Coverage of the AFF/WRI Environmental Markets Conference - June 24

Becca Madsen on June 24, 2010 Comment

Ecosystem markets practitioners from across the US are gathering in the Research Triangle area of North Carolina (eg - Raleigh-Durham) for a national gathering of folks working not at a theoretical level, but at a practical level - on various types of Payments for Ecosystem Services (PES) schemes.

Closing Keynote

David Metz, from Fairbank, Maslin, Maullin, Metz & Associates (a marketing/polling company) spoke about a recent national public opinion project for the Nature Conservancy regarding the public's understanding of 'ecosystem services.' Full information about this project is available at: www.conserveonline.org/workspaces/naturesbenefits. Or if you want to see a previously recorded webex conference about this project, check out this link.

The more understood benefits from nature were related to clean air and water. One important lesson was that focus groups did not like/understand the term 'ecosystem' - don't go out and visit an ecosystem. Terms that participants of a poll liked were 'Nature's Value' and 'Nature's Benefits.' The terms that were at the bottom of the list were 'ecosystem services' and 'natural capital.' The strongest messages were those that spoke about water quality, public safety, and specific kinds of benefits nature provides. Who says the message is also important - the most trustworthy delivery comes from farmers and ranchers, public health organizations (eg - in terms of clean air and water), environmental organizations and scientists. Business interests (chambers of commerce for example) were seen as a less trustworthy source of information.

From this poll and focus group effort, they created a 'message triangle' - with a core message and three supporting points. Core message: Nature provides measurable benefits for people's health, jobs and safety.

Sally Collins, of the USDA Office of Environmental Markets, spoke about the role of the OEM office and some of the issues their office sees on the horizon. The OEM office was created in May of 2008 and Sally was named the Director in December of 2008. A new administration came in in January of 2009, so the start of the office had been complicated by the changing administrations - they didn't even have office space in ~August of 2009 (...and ps - they still don't have a website). The office really started moving forward after meeting with and getting champions with the USDA Secretary Vilsak and Undersecretary Sherman. Sally introduced the OEM staff: Carl Lucero (formerly of USDA's NRCS, Mark Nechodom (formerly of the USDA Forest Service), Beth Larry (formerly of the USDA Forest Service), and Al Todd (on a detail from the USDA Forest Service, State and Private Forestry), and Ryan Atwell (a AAAS Fellow, from Iowa State University); as well as summer fellows and an academic fellow (Paul Brown - from the investment world) looking at motivations (/demand) for entering environmental markets.

Sally mentioned 5 things the office has learned from talking with many stakeholders:
• It's not all about carbon
• We have to involve stakeholders as we develop these markets
• You have to work across agencies and programs - there are really hard silos in biodiversity, water (and even quantity and quality silos within that)
• We need national metrics or guidelines for how these markets would work in regions
• Need robust science or you won't have a market that's credible

Other lessons learned:
Where do we start - do we start with metrics, a registry, with a clear way to bring biodiversity/carbon/water together? Many groups have been putting pieces together. But even if market infrastructure exists, do the landowner suppliers know enough to participate? Or is it more important to start with demand - TMDLs, offset programs? Or do you need to start by working across agencies - to avoid a chaotic marketplace? The OEM still needs practitioner feedback on the most important point of entry for the OEM.

The OEM now has a strategic plan. Some of the work includes an effort to coordinate efforts to build markets in the Chesapeake Bay. The interdepartmental group is working in the Ohio river and the Willamette partnership to see how agency efforts can be coordinated. Farms/Forests of the Future initiative (with EcoAgriculture Partners) intends to demonstrate alternate income streams through ecosystem payments. Also coordinating efforts related to ecosystem markets within USDA. Finally, the national ecosystem services partnership is a virtual partnership to share best practices and cutting edge activities/research.

What does the OEM staff see as issues in the next year?
Al Todd - the time is ripe to agree upon and communicate a common vision of the future of the space of ecosystem markets. Much effort has gone into market infrastructure and needs to be tested.
Beth Larry - we always felt that OEM needs to communicate the 'ecosystem services' lens. Providing information is one of the main things USDA can move forward in this space. The federal government is the best source of information on some of these markets.
Carl Lucero - OEM is at the point where it needs to put what has been learned into action. This could be the prelude to the 2012 Farm Bill.
Ryan Atwell - we hear different paradigms about the future of ecosystem services (regulatory-driven, payments for watershed services, etc.), but it's important to step back and remember that landowners may have no clue about ecosystem services. Also important to get the scientists together with the markets people.
Mark Nechodom - "I just want a climate bill." Two major issues on the horizon: 1) stacking and bundling issue - the policy, accounting, and rules have to be created. 2) Evolution of investment and finance in this space.
Sally Collins - the next Farm Bill is an opportunity to make ecosystem markets more robust and also to pay for conservation outcomes as opposed to programs.

Plenary Session 4 - Filling the Gaps and Seizing Opportunities
Panelists: David Primozich (the Freshwater Trust), Al Todd (USDA Forest Service), Joanna Silver (Markit), Pat Coady (Coady Diemar Partners), Becky Allee (NOAA)

Thoughts or highlights on the conference from the panelists:
• Regarding 'biodiversity market' - can you call it a service or is it more of a metric of the ecosystem service?
• Diversity of experience of the speakers and participants of the conference
• Compared to last year - the language was still forming, there were ideas of tools, and ideas for pilots. This year - the language is much more developed as well as tools, and pilots are happening.

What are gaps in development of ecosystem markets?
• Lifecycle of credit a great way to make it more real to help people understand the process of an ecosystem service credit. But what about the lifecycle of demand - from government incentive to corporate investment, we need to better understand people are looking for to stimulate demand. The supply side is really coming together, but the demand...
• Regulatory demand-drivers are getting a lot of resistance from stakeholders (eg - Virginia water quality trading by developers, Cardin Bill by Farm Bureau)
• One of the gaps is methods/quantification of ecosystem service credits
• How can the markets be made more viable for private landowners? Push the value-based decisions about should's/shouldn'ts...
• Good tools are flexible and replicable for other places, it's just a matter of changing the underlying data
• In wetland mitigation banking, there are issues of transparency. If you're going to have a market, there needs to be a record of pricing. Much pricing gets determined one-on-one, which is more like bartering than a market determining the price.