Transcript Getting Started with Payments for Ecosystem Services
Getting Started with Payments for Ecosystem Services
Getting Started with Payments for Ecosystem Services October 2009
United States Forest Service
1
Overview • • •
What are Payments for Services? Review/Examples of Existing US Markets and Payments USDA efforts
2
Ecosystem Services
…the benefits people obtain from ecosystems Marketable
$$$$
Non-Marketable
$$$ $$ $
Markets do not currently give the appropriate signal Farm and Forest Landowners Others + Private landowners do not benefits from producing public goods Beneficiaries do not pay for services Landowners may not be penalized for negative impacts Others are left to pay the costs Landowners not adequately compensated for producing things society values Farmer or other landowner do not pay the full cost of negative impacts
Payments for Ecosystem Services A payment for environmental services scheme is: 3) 4) 5) 1) 2) a voluntary* transaction in which a well-defined environmental service (ES), or a form of land use likely to secure that service is bought by at least one ES buyer from a minimum of one ES provider if and only if the provider continues to supply that service (conditionality).
5
Why ‘Payments’ for Ecosystem Services?
Nature provides services free of charge Consumption of ecosystem goods (such as timber or oil) is favored over the conservation of ecosystem services Grey infrastructure is favored over green infrastructure Market forces must be realigned to invest in the production of both ecosystem goods and services If market forces reward investments in ecosystem services, a positive feedback loop will start in which increased investments in ecosystem services leads to increased production of ecosystem goods.
This will fuel sustainable economic growth and ecological restoration 6
Early Environmental Markets
Wood/Forest Products Capped Issuance of Hunting and Fishing Licenses Limited, Sellable Water Use Rights Cap-and-Trade Trading in Pollutant Allowances of Sulfur Dioxide (U.S., 1990s) Wetlands and Species Credits (U.S.) 7
Markets for forest ecosystem services
• • • • • • • •
Emerging markets
Renewable energy (bioenergy) Carbon sequestration Watershed services Stream and Wetlands Water quality Biodiversity (T&E Habitat) Avoided deforestation 15
Environmental Markets & Payments for Services
Carbon trading (regulatory and voluntary) Carbon trading (regulatory and voluntary) Water markets (regulation driven) Water payments (public sector funding) Water payments (B2B & public sector) Biodiversity trading (regulation-driven) Biodiversity transactions (B2B) Water-related payments (public sector) Water markets (public sector funding) Carbon trading (regulation-driven) Water payments (B2B) Biodiversity transactions (B2B) Water payments (public sector) Biodiversity trading (regulation-driven)
9
What are the drivers of ecosystem service demand?
• • • • • • •
Private market demand Timber and non-timber products Government incentives i.e. Farm Bill programs (CREP, EQIP, CRP, WHIP) Environmental regulation i.e. cap and trade, no wetland loss, ESA Voluntary private “Green Goodwill”
• • • • • • • •
Types of Markets
Private deals/Voluntary markets Usually in the absence of regulation • 1 to 1 deals – benefit and opportunity Trading/Mitigation Schemes Regulatory standards or pollution caps Driven primarily by lower cost Public Payment Schemes Most prominent world-wide Traditional or new outcome-based incentives
A Review of Existing Markets
Policy or Regulation-based
Open-Trading Schemes
Markets that require sufficient liquidity and transferability, low transaction costs and good access to information
Public Payments
Payments to property owners who agree to adopt land management practices associated with the maintenance of ecosystems
Regulatory Markets Voluntary Markets Government Payments Government Taxes
Voluntary or Private Transactions
Self-Organized Deals
Individual beneficiaries of environmental services contract directly with providers of these services.
