Using Market Forces to Protect Nature’s Benefits
Nearly 300 people including representatives from government, business, the investment community and conservation organizations gathered for two days of stimulating and vigorous discussion about the emerging field of using the market place to pay people to protect the benefits that nature provides to us, such as clean water and wildlife.
As Tom Martin, President and CEO of AFF told the gathering “good management takes good markets.” The simple concept behind the conference, Martin noted is that “by paying for the many benefits that well-managed land provides, we can help provide the income needed for landowners to manage sustainably.”
This exciting new tool for protecting the great outdoors is rapidly evolving. There are billions of dollars in the private sector that have been, and can continue to be, channeled and invested in conservation that can bring in comparable and even superior rates of return to traditional investment opportunities.
In one session, discussion centered on the role of forests in helping to solve the climate crisis. Participants noted that forests can achieve 20-25% of U.S. needed reductions in carbon emissions over 50 years, while also supplying wood products, clean water and wildlife habitat. AFF co-chairs the Forest-Climate Working Group to ensure that America’s forests are part of the solution to climate change.
The loss of private forests was highlighted. Connie Best from the Pacific Forest Trust noted that we are losing 1.5 million acres of private forests annually. Andrew Goldberg from the Dogwood Alliance said that we are losing more forestland in the Southeast than any other area of the U.S., despite the fact that these forests are providing us with a lot of ecosystem services. He noted that the Southeast has the most diversity of any area in North America.
Kent Gilges from Conservation Forestry LLC sees the market for ecosystem services as a way to increase the availability of scare resources for conservation. There are millions of acres providing healthy forests, clean rivers and streams and places for wildlife all across the country, owned by people who need a return on their investment. This is the group – landowners – that should be the target of a large scale ecosystems market. Gilges emphasized that investors are looking at ecosystem services as an asset class in itself.
Two main threads are evident, according to Ray Hartwell, of Ecosystem Economics. The need for funding for development of projects prior to sale of credits – meaning the need for working capital; and the use of financial tools to develop markets. Pat O’Connell from Evergreen Conservation Finance added that bonds could help shift the inefficiencies in conservation because the majority of conservation funding is transaction based. He suggested tax-exempt bonds as a way of funding ecosystem services projects.
Michael Beck, who works in San Diego said that the work he is doing is focused on the preservation of biodiversity and what drives the program is economics and the balance that’s needed -- projects have to make sense economically and work for a broad range of stakeholders.
While much of the two days focused on digging deeper into the big questions around how to ensure new markets help achieve meaningful protection of our air, water and land, and what kind of federal policies (such as the 2012 Farm Bill) can be used to push market development forward, the consensus was clear that market incentives do matter and ecosystems markets offer an exciting new tool by which we all can protect and restore natural resources.
