How Rice Farmers And Conservationists Use Auctions To Save Birds : The Indicator from Planet Money The Pacific Flyway, one of the major bird migration routes in North America, has lost over 90% of its original wetland habitat in California. Purchasing and restoring these lands would cost a lot of money. But one economist had an idea: What if we paid rice farmers to flood their fields?

Saving Birds With Economics

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Eric Hallstein is an economist. But at the environmental nonprofit where he works, the Nature Conservancy, he spends most of his time around ecologists.


Do you dress differently than the ecologists?

ERIC HALLSTEIN: (Laughter) It's so funny. You're the first person that's asked me that question. I thought about this a lot. Do I wear a button-down shirt. Do I not? Like, do I try to fit in? Or is it so obvious 'cause of what I say that I'm the economist?

WOODS: Unlike a lot of economists and consultants who tend to wear suits, Eric started wearing T-shirts and fleeces, outdoor wear, which comes in handy because also unlike a lot of economists, he spends a lot more time near his new favorite bird, the dunlin.

HALLSTEIN: It's a couple inches tall. It's just - it's got a ton of personality.

WOODS: What sound does it make?

HALLSTEIN: Yeah, it's got a little sort of chirp. Like, I don't even know if I could make it, but it's a - it's like a yee (ph).

VANEK SMITH: Eric spends a lot of time looking at something called the Pacific Flyway. It is a huge route for migratory birds. It stretches from the Arctic down through California's Central Valley all the way to Patagonia in the Southern Hemisphere. Millions of birds, over 300 species, rely on this flyway every year to feed and to breed.

HALLSTEIN: One hundred and fifty years ago, if we were a bird and we were flying, we would look down and we'd see in the right seasons a sort of mosaic of wetlands that would be full of invertebrates and bugs and things that we would be interested in landing and eating. Now what we're seeing is a patchwork pattern of wall-to-wall crops.

WOODS: Over 90% of that wetland habitat in California is now farmland. They grow tomatoes, grapes, apricots - even rice, which might sound a little odd for water-parched California. But either way, what habitat remains is particularly precarious this year. It is shaping up to be a record drought in America's West this summer, and if the habitat along the Pacific Flyway is not available, that threatens the survival of entire species.

VANEK SMITH: So just buying up all that farmland and turning it back into wetlands - like, turning it into mud - that was pretty out of the question. California's Central Valley is some of the most productive and expensive farmland in America and in the world, like, on the order of billions of dollars. And Eric and his conservation group did not have billions of dollars, so Eric got this crazy idea - maybe they could save the birds with economics.



WOODS: And I'm Darian Woods. I don't care too much for money; money can't buy me mud. But we might got to rent it.

VANEK SMITH: (Laughter).

WOODS: That's after the break.


WOODS: In 2013, Eric Hallstein was in a windowless boardroom in Sacramento. He was there with 15 or 20 conservationists.

VANEK SMITH: And they were talking about this curious thing that rice farmers do. Every year, they flood their fields, and it creates these kind of muddy areas, a little like a wetland. It's good for the fields, but it is also great for migratory birds. The water's there for the birds to drink and rest in, and it attracts insects for the birds to eat. It's pretty much as good for the birds as an actual wetland.

WOODS: But the farming cycle and the migratory cycle don't match up perfectly. So Eric and his colleagues in that windowless room were trying to figure out how to convince rice farmers to flood their fields a little earlier in the fall and keep those fields flooded a little later into the spring. But in a drought year, that's a tough ask for farmers.

VANEK SMITH: And that is when Eric had this stroke of genius.

HALLSTEIN: Hey. This is going to sound like the craziest idea you've ever heard. But what do you think about us designing a reverse auction where we basically ask rice farmers how much we would have to pay them in order to create really nice wetland habitat with all the right bugs and animals in it? Could we create enough habitat in a really capital-efficient way?

WOODS: So the scheme, this reverse auction, instead of buyers bidding, it would be the seller putting up bids of how much money they would want to get. So in this case, the conservationists would ask the farmers how much would they need to flood their fields for longer, and the farmers each would figure out how much that extra water and labor would cost them. And then they'd tell the conservationists, I would need this much to flood my fields - so $100 per acre. The response from conservationists - blank faces.

