Opening Session

The conference opened with a message from none other than His Royal Highness (HRH) the Prince of Wales, via video message. Prince Charles knows his stuff - he's familiar with the TEEB, and he added a 4th 'R' - Restore - to the traditional Reduce, Reuse, Recycle. He encouraged conference delegates to "...ensure that environmental resilience is at the heart of economic resilience."

Johan Eliasch (Chairman, Head, and former Special Representative of the Prime Minister of the UK) pointed out that biodiversity loss poses a serious business risk. The conference goals are 1) to celebrate the International Year of Biodiversity and the progress that has already been made; 2) to challenge the conventional 'running down' of natural capital; 3) to provide a forum to exchange knowledge, expertise, ideas; 4) to capture feedback and channel it to inform the October CBD COP10.

Plenary Session 1
Experts from business, government, and NGOs spoke on trends in business and future scenarios for business, potential policy developments, etc. Speakers included Tom Albanese (Rio Tinto), Professor Brian Collins (UK Dept for Business Innovation and Skills), Gavin Neath CBE (Unilever), Robert (Bob) Watson (UK DEFRA), and Peter Seligmann (Conservation International).

Highlights from the session:
• Tom Albanese of Rio Tinto, an international mining company, has to address biodiversity issues now if they want to be around in 100 years. First company to adopt 'net positive impact' on biodiversity (in 2004).
• Bob Watson emphasized that business both use and impact biodiversity and the cost of doing business could increase as ecosystems are degraded. The business environment is and will be changing with consumer and shareholder expectations. Valuation of ecosystem services is critical. Have to remove perverse subsidies that degrade ecosystem services and put in place incentives that enhance ecosystem services.
• Brian Collins has a challenging task of getting across to other Ministers the complexities of interlinked economic, environmental, and social issues. He pointed out that there needs to be a language for discourse between business and biodiversity actors.
• Gavin Neath of Unilever provided perspective from a business that is reliant on ecosystem services - particularly in terms of agricultural sources of their products. Biodiversity has been a tricky subject for businesses because they often think "What do these little chaps [rare animals and plants] have to do with by business?" For Unilever, their impact on biodiversity is primarily from the negative impacts of monoculture agriculture, so their work on biodiversity is focused on sustainable agriculture. Three examples were given: sustainable tea estates (certified by Rainforest Alliance), and sourcing more sustainably from palm oil (they have committed to buying 100% RSPO certified sources by 2015) and tomato suppliers.
• Peter Seligmann of Conservation International noted that his organization recently changed its focus towards ecosystem services provided to people. Collaboration with the private sector (ex - WalMart) and development sector (Gates Foundation) have been paramount to CI's biodiversity work. Gates Foundation recently saw the link between health and development issues and biodiversity. CI partnered with WalMart seven years ago, and there's been significant work on sustainability issues within WalMart. Now, you don't get primary shelf space in WalMart unless its green.

Plenary Session 2
The TEEB for business (TEEB D3) was launched at this session. Pavan Sukhdev (TEEB) and Josh Bishop (IUCN) presented the results of the report and panelists responded to the results. Panelists included: Herman Mulder (TEEB Advisory Board, Worldchanging), Malcolm Preston (PriceWaterhouseCoopers), Vincent Gros (BASF SE), James Sweeting (Royal Caribbean), Genevieve Ferone (Veolia Environment).

Pavan Sukhdev noted that the TEEB project started in 2007, when the Stern report on the economics of climate change came out, and folks in the biodiversity world thgouth 'we ought to have like this for biodiversity.' "Nature is largely economically invisible." In the absence of valuing nature, the trade-off decision-making is heavily weighted towards development or conversion of biodiverse habitats. As an example: the economic value of converting mangroves to shrimp farming may be greater than the 'invisible' value of the mangrove's ecosystem services - unless a shadow value can be put on these services and considered in decision-making.

Josh Bishop is the lead of the TEEB for business report. The report is full of case studies and statistics, and Mr. Bishop's presentation provided some examples.

A recent PWC survey on business leaders' knowledge on biodiversity showed varying levels of awareness of biodiversity (value/risks). A study by the UK organization Trucost contributed a study on the cost of deforestation in China (US $12.2 billion) - considering things like property loss from flooding, reduced precipitation, reduced water runoff, etc. Another case study in the report looked at the value of business' dependence on biodiversity via the story of blueberry crop dependence on pollination services.

