This presentation was delivered to Forestry 530 - Advanced Forest Resource Management at the University of Tennessee - Knoxville Fall 2013. It provides an overview of ecosystem services, ecosystem markets, and incorporating management and marketing ecosystem services with traditional forest management operations.
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:
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
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
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
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
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