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INCORPORATING
ECOSYSTEM MARKETS
AND TRADITIONAL
FOREST MANAGEMENT
STUART HALESEPTEMBER 17 2013
What are Ecosystem Services
 Ecosystem services are “the benefits people
obtain from ecosystems” (MEA 2005).
Human relationships with ecosystems:
 Man and Nature (1864)-
George Perkins Marsh argued that natural resources are finite
 Progressive Era conservationists
Humans are part of the ecosystems and must be proper
stewards to ensure health
 Current Academy
Daily’s Nature’s Services (1997); Constanza et al. (1997);
Tercek’s Nature’s Fortune (2013)
Increasing awareness of humans’ dependence on nature and accounting for the services prov
Introduction
UN MEA
• Global
assessment
of ecosystem
health and
human
impacts
• Initiated in
2001 and
completed in
2005
• Comprised of
1,360 experts
worldwide
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 2005)
Introduction
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:
Introduction
Ecosystem services:
• Non-exclusive
• Non-rival
• Externalities – positive and negative
• Additionality and Leakage
 The rise of TIMOs and REITs places
approximately 12-14% of private forestlands
with organizations in the business of
managing natural capital.
Dependent on private landowners
(Salzman and Ruhl)
Ecosystem demands
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
Demands and stresses on ecosystems are changing due
to:
Source: Southern Forests for the Future
Key Drivers of Southern Forest Change
Southern forests of change
Ecosystem markets
Increasing demand for benefits of ecosystem services have
fostered ecosystem markets.
Emerging ecosystem services markets are driven
primarily by:
 Government regulation
Mitigation markets
• Clean Water Act
• Safe Water Drinking Act
• Endangered Species
Act
 Consumer demand
• Voluntary markets
• Eco-labeling
State of ecosystem markets
New York City watershed protection in 1990s (Chichilnisky and Heal1998)
•$6-8 billion facility improvements versus 1.5 billion upstream conserva
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 201
Approximately 687,000 acres so far
Grey versus green
State of ecosystem markets
Existing primary markets:
• Fiber
• Recreation
• Carbon sequestration
• Watershed services
• Biodiversity
State of ecosystem markets
Fiber
Timber
- Markets flat
to slowly
improving.
Robust
improvement
s in other
regions.
Changing fiber demands
Fiber
Biomas
s
- Markets
emerging
but local.
Strong
demand for
European
supply.
 Commercial
pellets
 Domestic/local
 Industrial pellets
 European
markets
 Whole-tree chips
 Power
generation/Co-
Recreation
 Yearly/$2.00-
4.00 per acre
 Public hunting
areas on
private land by
permit
 Specialty hunts
 Game
preserves
 OHV/ Multi-Use
Trails
 Bird watching
 Equestrian
 Mountain biking
 Hiking
Hunt leases
Carbon
 OTC/Voluntary
 Frequently large
corporations
 Disney
 Staples
 Coca Cola
 Google
 Various protocols
 CAR, VCS, ACR, …
 Regulatory
 AB 32
 IFM
 Afforestation
 Avoided Conversion/REDD
 RGGI
 Northeast and Mid-Atlantic
states
 Designed to cap and
reduce power sector CO2
emissions
Source: Ecosystem Marketplace State of Carbon Markets 2013
Carbon sequestration markets
Source: Ecosystem Marketplace State of Carbon Markets 2013
Carbon sequestration markets
Source: Virginia Tech Urban Forest Assessment 2011
Carbon sequestration markets
Source: Ecosystem Marketplace State of Carbon Markets 2013
Carbon sequestration markets
Source: Ecosystem Marketplace State of Carbon Markets 2013/ ecoPartners
Carbon
Carbon sequestration markets
Carbon sequestration markets
 High project initiation costs
 Approximately 1500 acres
minimum for feasibility
 Must be certified to qualify
for IFM protocol
 Does not exclude timber
harvest
 100 year project term
 Landowner able to market
credits above common
practice baseline
 Total project timeline may
Watershed services
Compensatory Mitigation
 “No Net Loss”
 Clean Water Act
Section 404
 Mitigation Banks
 In-Lieu Fee
 Permittee Responsible
Source: Ecosystem Marketplace State of Markets 2011 Update
Watershed markets
Source: Ecosystem Marketplace State of Markets 2011 Update
Watershed markets
Source: Ecosystem Marketplace State of Markets 2011 Update
Watershed markets
 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.