Chapter 3 of the report focuses on measuring and reporting biodiversity and ecosystem service impacts and dependence by business. One example: SAB Miller (brewery) set a quantitative target of water productivity (25% by 2015, with a potential savings of 20 billion liters of water per year). Chapter 4 is concerned with how to translate biodiversity risks to business. Chapter 5 turning ecosystem services into a business cash flow (eg - new markets like REDD). What it takes to make markets work is enabling policy: ending subsidies that damage ecosystem services, providing tax credits and other incentives for provisioning ecosystem services, and providing information and transparency on markets. Chapter 7 looks at various standards.

There are activities that business can do today: identify impacts and dependence on BES, assess risks and opportunities; develop BES information systems set targets and measure and value performance; avoid/minimize/mitigate risks; and more.

Plenary Session 3
Rt Hon Caroline Spelman MP (Secretary of State for DEFRA) addressed the conference delegates for the Keynote Address. Despite efforts, the 2010 target for the Convention on Biological Diversity has not been met in the UK [or by any of the signatories of the CBD]. Biodiversity cannot continue to be seen as collateral damage to economic development. The UK is the first country in the world to be conducting a national ecosystem services assessment, which will be released next year.

Deforestation is a global and critical issue. Ms. Spelman touched on deforestation issues related to palm oil plantations and illegal logging, and noted some progress and plans related to sustainable sourcing and the potential of REDD+.

New markets must reflect the value of ecosystem services. "There are some prices that are just too high to pay. It's imperative that each business examine its own supply chain... The world is going to start pricing natural resources, so if you move into this market early, you will [get a first-mover advantage]."

Panel Debate on the Policy-Practice Divide
A group of panelists spoke to future trends and policy changes required to engage business.

Speakers included Angela Cropper (UNEP), Colin Melvin (Hermes Equity Ownership Services), Michel Mane (Mane Americas), Ravi Sharma (CBD Secretariat), and Ambassador Mauricio Rodriguez Munera (Embassy of Colombia).

Highlights from the session:
• Angela Cropper made multiple points, first that the conference was 'preaching to the choir' and more effort needed to be made to engaging the reluctant and skeptical. Additionally, the dialogue on business and biodiversity needs to be more targeted and specific to translate the messages for specific sectors. The development of incentives (specific to sectors) also needs to be speeded up. Reporting on biodiversity indicators should not be voluntary, and consumers need to have this information to make informed choices.
• Ravi Sharma thought that businesses may not have been well-engaged in the CBD in early days, but are and will be engaged more and more. The new 2020 CBD targets will be more focused on specific sectors (eg - agriculture, fisheries). As well businesses will be one of the stakeholders in the development of national strategies for the upcoming 2020 CBD targets.
• Colin Melvin spoke as a representative of investors. He explained that investors can be a major barrier to companies adopting sustainability principles because of their emphasis on short term profits. But on the other hand, investors can push companies to adopting sustainability principles - which we see with some pension funds. The UN Principles for Responsible Investment (UNPRI www.unpri.org) has $20 Trillion in investment committed to the principles.
• Michel Mane explained that his company designs flavors and fragrances, a small industry ($30-35 million industry) that is largely self-regulated. Debate on the loss of biodiversity should be placed in both the scientific domain and the entrepreneurial domain.
• Ambassador Mauricio Rodriguez Munera spoke about the biodiversity of the country of Colombia. Colombia has a national biodiversity policy, created in the early 1990s. Colombia is tenth in the world in the Environmental Performance Index 2010 conducted by Yale University. One request regarding the Nagoya summit: "Colombia hopes the participant States support the conclusion of negotiations and adopt a protocol of access to and fair distribution of the biodiversity benefits in the world."

Issei Tajima, Senior Vice-Member of the Environment from the Government of Japan, spoke on the topic 'Towards Nagoya, COP10.' This year is an important year for people around the world to address biodiversity issues. One of the activities that the Government of Japan intends is to create a new strategic plan to meet the new 2020 CBD target. The engagement of the private sector is of utmost importance. An interesting anecdote - the bullet trains of Japan have an aerodynamic 'nose' based on the beak of the Kingfisher bird.

