This document discusses ecosystem services and emerging markets for them. It provides background on the concept of ecosystem services and examples. Key points include:
- Ecosystem services are benefits that ecosystems provide to people, like food, water, recreation opportunities.
- Markets are emerging for ecosystem services like carbon sequestration, water quality protection, as demand increases for these natural benefits.
- Managing lands for both traditional uses like timber and ecosystem services like watershed protection through emerging markets could provide additional revenue streams for landowners.
2. Ecosystem services are “the benefits people
obtain from ecosystems” (MEA 2005).
Examples include:
Fiber
Recreation
Air Quality
Carbon Sequestration
Water Quality
Biodiversity
The term “ecosystem services” was first introduced in the
report, Study of Critical Environmental Problems in 1970.
3. Human relationships with ecosystems:
• Plato (c.400 BC)
First noted human impacts on the
environment
• George Marsh
Man and Nature, in 1864, argued that natural
resources are finite
• Progressive Era conservationists
Pinchot and Leopold - Humans are part of ecosystems and must act
as proper stewards to ensure their health
• Current Academy
Daily’s Nature’s Services (1997); Constanza et al. (1997); Salzman
and others-
Increasing awareness of humans’ dependence on nature and accounting
for the services provided
4. The UN Millennium Ecosystem Assessment was initiated in
2001 as a global assessment of ecosystem health and
human impacts comprised of 1,360 experts worldwide.
General Categories of Ecosystem Services :
• Provisioning Services:
food, water, fuel, fiber, and other goods
• Regulating Services:
climate, water quality, disease regulation,
pollination
• Supporting Services:
soil genesis, nutrient cycling
• Cultural Services:
educational, aesthetic, heritage, recreation
5. Millennium Ecosystem Assessment found:
• Human actions are depleting the Earth’s natural capital
straining the planet’s ecosystems ability to sustain future
generations.
• It is possible to reverse the ecosystem degradation over the
next 50 years but will require substantial changes in policy and
practice, not currently underway.
Major gaps in knowledge were found at the local and national
levels on the status of ecosystems and their economic values.
“…at the local scale there is typically insufficient information on
the full economic costs and benefits of alternate uses of
ecosystems to fully inform decisions.” (MEA 2001)
6. Demands and stresses on ecosystems are changing due
to:
Increasing scarcity
• Population growth
• Suburban encroachment
• Land-use conversion
• Forest fragmentation
• Habitat degradation
• Pests and pathogens
• Invasive species
Market conditions- social values
Product preferences
Available information
Bio-accumulation
8. Ecosystem services :
• Non-exclusive
• Externalities
• Dependent on private
landowners
This rise of TIMOs and REITs
places approximately 12-14% of
private forestlands with
organizations in the business of
managing natural capital.
9. Increasing demand for benefits of ecosystem
services have generated ecosystem markets.
• Public policy and regulatory
shifts
• Potential economic benefits to
landowners and communities
• Dynamic land-use and
ownership patterns – TIMOs and
REITs
10. Emerging ecosystem services markets
are driven primarily by:
Consumer demand
• Voluntary markets
• Eco-labeling
Government regulation
• Mitigation markets
Clean Water Act
Safe Water Drinking Act
Endangered Species Act
11. New York City watershed protection in 1990s
• $6-8 billion facility improvements versus 1.5 billion upstream
conservation
Denver Water
• Split bill of $33 million with USFS to manage watersheds in
response to a current $40 million clean-up of one reservoir
Wal-Mart - “Acres for America”
• In US, protecting 1 acres of land for every 1 acres disturbed
through 2015
• Approximately 687,000 acres so far
Grey versus green
19. These prices represent credit prices and not payments to landowners.
Credit prices consists of many variables including construction costs,
administrative costs, land acquisition costs, and others.
20.
21.
22.
23. Thunderstruck
Conservation Bank
Approximately 600 acre but
part of a larger 2000 acre
management area
• Cheat Mountain
Salamander
• Northern Flying squirrel
• High potential of Indiana
and Virginia big-eared
bats
24. • Markets are emerging
• Potential benefits to landowners
• May offer opportunities to generate
income off otherwise non-
productive areas
• Diversify natural capital portfolio to
mitigate market fluctuations
Could ecosystem services marketing fit into current
management without substantial opportunity costs?