HALLSTEIN: I thought very honestly that I had bungled it. I was pretty convinced it was dead at that point.

VANEK SMITH: But Eric kept refining the idea. Over the next few weeks, he talked to colleagues, and eventually, they thought they had a good system. They said, let's try this out. So they held workshops with rice farmers to see if collaboration might be possible. The farmers arrived in their trucks, work clothes still on, stood there, arms crossed. Farmers are historically kind of suspicious of conservationists proposing to do things with their land and water.

HALLSTEIN: Those were tough conversations. It was really not easy.

NICOLE VAN VLECK: I remember hearing about the reverse auction and thought it was kind of a wild idea.

WOODS: This is rice farmer Nicole Van Vleck. She runs a sushi rice farm called Montna Farms. And she was in one of those rooms in the Sacramento Valley, and she remembers a bit of skepticism from the other farmers. But Nicole? She eventually signs up, and she encourages other rice farmers to do the same.

VANEK SMITH: Soon, the very first reverse auction to pay rice farmers to flood their fields was announced for early 2014, and Nicole needed to get her bids in order. And to figure this out, she tallied up two main costs - the cost of water and the cost of labor; labor because somebody has to keep the fields wet at the right amount for the birds each day.

WOODS: And on the night before the day of bidding, Eric Hallstein was feeling restless.

HALLSTEIN: I had sort of fears of - that was going to be my last day of employment.

WOODS: High stakes.

HALLSTEIN: It was - it felt like pretty high stakes. But about mid-morning, I remember getting a phone call from the program director saying, Eric, you're just not going to believe it; there are dozens of bids that have already been placed.

WOODS: The bids ranged from a couple of hundred dollars per acre to tens of dollars per acre. There was even a farm or two willing to do it for free. Eric's overall budget was just several million dollars, and what this meant was that Eric could take all of those bids and map them out against crowdsourced bird migration data and see what land would be the most valuable to migratory birds and then pay for the rice farms in those areas to flood their fields. The Nature Conservancy could also reject bids that were too high and go with cheaper farms in good areas for the birds.

VANEK SMITH: Nicole Van Vleck, among several other farmers, was paid to flood her fields. And she says the results were almost instant.

VAN VLECK: A phenomenal success, you know? They do get there very quickly. You know, you just add water.

WOODS: Just add water?

VAN VLECK: Yeah, and it's not much.


VANEK SMITH: What you're hearing is from Nicole's farm, from the fields. It is a fling of dunlin, those little birds. That is the collective noun for dunlin, by the way, Darian. It is a fling. It's like a murder of crows, except for much cuter.

WOODS: (Laughter) And Eric says across California, the reverse auction has had huge results. On some days, there was almost all the equivalent habitat available for the Pacific Flyway that there would have been prior to industrial agriculture. Of course, there are other restoration efforts going on as well, but to restore all the habitat loss, that would mean buying up that farmland, and Eric estimates it would cost $4 billion. But the equivalent cost of running it through an auction system is a lot cheaper. That would be around $20 million a year, less than a percentage point of the cost of buying the land outright.

VANEK SMITH: But this year, with a historic drought forecast, Eric says he got really nervous.

HALLSTEIN: I think that water is so scarce that it's possible farmers will choose to not allocate any water, and we will probably know in a couple of weeks.

WOODS: Well, those two weeks, they're up now, and the reverse auction just concluded. And, yeah, it was different this year. The morning of the final day of the auction, there was only three or four bids representing just 300 acres, much lower than thousands last year. It was a nail-biting moment.

VANEK SMITH: But at about 1 p.m. on the final day, a bid from Nicole, plus bids from lots of other farmers, started pouring in - in total, 4,000 acres worth of farmland. So this year's rice field flooding can go ahead.

WOODS: And Eric, he says the success this year, that's the beauty of the reverse auction system. It doesn't matter how bad the drought is - every farmer still has their price.


VANEK SMITH: This episode was produced by Julia Ritchie (ph) with help from Gilly Moon. It was fact-checked by Michael He. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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