Some examples of the role the IPBES could play: making global reports on biodiversity more coordinated and meaningful by matching up methodologies and standards; bringing scientific expertise on new topics to attention before major policies are passed (eg - scientific pros/cons of biofuels); "encouraging research in neglected areas, as well as providing research and conservation opportunities in developing countries." (MongaBay)

UNEP boss Achim Steiner said "IPBES represents a major breakthrough in terms of organizing a global response to the loss of living organisms and forests, freshwaters, coral reefs and other ecosystems that generate multi-trillion dollar services that underpin all life-including economic life-on Earth."

The green light for the IPBES was given by delegates from 85 nations. The pass-off for full approval goes to the UN General Assembly in September 2010, with later endorsement by individual country environmental ministers attending a February 2011 UNEP Governing Council/Global Ministerial session.

Sources:
UNEP Press Release 6/11/2010
BBC 6/14/2010
MongaBay 6/14/2010
IUCN website 6/2010

The second project is a very Facebook-y campaign to get Californians engaged in endangered species protection. The campaign, called Tatzoo(.org) uses the enticement of a tattoo inked by world-famous tattoo artists to generate fresh ideas for engaging in endangered species protection. ...now appearing on some cool dude's bicep: the California Red-Legged Frog. Nice.

Next is a Guardian contest to re-name British species to more charismatic names. Who could forget the Hellbender, a rare, extraordinarily-sized salamander found in the US? Unfortunately, not all species are blessed with such memorable names: a medicinal lichen Usnea florida (yawn), a leaf beetle Cryptocephalus punctiger (double-yawn). So the Guardian has put on a contest to allow readers to provide suggestions for more fabulous species names. I can't find an end date, so hurry up and put in your idea!

And finally, if Twitter is your thing, the Guardian lists the 'Top 50 wildlife and conservation Twitter accounts.' Harrumph! We haven't made the list yet - follow us @EcoMarketplace and @KatoombaGroup.

Guardian 6/23/2010,
Biking for Biodiversity blog 6/2010,
Tatzoo.com website 6/2010,
Guardian 6/25/2010,
Guardian 6/4/2010

With all this buzz building, Peter Carter of the European Investment Bank drops this bombshell quote at a recent European 'Green Week' Conference: biodiversity offsetting could be "as big as the carbon market," and he pointed to the US wetland mitigation market as an example.

Reality check: the total carbon market worldwide is upwards of $100 billion annually vs. total US wetland mitigation market is around $1-2 billion annually. Others in the know pop the optimism with a dose of reality:

"With the carbon market we know what we are trading and how to tackle them. We can set a cap and use the price to drive them down. We have a baseline for biodiversity in Europe now, but it is not one figure - it is four pages of different elements of biodiversity," says Karl Falkenberg, European Commission director general for environment. (Ecologist.com)

Some of the more realistic optimism for biodiversity offsets in Europe recognizes that development will continue to occur, and offsets could be a useful policy tool provided that there is additionality. But Pavan Sukdev, the PI on the TEEB study, counters "societies needed to cease putting "private wealth above public wealth" to tackle the problem effectively."(NYT)

In related news, the EU Habitats and Birds Directive had a task force working on biodiversity offsets that has recently released a position paper. The position of the BHDTF (Birds and Habitats Directive Task Force) is one of cautious approval for biodiversity offsets for habitats and species of European Importance outside Natura 2000 sites. The task force emphasizes that the "current stringent offset system prescribed in... the Habitats Directive must be maintained and its implementation strengthened." As well, the position paper lays out principles that an offset system should include, referencing Ecosystem Marketplace's sister initiative, the Business and Biodiversity Offset Programme (BBOP).

Sources:

New York Times 6/6/2010
The Ecologist.com 6/9/2010
BirdLife website 6/2010

Michael Van Patten, Mission Markets' CEO & Founder, also emphasizes starting with locating buyers.
Michael Van Patten

Tom Simpson, the Executive Director of Water Stewardship, notes that "low quality credits would destroy a the market."
Tom Simpson

Stephanie Gripne, the Director of the Initiative for Sustainable Development, emphasizes engaging the end user of ecosystem credits.
Stephanie Gripne

Finally, Todd BenDor, Assistant Professor of City and Regional Planning at the University of North Carolina-Chapel Hill, speaks about the geography of the market. Apologies for the background noise in this clip.
Todd BenDor

Over the course of the Fifth Rights and Resources Initiative Dialogue on Forests, Governance & Climate Change which wrapped up this Tuesday in Washington, DC, four expert panels surveyed the past, present, and future for reducing emissions from deforestation (RED) and forest degradation (REDD) and through improved forest management (REDD+).