Source: Ecosystem Marketplace State of Markets 2011 Update
Watershed markets
Watershed markets
 Require long-term restrictions but
in some cases as short as 20 years
plus 10 years monitoring period
 Flexibility in conditions
 Options for restrictions including
conservation easement, deed
restriction, or other method
 Projects may be negotiated, with
Corps approval, as permittee
specific
Biodiversity
 Endangered Species Act
Section 10
 Conservation Banks
 HCPs
Biodiversity markets
Source: Ecosystem Marketplace State of Markets 2011 Update
Biodiversity markets
Source: Ecosystem Marketplace State of Markets 2011 Update
Biodiversity markets
Source: Ecosystem Marketplace State of Markets 2011 Update
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
Biodiversity markets
 Not as common due to
infrequent enforcement of
ESA on private lands
 Increasing in occurrence
(along with HCPs)
 Most value is captured in
general conservation
values
 Species specific in pricing
with current examples
Ecosystem markets
• 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
 Fit ecosystem services markets into current
management without substantial opportunity
costs
Ecosystem management
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
Landscape features with potential to offer marketable ecosystem servic
Incorporating Ecosystem Markets and Traditional Forest Management
Incorporating Ecosystem Markets and Traditional Forest Management
Incorporating Ecosystem Markets and Traditional Forest Management
Incorporating Ecosystem Markets and Traditional Forest Management
Incorporating Ecosystem Markets and Traditional Forest Management
Ecosystem markets
 Problems
 Market approach may not be best for
insuring long-term ecosystem health
 Highly variable costs and pricing
 Negative impacts from long-term/perpetual
deed restrictions
• Future selling price
• Restricting future management options
Ecosystem markets
 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
Conclusions
 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
Questions
Contact: hale.stuart@gmail.com
D. Stuart Hale Copyright © 2013 All rights reserved

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Incorporating Ecosystem Markets and Traditional Forest Management

  • 1. INCORPORATING ECOSYSTEM MARKETS AND TRADITIONAL FOREST MANAGEMENT STUART HALESEPTEMBER 17 2013
  • 2. What are Ecosystem Services  Ecosystem services are “the benefits people obtain from ecosystems” (MEA 2005). Human relationships with ecosystems:  Man and Nature (1864)- George Perkins Marsh argued that natural resources are finite  Progressive Era conservationists Humans are part of the ecosystems and must be proper stewards to ensure health  Current Academy Daily’s Nature’s Services (1997); Constanza et al. (1997); Tercek’s Nature’s Fortune (2013) Increasing awareness of humans’ dependence on nature and accounting for the services prov
  • 3. Introduction UN MEA • Global assessment of ecosystem health and human impacts • Initiated in 2001 and completed in 2005 • Comprised of 1,360 experts worldwide 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 2005)
  • 4. Introduction 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:
  • 5. Introduction Ecosystem services: • Non-exclusive • Non-rival • Externalities – positive and negative • Additionality and Leakage  The rise of TIMOs and REITs places approximately 12-14% of private forestlands with organizations in the business of managing natural capital. Dependent on private landowners (Salzman and Ruhl)
  • 6. Ecosystem demands 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 Demands and stresses on ecosystems are changing due to:
  • 7. Source: Southern Forests for the Future Key Drivers of Southern Forest Change
  • 9. Ecosystem markets Increasing demand for benefits of ecosystem services have fostered ecosystem markets. Emerging ecosystem services markets are driven primarily by:  Government regulation Mitigation markets • Clean Water Act • Safe Water Drinking Act • Endangered Species Act  Consumer demand • Voluntary markets • Eco-labeling
  • 10. State of ecosystem markets New York City watershed protection in 1990s (Chichilnisky and Heal1998) •$6-8 billion facility improvements versus 1.5 billion upstream conserva 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 201 Approximately 687,000 acres so far Grey versus green
  • 11. State of ecosystem markets Existing primary markets: • Fiber • Recreation • Carbon sequestration • Watershed services • Biodiversity
  • 13. Fiber Timber - Markets flat to slowly improving. Robust improvement s in other regions.
