obtaining credits in State
Implementation Plans (SIPs).xii The state’s air quality authorities at the Texas Commission on
Environmental Quality (TCEQ) have expressed interest in examining the role large-scale
reforestation might play in ozone SIPs if it can be shown that such projects achieve net
reductions in precursors. While this type of effort has been endorsed conceptually by EPA, to
date, no company or organization has attempted such a program.
A challenge of implementing this strategy is that EPA requires that emission reductions from SIP
measures be quantifiable, additional, enforceable and permanent.xiii These requirements demand
an effective way of incorporating uncertainties related to stochastic disaster events that may
destroy reforested areas and thus their pollution removal functions, as well as uncertainties from
common events such as tree mortality. Standard methodologies are available for dealing with
those uncertainties. Nevertheless, if ex-post verification of estimated pollution removal reveals
that actual removal is less than originally estimated, offset quantities would be reduced and the
cost-effectiveness of reforestation as a control strategy would be less than originally estimated,
and possibly may fall below that of conventional control approaches. While reforestation may
still be the preferable alternative from an overall social net benefit perspective because of the cobenefits it generates for stakeholders other than the regulated sources of ozone precursor
emissions, such an outcome would reduce its attractiveness to regulators and regulated sources.
There are several key issues that require careful analysis when evaluating the possibility for Dow
to obtain credits for reforestation activities. One is how the location of a reforestation project
might impact the benefits Dow can derive from these reductions. Given that the NOx and VOC
caps are HGB area-wide, it is expected that reductions in NOx from any Dow reforestation
anywhere in the HGB area could generate NOx or VOC offsets for Dow, that is, reductions that
could be used to offset emission increases. On the other hand, the reductions may not necessarily
yield tradable credits. For example, the VOC cap-and-trade program (HECT) in the HGB area
currently only operates in Harris County, TX. Thus, VOC reductions from reforestation projects
in other parts of the HGB area currently would not be tradable on the HECT market. In addition,
the question arises as to whether sources located outside of the current HECT operation area
would be able to register VOC credits on the HECT exchange even if the associated reductions
were to occur in Harris County. These issues require discussion with air pollution regulatory
authorities.
Conservation and Business Opportunities
By developing a methodology for evaluating reforestation as a potential corporate strategy for air
pollution mitigation, this analysis could generate incentives for companies to invest in forest
restoration. While the Freeport analysis serves as a test case, the methodology and tools
developed are designed to be applicable to other urban areas in the United States and in other
countries. Once established, forest restoration incentives could be used by other businesses in
non-attainment zones as well, providing broad applicability to the analysis.
The biological conservation value of candidate reforestation sites is explicitly included in the set
of variables used to select project location(s). In the region of the Freeport pilot site, the potential
for large-scale forest restoration, and thus for generating conservation gains, exists in the
Columbia Bottomlands Conservation Area. This area, a substantial portion of which falls into the
HGB ozone non-attainment area, has lost approximately 75% of its historic cover of biologically
important bottomland hardwood forests running inland along the floodplains of the Brazos, San
Bernard and Colorado rivers.xiv
Overview of Analysis
This analysis will enable us to leverage well-tested methods and models in a unique application,
with the goal of producing estimates of NOx — and potentially VOC — credits or offsets as well
as the value of additional forest ecosystem services generated by an industrial business through
reforestation within an ozone non-attainment area.
To determine whether reforestation may be a viable new business strategy for air quality
maintenance at Dow’s Texas Operations in Freeport that improves both business performance
and conservation, we are engaging the regional U.S. Environmental Protection Agency (EPA)
office and TCEQ to determine how a forest restoration project should be designed and its air
quality effects estimated for it to have the potential to generate NOx and VOC offsets.
