What is an ecosystem service market?
Many ecosystem services are taken for granted by society. That is, their recognized economic value is either very low or nonexistent. Conservation Marketplace Midwest and other ecosystem service markets are attempting to recognize and value these services that are provided by nature. The idea is that individuals can manage the landscape in such a way that the land produces more clean air, clean water, pollinating services, etc. They become the sellers of these ecosystem services when buyers--other members of society--choose to purchase the services being produced. Buyers may represent a corporation, a municipality, a non-profit organization, land developers, or even other private citizens.
Businesses, corporations, conservation groups, and other entities may provide payments to landowners to implement ecosystem service projects. For example, a corporation may pay a landowner to plant trees to reduce their carbon footprint. An interest group may pay for habitat enhancements or hunting leases on private land. A municipality may protect its drinking water source by paying landowners to implement conservation practices in vulnerable groundwater recharge areas.
To more efficiently comply with regulations (water quality, quantity, or safe drinking water standards), regulated entities may choose alternatives to traditional compliance measures. For example, Rahr Malting in Shakopee, MN received a permit from the Minnesota Pollution Control Agency to construct a treatment facility and expand their wastewater discharge to the Minnesota River in 1997. This permit included the requirement to offset the expanded discharge through the reduction of nonpoint pollution. Rahr implemented conservation practices in the watershed to restore streambanks and establish riparian vegetation along river corridors.
CREDIT TRANSACTION BASICS
Market-based opportunities provide payments to support environmentally beneficial land use decisions. Landowners and agricultural producers who implement new practices that generate ecosystem services are called credit generators. A credit is a measure of the environmental value gained from a change in land management determined by using a repeatable science-based metric. Credit buyers are entities that want to invest in conservation. They may be municipalities, utility companies, private businesses, or non-profit organizations. Their motives might be to meet regulatory requirements, to improve their corporate image, or to support their mission. Market participants should consider the following:
• Participation is always voluntary
• Baselines may need to be satisfied before buying or selling credits
• Credit prices are determined by market forces
Stacking ecosystem services credits allows landowners to sell different types of credits from a single location or receive multiple revenues from the same project or practice. For example, if a landowner restores an acre of stream buffer, water quality credits, carbon credits, habitat credits, and source water protection credits could be produced, all of which the landowner could sell in respective markets.
1. Identify - CMM works with corporations, municipalities, or non-profits to identify market-based conservation opportunities.
2. Enroll - CMM's Certified Field Representatives recruit land managers to participate in conservation projects.
3. Implement - Land managers upgrade their land stewardship practices to standards set by CMM and ecological investors.
4. Payment - Ecological investors pay land managers for the improved performance of their land.
Land managers can generate ecosystem service credits by implementing new conservation practices. Ecological services are the processes that provide us with natural resources such as clean water, fresh air, wildlife habitat, and the pollination of plants.
Corporations, municipalities and non-profit organizations may wish to invest in ecological services to achieve voluntary sustainability goals or meet regulatory requirements. CMM collaborates with these groups to build programs that meet their individual needs.