Landowner (or NGO) to Landowner Multi-Buyer Consortium
12
Potential buyers of ecosystem services…
• • • • • • • • Agriculture Drinking water providers Sewage treatment plants Developers Federal, State and local governments Large residential and commercial developers Industrial polluters and energy companies Individual Citizens and Communities
Categories of Services/ Markets
• • • • • Biodiversity Water (qual, quant, temp) Carbon Wetland Others: Scenic beauty (eco- tourism), bundled services (land trusts, conservation easements )
Biodiversity Markets and Payments
U.S. Species Banking
• • • • Species banking started in the early ’90s & wetlands in early ‘80s ~115 species & 800 wetland & habitat banks in the US Species offset & banking $200-300 million in 2007 Wetlands offsets & banking $3 billion in 2007 (ELI) Mechanisms: do it yourself, pay into a fund, or buy a third-party credit
Water payments
Payments for Watershed services (quality & quantity) • • • Private deals Regulated markets Upstream-downstream PWS
Self organized private deals
• Perrier -Vittel - France- largest bottler of water. Protect land, improve ag practices, and reforest critical recharge areas. $24.5 million in payments to landowners to protect water quality.
• Coca Cola Company withdrawals. – working toward goals for water neutrality by investing in local watershed to improve water conservation and environmental flows as an ‘offset’ to
Chesapeake Bay
•
Cap (TMDL) for nutrients
•
Point sources exceed or are projected to exceed Tributary limits
•
EPA Model efficiencies for BMPs
•
Cheaper compliance
• • • • •
Tualatin Watershed
(OR) Sewage Treatment Plant Temperature TMDL Endangered salmon Tree planting for shade and restore/reconnect floodplains to cool base flow $6-10 million spent by water utility in lieu of $60 million refrigeration cost
Public Payments:
• • •
NYC Watershed
Drinking water supply for >6 million people Conservation of forests and agricultural lands Invest $30-50 million per year in conservation vs. $7+ billion in capital & operating costs (estimate 80%+ reduction in costs.
• • • •
Denver Water Company
Over 80% of the water supply for over 1.5 million people in the Denver metro area Fire and flood events degraded water quality and damaged water treatment and storage facilities City funding road rehabilitation, prescribed burning, fire protection measures in private subdivisions and upstream.
Public education
Carbon Markets • The most global environmental market as a result of Kyoto Protocol, which drives European Emissions Trading System (EU ETS) • Non- Kyoto carbon markets • • • Voluntary carbon markets US carbon markets Markets for biological carbon sequestration
Universe of Carbon Markets in 2009 EU ETS
$118 Billion
CDM
$2.7 Billion
AAU
$2 Billion
JI
$354 Million
RGGI
$2.2 Billion Total value, 2009: US$143,727 Billion
NSW
$117 Million
Voluntary OTC
$326 Million
Chicago Climate Exchange (expired)
$50 Million Source: Ecosystem Marketplace and World Bank
Active Forest Carbon Offset Projects Source: www.forestcarbon
portal.com
At www.forestcarbonportal.com, the Ecosystem Marketplace tracks and posts active forest carbon offset projects.
Market-based conservation faces a number of barriers…
• • • • • •
limited demand (and connection to supply), clear, consistent rules and standards, high start-up and transaction costs, long-term investment risks, lack of an institutional/policy framework, And, a lack of information and experience .
10
Farm Bill: Food, Conservation, and Energy Act of 2008
Sec 2709: Farm Bill authorizes USDA to create a Federal framework to facilitate Environmental Services Markets.
13
The Secretary shall…
• • • • Establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management • • report and verify benefits through protocols collect, record, and maintain measured benefits in a national registry Facilitate the participation of farmers, ranchers and forest landowners in emerging markets Consult with stakeholders
Established the USDA Office of Ecosystem Services and Markets • Carry out intent of the legislation • • Form Technical Work Groups Provide Coordination among federal agencies • Carry out consultation and involve the public
• • • •
Forest Service Objectives
Raise awareness of a wide range of ecosystem services provided by forests Better integrate ecosystem services in planning, management, and decision-making Convene partners demonstrate and learn, test, pilot, Expand opportunities for private forest lands to remain forested through market opportunities *** Public-Private partnerships*** ** Ecosystem Commons **
•
Willamette Partnership (OR) • • •
NGO led Salmon protection Bundling multiple markets, (wetlands, T&E)
•
Conservation Registry
•