We are working with air quality authorities to design a full-scale analysis that would meet their
requirements, and that will include the following broad steps (Figure 2):
a) Identify suitable planting sites and tree species that also yield conservation benefits;
b) Model the estimated direct removal of ozone and NOx in the HGB area for a specific
reforestation project;
c) Consult with experts on the desirability and feasibility of including the indirect effects of
reforestation on NOx and VOC emissions from power plants;
d) Feed model outputs into regional air quality models to estimate how ozone and NOx
removal and VOC emissions from reforestation would affect ozone concentrations
throughout the HGB area;
e) Estimate the value of selected additional benefits (such as recreation, carbon
sequestration, scenic views, health benefits) from forest restoration to parties other than
Dow; and
f) Estimate the cost-effectiveness of reforestation for NOx and VOC control to allow for
comparison with alternative control methods.
1) Engage
air pollution
authorities
2) Design
tree
planting
project
EPA (Region 6 and HQ)
TCEQ
Finalize analysis methodology
Select planting sites (location and size)
Conservation value of sites
Costs (tree planting, maintenance and
monitoring; opportunity cost of land)
Select appropriate tree species
3) Model
pollution
removal
Sites with highest air quality benefits
VOC emissions; site appropriateness (water
requirements, native species)
Calculate canopy characteristics as input
to UFORE modeling
Estimate direct removal of ozone, NOx, PM10,
CO, SO2; estimate VOC emissions (UFORE)
Examine need for analysis of indirect
effects
Possibly: Estimate regional ozone concentration
reductions for co-benefits analysis
4) Economic
analyses
Estimate NOx and VOC credits
Agency input: converting directly removed
ozone into equiv. NOx and VOC reductions
Estimate cost-effectiveness of NO2 and
VOC reductions for Dow
Estimate to cost-effectiveness of
alternative control options
Dow info on cost-effectiveness of alternatives
Quantify and value selected other benefits (human
health, recreation, property values, carbon removal)
Figure 2. Overview of stages of analysis
Momentum for the Future
The team has been working with the relevant air quality regulatory authorities to ensure that the
analysis and study methodologies meet the authorities’ requirements. The analysis is now under
way, with Conservancy staff working with air quality authority experts and Dow Texas
Operations as well as academic researchers to collect relevant local data and run the forest
growth and pollution removal models. The analysis will be completed by the end of 2012.
In addition to meeting Dow’s air quality requirements, a series of benefits that reforestation is
likely to generate for parties other than Dow will be assessed. Additionally, the values that the
new forest will provide in the form of recreational opportunities for local residents and visitors,
visual amenities for residents living in the view shed and through removal of atmospheric carbon
dioxide will be assessed. xv,xvi Quantitative estimates of the potential habitat the new forest may
provide for rare species will also be developed. There are additional benefits that the forests
would likely provide that are outside of the scope of the analysis, including reducing urban
runoff and thus nutrient and sediment input into surface waters, benefiting downstream
freshwater and coastal ecosystems.xvii
The larger goals of this pilot, however, reach beyond the Freeport region. The collaboration will
develop and publish the generalized analysis methodologies so that Dow and other companies
can quantify the effectiveness and cost-effectiveness of using reforestation as an ozone precursor
compliance strategy in other regions. The methodologies are also being vetted with air quality
regulators to ensure requirements are met to allow the methodologies to be transferrable to other
ozone non-attainment zones. Finally, this analysis will be used to further inform the integration
of ecosystem-based solutions into broader decision-making within Dow.
i
Escobedo, F., T. Kroeger and J. Wagner. 2011. Urban forests and pollution mitigation: Analyzing ecosystem
services and disservices. Environmental Pollution 159:2078-2087.
ii
Smith, W.H. 1990. Air Pollution and Forests. New York: Springer.
iii
Nowak, D.J., D.E. Crane and J.C. Stevens. 2006. Air pollution removal by urban trees and shrubs in the United
States. Urban Forestry and Urban Greening 4:115-123.
iv
Nowak, D.J. and J.F. Dwyer. 2007. Understanding the benefits and Costs of Urban Forest Ecosystems Pp. 25-46 in:
Kuser, J. (Ed.) (2007). Handbook of Urban and Community Forestry in the Northeast. 2nd edition. Springer,
New York.
