Mining Nature s Bounty: Tapping Markets for Ecosystem Services

Transcription

1 Mining Nature s Bounty: Tapping Markets for Ecosystem Services Peter Howell & Abigail Weinberg Open Space Institute Land Trust Alliance Rally October 15 th, 2005

2 Session Overview What are ecosystem services? Why should land trusts care about them? Which services have the greatest market potential, and what will it take to develop them? What are the barriers/opportunities for land trusts to tap markets for ecosystem services? What has been your experience, what are your visions?

3 What are Ecosystem Services? Basis of human economy The include: Atmospheric gas regulation Climate regulation Water supply Soil formation Nutrient cycling Pest control Genetic material, etc. The services affect direct economic productivity Tangibles: food and fiber, materials, chemical, pharmaceuticals Intangibles; cultural and historical, recreational, aesthetic and spiritual pursuits

4 Why are markets for such services underdeveloped? Classic public goods: shared by all, owned by none Services taken for granted Lack of institutions to regulate and value services, which typically range across political boundaries

5 Ecosystem Services: A Traditional Landowner s Perspective Land has carrying costs, e.g., taxes, insurance and maintenance Sales potential: how much can I sell my land for? Value established by development potential, e.g., residential, commercial, industrial, agricultural, silvicultural Environmental amenities often viewed as liabilities, e.g., wetlands, endangered species

6 A New Perspective Environmental amenities viewed as valuable assets Value can be tapped and realized Active commitments to protect or enhance environmental assets can enhance land value and generate substantial revenue

7 How Ecosystem Services Mitigation Generate Revenues Compensatory mitigation for development projects Mitigation as regulatory compliance tool Mitigation to offset operational impacts Liability Relief Where there s services, there s money..

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15 Summary of Revenue Enhancement Conventional Land Sale $1,500,000 1,000 $1,500/acre Ecosystem Service Transactions Pulp Mill Water Trade (100 $5,000/acre) $500,000 Flood Control District ($250,000 for new stormwater retention capacity) $250,000 Mall Developer (100 $500,000/acre) $500,000 Pipeline Company Mitigation (100 $5,000/acre) $500,000 USDA Payment (100 $1,000/acre) $100,000 Upscale Suburban Development (100 $20,000/acre) $2,000,000 Retained Unencumbered Property (500 $1,500/acre) $750,000 Total $4,600,000

16 Why Should Land Trusts Care about Ecosystem Services? Potential new source of revenue Helps land trusts become more involved in provision of basic human needs, i.e., water, food, climate control as opposed simply to open space Potential to create new constituencies for conservation Help pay for stewardship?

17 Land Trusts are Poised to Advance Ecosystem Service Markets Possess transactional skills Strong connections with landowners Easements provide stepping stone bundling new services and revenues Where markets are local, trusts have key relationships

18 What Are Barriers/Opportunities To Developing ES Markets? Most markets are small, highly fragmented and dependent upon public subsidy Environmental markets are controversial. That wild nature can be priced is difficult for some Few markets have necessary institutional infrastructure Problem of moral hazard remains significant If you pay Farmer A with bad practices to get better, won t Farmer B with good practices want $, too?

19 Key Challenges Facing Land Trusts Change in conservation approach, from landscapes to services Grappling with permanence: is anything less than perpetual conservation valuable? Reeducating board, staff and donors about conservation

20 Which Services Have the Greatest Market Potential? Preconditions for service markets Clear link of service to natural resource Clear beneficiaries Scarcity Markets vary in size, liquidity and efficiency

21 Catskills Watershed: Poster Child for Ecosystem Services City of New York acquires watershed lands to protect city s drinking water instead of building costly water filtration plan Tools: land acquisition and easements, cost/sharing and subsidies for improved land use planning, forest management Results: 34,000 acres acquired/eased, 90% of 350 watershed farms participating in program Cost: Likely $1B - $1.5B versus $6B - $8B for filtration plant, plus $300M - $500 for maintenance

22 Framework for existing markets Self-Organized Private Deals Private entities develop their own mechanism to produce conservation without government involvement. Trading Schemes Private entities trade service or commodity according to system government has established. Public Payment or Regulatory Relief These mechanisms exist where the government pays for the service itself, or grants exemption from regulations for conservation outcomes

23 Private Market Public Conditions for Mechanism to Exist Exist where private interests can achieve mutual gain in absence of government, or more efficiently than regulations might. Trading occurs in regulated environments where government devises standards but does not care who takes action. Government sets the standard and has the resources to pay for the service, or power to adjust regulations. Examples -Land acquisition/easement -Certification and eco-labeling -Grass Banking -Voluntary carbon sequestration -Natural medicinal products -SO2 Trading -Wetland mitigation banking -Species banking -Water trading -Trading of Development Rights (TDR) -Public land acquisition -Safe Harbor -Federal Conservation Reserve Program

24 Case Studies Self-Organized Private Deals Heart Mountain Grassbank (TNC, Wyoming) Trading Schemes New Jersey Pineland TDR Program Public Payment or Regulatory Relief Endangered Species Banking

25 Heart Mountain Grassbank Situation: (TNC, Wyoming) Private ranchlands constitute 25% of landholdings adjacent to protected areas and include key habitat Over-grazing lead to prevalence of invasive exotic species and fire suppression on BLM and NFS lands

26 Solution TNC purchases 15,000 acres east of Yellowstone and sells discounted grazing rights to ranchers in exchange for easements on private lands. Reduced pressure on BLM and NFS lands allow for ecological restoration.

