Ecosystem services are the benefits that nature provides, such as purifying and cooling water or storing carbon dioxide. Worldwide, there is growing interest in harnessing market forces to drive conservation and restoration. Market-based approaches to ecosystem services can:
- Provide a pivotal link between people willing to pay for actions that improve and protect our environment and those who can take those actions.
- Identify specific environmental products and services that result from restoring and protecting our environment. In much the same way that farmers can describe the specific quantity and quality of crops they grow, they can also now describe the specific quantity and quality of environmental products and services they can create, like fish and wildlife habitat and water storage and purification.
- Create economic incentives for cities, industries, and businesses that have unavoidable impacts on the environment to fund meaningful conservation and restoration actions.
- Create opportunities to pay the people who can restore and maintain ecosystem services.
- Target conservation and restoration toward the most beneficial locations.
- Involve the private sector in conservation and restoration and increase cooperation among diverse parties, such as business, environmental, and agricultural interests.
- Marry the economy and the environment, creating new business opportunities while increasing the pace, scope, and effectiveness of conservation and restoration.
How ecosystem services markets work
The concept behind ecosystem services markets is fairly simple. Environmental regulations set standards to protect natural resources. Industries, businesses, developers, and individuals who change the land or water must either meet these regulatory standards or compensate for the impacts they cannot avoid.
For example, a developer who cannot avoid impacts to a wetland must replace it, either on site or elsewhere. Cities and industries must clean and cool wastewater before releasing it into a river.
Where impacts cannot be avoided completely or where a resource can be better protected elsewhere, ecosystem services markets provide a way for regulated parties (buyers) to pay other land and water managers (sellers) to restore wetlands, reconnect river floodplains, preserve prairies and forests, plant trees along streams, or improve the ecosystem in other ways.
Is this for real?
Ecosystem services markets are already in place in Oregon, the United States, and elsewhere in the world. Here are some examples:
- In Oregon, wetland mitigation banks are allowed to sell credits to offset unavoidable impacts to a natural wetland impaired by a development project.
- In Oregon’s Tualatin River basin, a water resources agency avoided investing more than $60 million in technological upgrades by restoring 35 miles of 150-foot-wide stream buffers and paying farmers competitive rates for using their land for restoration.
- The U.S. Fish and Wildlife Service developed a conservation banking program that allows developers who cannot avoid causing adverse effects to endangered species to invest in banks elsewhere that restore or protect equivalent habitat. Most of these banks are in California, but the Oregon Department of Transportation developed a conservation bank to conserve Oregon chub. The chub were officially the first fish to be removed from the federal Endangered Species List as a result of population recovery.
- The Kyoto Protocol stimulated the development of a cap-and-trade system for carbon dioxide emissions in most industrialized countries, although not in the United States.
For more information on ecosystems services and market-based approaches to conservation, see the Willamette Partnership and the Freshwater Trust.