25. • Determine validity of ecosystem services management as part
of a comprehensive resource management strategy and
compare to traditional management
• Provide a demonstrative example of an ecosystem services
management scheme and actual land-base as a case study
• Estimate direct market present value of ecosystem services
• Use open-source information as available
26. •Proposed Project Area is
approximately 3,976 acres
•Dumps Creek watershed in
southwest Virginia
•Mixed mesophytic forest eco-
region of predominately upland
hardwoods with some cove
hardwood forest types
•Current and past land uses
included timber, coal, and natural
gas extraction, human habitation,
and agriculture
27. Identify traditional and ecosystem services markets
Examples:
• Local fiber markets
• Local recreational hunt leasing
• Ecosystem Marketplace
• The Bay Bank
• Mitigation banks/ ILF programs
• “Over the Counter” (OTC)
Find comparable prices from
reported transactions or estimates
29. Traditional Management Scheme
Service Area (ac)
Fiber 2,873 410 3,283
(80% BA (50% BA
harvest) harvest)
Recreation 3,883 NA*
Non-timber 693 693
TOTALS: 3,976
*The area of recreation is considered co-use,
in that it provides multiple services, and
therefore will only be counted once in total
area.
30. Traditional Management Scheme Service Prices
Service Units Price per unit Sources Assumptions
Fiber MBF •$100 – pessimistic •Local prices •3000 BF/ac
•$125 – most likely •Timber Mart- •Harvest 80% for
•$150 – optimistic South suitable areas
2nd Quarter •Harvest 50% for
2010 SMZ buffers
•Annual harvest rate
of total area/15-year
ownership period
Recreation acre •$2.00 – pessimistic •Local prices •All areas suitable are
•$2.07 – most likely •VA DOF leased annually
•$3.00 – optimistic based on current
conditions
31. Landscape features with potential to offer
marketable ecosystem services:
1. Areas suitable for fiber harvests
2. Culturally significant sites
3. Retention areas of recent timber harvest
4. Areas unlikely for timber harvest
5. Perennial streams
6. Critical habitats
7. Non-forest areas
8. Wetlands
9. High Conservation Value Forests
10. Critical viewsheds
11. Areas with public safety concerns
32. Ecosystem Services Management Scheme
Service Area (ac) Linear feet
Fiber 2,264 NA
(80% BA
harvest)
Recreation 3,883* NA
Carbon 685 NA
Watershed 397 94,212
Services (No harvest
SMZ Buffers)
Biodiversity 630 NA
(Non-timber)
TOTALS: 3,976
*The area of recreation is considered co-use, in
that it provides multiple services, and therefore
will only be counted once in total area.
33. Ecosystem Management Scheme Service Prices
Service Unit Price per unit Sources Assumptions
Fiber MBF •$100 – pessimistic •Local prices •3000 BF/ac
•$125 – most likely •Timber Mart- •Harvest 80% for suitable
•$150 – optimistic South areas
2nd Quarter 2010 •Harvest 50% for SMZ
buffers
•Annual harvest rate of
total area/15-year
ownership period
Recreation acre •$2.00 – pessimistic •Local prices All areas suitable are
•$2.07 – most likely •VA DOF leased annually based on
•$3.00 – optimistic current conditions
Carbon ton •$0.10 – pessimistic •Ecosystem •127 tons/ac
•$1.00 – most likely Marketplace •Annual enrollment rate of
•$4.00 - optimistic •Appalachian total area/15-year
Carbon ownership period
Partnership •Additional area from fiber
retention in Year 2
34. Ecosystem Management Scheme Prices (continued)
Service Unit Price per unit Sources Assumptions
Watershed linear •$20 – pessimistic •Approximate ILF •1% of total LFt sold
feet •$25 – most likely average – annually for 15-year
•$30 – optimistic construction cost ownership period
•Approximately 10% •Act as mitigation
of ILF prices bank
•Demand provided
through mitigation
markets (CWA)
Biodiversity acre •$0.00 for all pricing •Transactions are •Act as conservation
scenarios taking place but prices bank
are highly variable •Demand provided by
and project specific conservation markets
•No local transactions (ESA)
35. Valuate marketable services as available and
projected :
5
y= Σ (a )(v )
i i
i =1
Whereas,
y = economic benefits to landowner
i = landscape feature
a = units of marketable ecosystem services
v = value per unit of marketable ecosystem
services
36. Comparison of Management Schemes by Pricing Scenario
1600000.00
1400000.00
1200000.00
1000000.00
Dollars (US)
Ecosystem
Services
800000.00 Management
600000.00 Traditional
Management
400000.00
200000.00
0.00
Pessimistic Most Likely Optimistic
40. Problems
Market approach may not be best for
insuring long-term ecosystem health
Highly variable costs and pricing
Negative impacts from perpetual deed
restrictions
• Future selling price
• Restricting future management options
41. Positives
• Additional revenues and making acres productive that
may not have been otherwise
• Additional management actions could be incorporated
into current practices
• Provide opportunity for management of other desirable
species without market values
• Could provide for significant gains if applied to a larger
portfolio
• Promote awareness and education of human impacts
and dependence on ecosystem health
42. Ecosystem markets are emerging but immature
Ecosystem services management and marketing
may offer additional revenues to landowners now
and in the future
Greater recognition of ecosystem service values
could influence management policies
Humans and ecosystem health are dependent
upon the services originating on private lands
Improved ecosystem management could result in
improved human and ecosystem health