With recent REDD+ movements such as the growing billions of dollars pledged through multilateral and bilateral deals or through the recently established Interim REDD+ Partnership among more than 50 countries, the rapid movements in this area in the wake of Copenhagen have earned REDD+ front-runner status on the global climate agenda and appear to be positioning REDD+ as a testing ground for seeing more generally how international funding mechanisms and sustainable development priorities can be integrated to address climate change.

Evolution

While the debate over numerous technical policy choices remained in the background and periodically resurfaced throughout the event, this dialogue presented a focused and sustained vision of why meaningful safeguards are not simply a burden to be side-stepped by eager project developers or forested countries looking to tap into the growing pool of money to fight deforestation. Similarly, the standards being discussed were not to be viewed as a luxury afforded only to conscientious funders.

What was laid plain through the course of the discussions and comments from both panelists and members of the audience over the course of the day was a growing consensus that critical safeguards such as securing free, prior, and informed consent (commonly abbreviated as FPIC) from local stakeholders, as well as the establishment of functioning grievance and redress mechanisms should, rather than obstacles, more fundamentally be viewed as enabling conditions without which REDD+ will be doomed to fail.

According to Lars Løvold, the Director of Rainforest Foundation Norway and panelist in the first session, the process of REDD+ policy formation has been changed dramatically since it first emerged clearly with the Bali Action Plan in 2007. The role of southern NGOs and indigenous peoples groups has increasingly been recognized and institutionally secured through voices and votes in various executive and policy bodies embedded within the emerging REDD+ architecture.

Løvold pointed specifically to the transformation of the Paris-Oslo process where many civil society and indigenous peoples organizations were initially left entirely out of the picture, but are now being incorporated into the nascent Partnership's apparatus. While Løvold stressed that more such progress was needed and higher standards were still in order, he was heartened by the fact that the basic landscape for REDD+ participation has evolved considerably in recent memory.

Engagement

Yet even while voices and votes for local stakeholders have begun to materialize in several international bodies, a disconnect persists between developments on the international stage and for those on the ground to whom REDD+ will mean the most.

Guy Patrice Dkamela of the Network for Environment and Sustainable Development described the state of affairs in Cameroon as an upside-down pyramid. While more than a dozen BINGOs (big international non-governmental organizations) are active in the country on REDD+ issues, fewer than five national NGOs and only one government ministry are seriously engaged.

Arguing "REDD is still an issue for technocrats and the elite," Dkamela lamented a "tragedy of coordination" among national officials and organizations to develop the political will for making progress on forest conservation in Cameroon.

These stalled policies play into a history where, as Dkamela says, "corruption and collusion between [major economic] interests is a resilient process in the forest sector." He sees these trends furthering an ongoing distrust between the state and the population who have witnessed decades of failed revenue-sharing and embezzlement from forest funds.

In the final panel, Cécile Ndjebet, Director of Cameroon Ecology spoke of the urgent need to move the REDD+ discussion to a local context where mayors and community representatives could begin a more grounded process to move up the REDD+ learning curve and determine how REDD+ can be sustainably implemented. She described a danger that failing to engage local decision-makers on REDD+ could reverse the empowering trend of decentralization of authority in much of Africa if central governments are left as the only engaged political parties.

Ndjebet also stressed in particular the need to empower women who risk being further marginalized in decision-making and resource-management in Cameroon if money for REDD+ activities contributes to a magnification of the male-dominance of the forest sector. Ndjebet's perspective provided a stark reminder that these environmental remedies being sought around the world do not take place in a social vacuum, but rather have a strong potential to exacerbate (or ameliorate) pervasive social inequalities.

Enforcement

And yet, while the entire day's discussion of safeguards proceeded with general agreement, the unresolved issue for many seemed to be the mechanisms by which any safeguards could be reasonably enforced from international to local levels.

Forest Trends' Director of Communities & Markets Program Beto Borges described the landmark legal work arising from the Surui tribe's forest planting and REDD+ projects in Brazil that demonstrated a constitutional right for the tribe to the carbon in their trees. And the World Bank's Charles Di Leva described how existing contract mechanisms could be expected to fill some of the gap for enforcing breaches in agreed-upon safeguards where carbon credits are being generated.