27 NJ Pinelands TDR Program The Situation 1.1 million acres in New Jersey Pinelands constitute the largest remaining open space between Richmond, VA and Boston, MA 17 trillion gallons of clean water stored there vulnerable to pollutants generated by septic systems, fertilizers, and runoff from roads

28 Solution Receiving Area Sending Area 40,000 acres protected to date The NJ Pinelands TDR Program pays for credits awarded to properties located in the Pinelands Preservation Area. The credits are bought by developers wanting to develop at higher densities in designated receiving areas.

29 Endangered Species Banking The Situation Red Cockaded Woodpeckers (RCW) are a globally threatened species located in the south where the majority of land is privately owned Management for RCW requires expensive landscape management including controlled burning and the aging of financially mature hardwood pine

30 Solution Red Cockaded Woodpecker Habitat Conservation Plans (HCPs) regulate destruction of habitat Management for RCW paid for through a reallocation market Species thriving on larger landscapes thanks to relocation under trading programs in GA, NC, SC RCW pairs now selling for $250,000!

31 What Role Can Land Trusts Play? Assist in research and design of markets Broker transactions Increase supply through pilots on land trust lands

32 From Concept to Implementation: Pacific Forest Trust s Forest Forever Fund PFT played crucial role in advancing theory and policy on carbon sequestration Fund has purchased easements that also contain carbon credits Green Mountain Energy of Vermont has purchased credits PFT is advancing standard monitoring protocols for carbon through Climate Action Registry

33 What Action Can you Take? Conduct analysis of potential ES services in your region Develop relationships with key public agencies, e.g. water and sewer authorities, and potential industrial mitigators Develop pilot on your lands modelling potential economic values from ecosystem services

34 In Summary. Ecosystem Service Markets are no Silver Bullet Yet they offer potential to reorient, broaden and enhance land conservation efforts Land trusts are positioned to play a critical role in innovative pilots, and increased public understanding of value of such markets

35 Resources Agiculture/Forestry/Grazing/Wetlands Ecosystem Services Projects Land Stewardship Project Natural Resources Conservation Service The Greenhouse Emissions Management Consortium USDA Forest Service The Forestland Group, LLC Forest Trends Winrock International Food & Fertilizer Technology Center The Pacific Forest Trust American Forests Trees and Ecosystem Services e.php Grassbanking: Center for Compatible Ventures US Environmental Protection Agency Community Development ShoreBank Enterprises Pacific Conservation and Community Investment Forum United State Business Council for Sustainable Development Market Data The Katoomba Group Earth Trends Valuing Ecosystem Services =5&fid=15 Policy Southern Environmental Law Center Congressional Research Service Environmental Defense Defenders of Wildlife Duke Environmental Law & Policy Forum

36 Policy (cont) Environmental Law Institute USDA Farm Bill Forums H?navid=FARM_BILL_COMM&parentnav=FARM_BILL _FORUMS&navtype=RT&edeployment_action=change nav NRCS Farm Bill Conservation Provisions Center for Conservation Incentives: Environmental Defense: Scince Green Facts Science Facts on Ecosystem Change Business Solutions Electric Power Research Institute ECONorthwest Ecological Society of America Ecosystem Services PDF Key books Banks and Fees: The Status of Off-Site Wetland Mitigation In the United States Valuing Ecosystem Services: Toward Better Environmental Decision-Making (2004) David B. Lindenmayer and Jerry F. Franklin, Towards Forest Sustainability ECONorthwest, Economic Benefits of Protecting Natural Resources in the Sonoran Desert Gretchen Daily, New Economy of Nature (2002) Rick Pruetz, Saved by Development: Preserving Environmental Areas, Farmland and Historic Landmarks With Transfer of Development Rights Robert W. Burchell, Anthony Downs, Barbara McCann, Sahan Mukherji, Sprawl Costs: Economic Impacts of Unchecked Development William J. Ginn, Investing in Nature (2005)

37 What has been your experience, what are your visions? Can these markets finance and leverage conservation at scale? What steps are necessary before these markets are more useful for land trusts? What role can/should land trusts play in modeling potential markets?

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