v
Nowak, D.J., Stevens, J.C., Sisinni, S.M., Luley, C.J., 2002. Effects of urban tree management and species selection
on atmospheric carbon dioxide. Journal of Arboriculture 28 (3), 113e122.
vi
Source: http://www.tceq.texas.gov/airquality/sip/hgb/sip-hgb
vii
Nowak, D.J., D.E. Crane, J.C. Stevens, R.E. Hoehn, J.T. Walton and J. Bond. 2008. A ground-based method of
assessing urban forest structure and ecosystem services. Arboriculture & Urban Forestry 34(6):347–358;
Nowak, D.J., D.E. Crane and J.C. Stevens. 2006. Air pollution removal by urban trees and shrubs in the United
States. Urban Forestry and Urban Greening 4:115-123.
viii
Nowak, D.J. and D.E. Crane. 2000. The urban forest effects (UFORE) model: Quantifying urban forest structure
and functions, pp. 714–720. In: Hansen M., and T. Burk (Eds.). In: Proceedings Integrated Tools for Natural
Resources Inventories in the 21st Century. IUFRO Conference, 16–20 August 1998, Boise, ID. General Technical
Report NC-212, U.S. Department of Agriculture, Forest Service, North Central Research Station, St. Paul, MN.
ix
Nowak, D.J., P.D. Smith, M. Merritt, J. Giedraitis, J.T. Walton, R.E. Hoehn, J.C. Stevens, D.E. Crane, M. Estes, S.
Stetson, C. Burditt, D. Hitchcock and W. Holtcamp. 2005. Houston's Regional Forest. Texas Forest Service
Communication/Urban and Community Forestry 9/05-5000. 24p.
x
Boyers, A. 2010. Community and Environmental Planning. April 13 2010. http://arcgis02.hgac.com/rgf_2040/index.html Last Accessed July 18, 2011.
xi
Oguz, H., A.G. Klein and R. Srinivasan. 2007. Using the Sleuth Urban Growth Model to simulate the impacts of
future policy scenarios on urban land use in the Houston-Galveston-Brazoria CMSA. Research Journal of Social
Sciences 2:72-82.
xii
US Environmental Protection Agency (US EPA). 2005. Incorporating Bundled Measures in a State Implementation
Plan (SIP). Office of Air and Radiation. August 2005. Washington, DC: US EPA; US Environmental Protection
Agency (US EPA), 2004. Incorporating Emerging and Voluntary Measures in a State Implementation Plan (SIP).
US Environmental Protection Agency, Research Triangle Park, NC.
xiii
Diggs, T. 2006. Meeting State Implementation Plan Requirements. Presented at the Inclusion of Large-scale Tree
Planting in a SIP working session for the Houston region. The Woodlands, Texas, March 10, 2006.
http://files.harc.edu/Sites/HoustonRegionalForest/Events/SIPTreeWorkingSession/MeetingSIPRequirements.p
df (Last accessed July 8, 2011.)
xiv
The Nature Conservancy. 2004. Strategic Conservation Plan for the Columbia Bottomlands. March 2004. 34 pp;
Rosen, D.J., D. De Steven and M.L. Lange. 2008. Conservation strategies and vegetation characterization in the
Columbia Bottomlands, an under-recognized southern floodplain forest formation. Natural Areas Journal
28:74–82.
xv
Nicholls, S. and J.L. Crompton. 2005. The impact of greenways on property values: Evidence from Austin, Texas.
Journal of Leisure Research 37(3):321-341; McConnell, V. and M. Walls. 2005. The value of open space:
Evidence from studies of nonmarket benefits. Washington, DC: Resources for the Future. January, 2005. 78 pp.
xvi
Tol, R.S.J. 2009. An analysis of mitigation as a response to climate change. Copenhagen Consensus on Climate.
48pp.
xvii
Wang, J., T.A. Endreny and D.J. Nowak (2008), “Mechanistic simulation of urban tree effects in an urban water
balance model.” Journal of American Water Resource Association 44(1):75-85.