But outside this scope of the carbon market, which is obviously looming large in the background, but for the time being seems relegated to be dwarfed in the short-term by public financing and fund-based approaches, the emergence of numerous multilateral and bilateral agreements have created a hodge-podge of social and environmental safeguards where they exist at all.

Andreas Dahl-Jørgensen, advisor to the Norwegian government's International Climate and Forest Initiative described a vision of coordinated international REDD+ activities. "We should have one national strategy and all donors come under that, multilateral and bilateral, in the same country," he said.

But the international political will to require meaningful social and environmental safeguards as part-and-parcel of REDD+ funding remains to be seen. Carlos Mamani, the chairperson of the UN Permanent Forum on Indigenous Issues described in the day's third panel the current state of affairs regarding the recognition of indigenous rights through the UN Declaration on the Rights of Indigenous Peoples (UNDRIP), but remained unconvinced that mere recognition of international commitments (as occurred at recent UNFCCC meetings in Bonn) was enough.

Citing failures among countries that are already signatories to the International Labour Organisation's Convention 169 that enshrines indigenous control "over their own institutions, ways of life and economic development including the rights to control their own development priorities, and the right to manage and safeguard their own natural resources," Mamani articulated that safeguards subject to political vetoes, biased judicial systems, or even simply capable of being ignored will provide no meaningful improvement in indigenous livelihoods and rather allow persistent colonial tensions to drive a wedge between marginalized locals and political authorities.

Ultimately, the growing momentum surrounding the need for safeguards in emerging international REDD+ mechanisms is worthy of note, but the potential efficacy of these standards is still largely unknown.

All Politics are Local

Recognizing the open gaps in local and regional engagement on these issues, the Rights and Resources Initiative has scheduled three new dialogues with regional emphases to be held over the coming months in El Salvador, Ethiopia, and Nepal before reconvening an international dialogue in Mexico by September.

The outcomes of these dialogues will no doubt continue to illuminate the way forward for REDD+, and we should all hope that the words and sentiments expressed at these and other regional meetings will inform the international debates currently occurring largely above any level accessible to local stakeholders.

Although, as Carlos Mamani described, "the current situation among indigenous groups is a division between those who accept REDD (or its versions + and ++) and those who condemn it," the value of open dialogues such as those commenced earlier this summer in Cochabamba and soon to occur in San Salvador, Addis Ababa, and Kathmandu can hardly be overstated.

If REDD+ is to be more than a convoluted financial sleight-of-hand or simply a complex extraction of a new environmental asset from forests and the Global South, there is no way forward but through meaningful consultation, consent, and ownership over the performance and outcomes of these activities on the ground by the people who value these forests most.

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.

Opening Session

Jim Salzman, from Duke University, opened the conference with some ideas about environmental markets.

5 Core requirements to have a working PES system:
1) A discrete set of suppliers - can't have a payment system if you're paying *everyone*
2) A discrete set of beneficiaries - have to have someone who will pay. That's the difficulty of biodiversity - everyone benefits from it, so it's hard to set up some kind of PES scheme.
3) Perceived scarcity and value of the service - if you're going to get someone to provide ecosystem services, and if you're going to get someone to pay for it, you've got to convince someone that it's valuable - which can be a tough sell when we've always gotten these services for free.
4) A mechanism for suppliers and buyers to agree on a price - eg: mitigation markets/offsets, government subsidies...
5) Ways to make it work - procedures for implementation, oversight and dispute resolution.

Models for making money on environmental markets from Wall Street - high volume, low margins (probably not likely), or low volume, high margins (possible)... but what about medium volume, medium margins.

He also questioned whether we should be calling schemes on payments of ecosystem services 'markets.' The existing environmental markets are: carbon markets, mitigation markets, and then there are all the other payments for ecosystems - but there may be limited space for entrepreneurs, except at the local or regional level.