  • 15. Fiber Biomas s - Markets emerging but local. Strong demand for European supply.  Commercial pellets  Domestic/local  Industrial pellets  European markets  Whole-tree chips  Power generation/Co-
  • 16. Recreation  Yearly/$2.00- 4.00 per acre  Public hunting areas on private land by permit  Specialty hunts  Game preserves  OHV/ Multi-Use Trails  Bird watching  Equestrian  Mountain biking  Hiking Hunt leases
  • 17. Carbon  OTC/Voluntary  Frequently large corporations  Disney  Staples  Coca Cola  Google  Various protocols  CAR, VCS, ACR, …  Regulatory  AB 32  IFM  Afforestation  Avoided Conversion/REDD  RGGI  Northeast and Mid-Atlantic states  Designed to cap and reduce power sector CO2 emissions
  • 18. Source: Ecosystem Marketplace State of Carbon Markets 2013 Carbon sequestration markets
  • 19. Source: Ecosystem Marketplace State of Carbon Markets 2013 Carbon sequestration markets
  • 20. Source: Virginia Tech Urban Forest Assessment 2011 Carbon sequestration markets
  • 21. Source: Ecosystem Marketplace State of Carbon Markets 2013 Carbon sequestration markets
  • 22. Source: Ecosystem Marketplace State of Carbon Markets 2013/ ecoPartners Carbon Carbon sequestration markets
  • 23. Carbon sequestration markets  High project initiation costs  Approximately 1500 acres minimum for feasibility  Must be certified to qualify for IFM protocol  Does not exclude timber harvest  100 year project term  Landowner able to market credits above common practice baseline  Total project timeline may
  • 24. Watershed services Compensatory Mitigation  “No Net Loss”  Clean Water Act Section 404  Mitigation Banks  In-Lieu Fee  Permittee Responsible
  • 25. Source: Ecosystem Marketplace State of Markets 2011 Update Watershed markets
  • 26. Source: Ecosystem Marketplace State of Markets 2011 Update Watershed markets
  • 27. Source: Ecosystem Marketplace State of Markets 2011 Update Watershed markets
  • 28.  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. Source: Ecosystem Marketplace State of Markets 2011 Update Watershed markets
  • 29. Watershed markets  Require long-term restrictions but in some cases as short as 20 years plus 10 years monitoring period  Flexibility in conditions  Options for restrictions including conservation easement, deed restriction, or other method  Projects may be negotiated, with Corps approval, as permittee specific
  • 30. Biodiversity  Endangered Species Act Section 10  Conservation Banks  HCPs
  • 31. Biodiversity markets Source: Ecosystem Marketplace State of Markets 2011 Update
  • 32. Biodiversity markets Source: Ecosystem Marketplace State of Markets 2011 Update
  • 33. Biodiversity markets Source: Ecosystem Marketplace State of Markets 2011 Update 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
  • 34. Biodiversity markets  Not as common due to infrequent enforcement of ESA on private lands  Increasing in occurrence (along with HCPs)  Most value is captured in general conservation values  Species specific in pricing with current examples
  • 35. Ecosystem markets • 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  Fit ecosystem services markets into current management without substantial opportunity costs
  • 36. Ecosystem management 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 Landscape features with potential to offer marketable ecosystem servic
  • 42. Ecosystem markets  Problems  Market approach may not be best for insuring long-term ecosystem health  Highly variable costs and pricing  Negative impacts from long-term/perpetual deed restrictions • Future selling price • Restricting future management options
  • 43. Ecosystem markets  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
  • 44. Conclusions  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
  • 45. Questions Contact: hale.stuart@gmail.com D. Stuart Hale Copyright © 2013 All rights reserved