Avian influenza virus (AIV) persists in North American wild waterfowl, exhibiting major outbreaks every 2-4 years. Attempts to explain the patterns of periodicity and persistence using simple direct transmission models are unsuccessful. Motivated by empirical evidence, we examine the contribution of an overlooked AIV transmission mode: environmental transmission. It is known that infectious birds shed large concentrations of virions in the environment, where virions may persist for a long time. We thus propose that, in addition to direct fecal/oral transmission, birds may become infected by ingesting virions that have long persisted in the environment. We design a new host-pathogen model that combines within-season transmission dynamics, between-season migration and reproduction, and environmental variation. Analysis of the model yields three major results. First, environmental transmission provides a persistence mechanism within small communities where epidemics cannot be sustained by direct transmission only (i.e., communities smaller than the critical community size). Second, environmental transmission offers a parsimonious explanation of the 2-4 year periodicity of avian influenza epidemics. Third, very low levels of environmental transmission (i.e., few cases per year) are sufficient for avian influenza to persist in populations where it would otherwise vanish.