Ecosystem Marketplace spoke to Jim Salzman after the plenary session to get his thoughts on biodiversity markets.
Jim Salzman

Denise Knight, from Coca-Cola, spoke about Coca-Cola's 'Replenish' program. Markets for water is an evolving discussion. Commitments on water have to align with over 300 bottling partners (in a franchisee system). Water is at the core of Coca-Cola's product, and around 2000, starting tracking water quantity/use (in addition to tracking water quality). In 2003, publically noted a risk of water quantity, and began to plan to mitigate that risk. Also got a wake-up call that in addition to a natural 'license to operate' (water quantity and quality), and regulatory (?) 'license to operate', they needed to have a social 'license to operate' (healthy local communities).

Coca-Cola's water stewardship strategic framework includes four points: plant performance, watershed protection, sustainable communities, and global awareness and action (using Coca-Cola's visibility to bring to the forefront issues in water).

Their 'Replenish' goal is to "return to communities and nature an amount of water equivalent to what we use in all of our beverages and their production." They use scientific calculations to figure out how much water they've 'given back' - for example, determining the increased water storage from floodplain restoration in the Danube in Europe.

Their 'Replenish' program has 250 CWP (community water partnerships) projects in 70 countries that focus on watershed protection, water sanitation, watershed management and community livelihood support (?). One example of watershed protection project is a reforestation project in Brazil.

Lessons learned: you have to have demand from the local community. Although new technology may be enticing, needs identification is a 'must' first-step. Aligning with the government sector is important for project success.

Bobby Cochran, the new Executive Director of the Willamette Partnership, talked about where we are and where we're going. Status - seeing millions of $s transacted in environmental markets (voluntary and compliance), on top of even more payments for ecosystem services in programs like Farm Bill environmental programs. The tough part of environmental markets is developing the infrastructure to get there. There are environmental risks associated with the restoration that's the basis of environmental markets. It takes a lot of time to create the projects that underpin environmental markets. There are currently inconsistencies across regulators in the US.

If we could do 3 things before next year... activate demand; connect programs in the Northeast to the Midwest to the Pacific Northwest; and federal agencies can take advantage of their position to enable partnerships.

Q&A's from Opening Session

A: What are the first steps for developing water quality?
A: First need to determine what does your watershed really need? Need point sources and nonpoint sources rather than everything going through state and federal agencies. And then if you have agencies giving the message that water quality trading is appropriate... And also need to acknowledge when trading is not appropriate.

Q: Some ecosystem markets are catalyzed by regulations, others not - how see that changing in future?
A: Don't see balance of this changing in the future. Coca-Cola's work is voluntary, some voluntary work on clean drinking water provisioning, but don't see balance of voluntary vs. regulatory changing.

Q: Landowners may have difficulty participating - hope another major issue brought up in this conference will be environmental equity. Not sure if ecosystem markets will address equity issues.
A: You said it best: equity is an important issue. If not addressing equity in design of programs, will see issues of success. Those communities, those landowners need advocates - it's only the savviest landowners that can participate directly. If equity is a priority, then need to make sure that their advocates are informed about participating in environmental markets.

Panel: Making Federal, State, and Local Policies Relevant to Ecosystem Market Design
Panel speakers: Garrett Johnson (Pacific Forest Trust), Sara Vickerman (Defenders of Wildlife), and Michael Beck (Endangered Habitats League)
Moderator: Jerry Greenberg (American Forest Foundation)

Garrett Johnson of Pacific Forest Trust spoke about the Climate and Energy Bill and the US Farm Bill. In the Climate and Energy bill, the PFT has been advocating for a $5 million of funds to be directed on the landscape. Garrett thought that the next Farm Bill offered more of an opportunity to move payments towards outcome-based land management incentives, and moving some of the land protection programs in the Farm Bill to rural development.

Sara Vickerman, from Defenders of Wildlife, spoke about Oregon's Senate Bill 513. SB 513 was passed in Oregon in 2009 to encourage the legislature to encourage market-based approaches. The bill acknowledged the 'mitigation hierarchy' of 'avoid, minimize, mitigate' as a principle of market-based approaches. A work group and ad hoc advisors were convened related to the bill. Some of the high points of the working group were: that payments for ecosystem services should be ecologically credible. As well, they should be integrated across values, rewarding to both buyers and sellers, likely to scale-up (rather than 'goofy one-off deals'), and efficient (don't want these deals to be more expensive than the ecological value they provide) and transparent. The working group also outlines some roles that government could play: to facilitate integrated planning, to serve as a buyer of ecosystem services, to enforce existing regulations (which drive ecosystem markets), to provide incentives for multi-credit projects (to make sure you're not maximizing one service at the expense of another), and to improve transparency and efficiency. Metrics and methodologies are something very exciting, but easy to get hung up on.

Some major 'lessons learned' from the working group:
• Uneven regulation inhibits demand for biodiversity markets
• whatever credit generation/quantification system is built, it should be linked to conservation priority areas
• agency/program silos cause conflicts, raise transaction costs and jeopardize good projects
• need more efficient systems
• there is widespread distrust of markets, but it can be overcome with positive results at a broad scale

Michael Beck, with Endangered Habitats League (a small non-profit based in California), spoke about a 20-year experiment with many transferable attributes. In San Diego county, his group is focused on preservation of biodiversity - but what drives the program is economics. The endangered species act (along with California's state level species regulation) requires development projects to go through permitting process, and require mitigation.

Habitat Offsets and Crediting Session
Presenters: Nancy Natolie, Randy Wilgis, Todd Gartner

Todd Gartner from American Forest Foundation spoke about a voluntary system for credits of non-listed species (meaning, they may be rare, but they are not yet 'listed' as an endangered species in the US). Todd is working on a pilot habitat crediting system for the non-listed portion of the gopher tortoise (the species is already listed in the Western portion of the range), with the intention of putting efforts to prevent the species from becoming listed (eg - helping the species recover). AFF argues that it is ecologically easier to invest in protection before the species is close to the brink of extinction. The driver of this program is the threat of gopher tortoise habitat listing (eg - pre-compliance). The sellers are the smaller woodland owners of the Southeast. A 'weighted habitat credit' is what is being sold, which is a combination of the raw acreage weighted with quality indicators. The project has come a long way, but there are still some major steps to tackle. Buyers want to have certainty that the investment they make voluntarily now will be considered if the species is listed. The organization is also exploring an incentive for early adopters - for example a 'discount' on the normal impact to offset ratio. Another issue of this project is the aspect of a non-wasting endowment - most landowners are land rich/cash-poor, so there isn't a large pot of money around to create this a non-wasting endowment to fund long-term management. So AFF is looking for creative solutions to this issue.

Nancy Natolie from the Office of the Secretary of the Department of Defense (DoD), spoke about the military's activities related to ecosystem markets - which they see is an opportunity to help them meet their military readiness needs. DoD has a great of amount of endangered species on their lands, which impacts their ability to use those lands for military readiness. Military lands often become surrounded by residential development - so the lands become a species refuge. A great example of how endangered species impacts military readiness: the red-cockaded woodpecker lives in Ft. Bragg - originally, the Fort was required to make their trainees stay outside a 200-ft buffer of each tree with a bird cavity (/nest) in it... perhaps not a realistic situation with young trainees being put through military simulations. A private lands initiative now works with private landowners nearby to make sure they are protecting the birds so that the Fort has more flexibility about where they can do their training. A renewable energy 'gold rush' may have impacts on military operations, especially in the US West. With partnerships, federal dollars are multiplied for private land conservation with partner contributions.

Randy Wilgis, of EBX, spoke about the Carolina Heelsplitter (an endangered mussel found near the Charlotte metropolitan area) Conservation Bank. Conservation banking occurs under a regulatory scheme - within permitting for Section 7 & 10 of the Endangered Species Act. A 'credit' could be protection of the habitat area of a cluster of red-cockaded woodpeckers, or it could be acreage of another endangered species or habitat. The Carolina Heelsplitter is federally listed, with two major groups near Augusta Georgia and near Charlotte North Carolina - an area threatened by development. The threats to the species come from the development happening in the uplands of the species' habitat.

Q: What is the guidance for non-listed species?
A: Nothing in ESA related to non-listed species, but perhaps will see in guidance in the future

Q: Who holds endowment?
A: Usually local land trust, or the Nature Conservancy, or a local or state agency. We write a check for the endowment/long-term management of the property.

Q: What would you like FWS to do to see assurance to buy 'pre-compliance' credits
A: Potnetial buyers need certainty that what they spend money on now will be recognized in the future. Assurance of ecological soundness of methodology. Project will provide a case study. Also - we feel like for non-listed, we need to be pragmatic about long-term management fund (EBX - we have credits of non-listed flying squirrel...)

Q: Since Conservation banking has been modeled after wetland banking... how do you see view of preservation credits
A: Consensus from biologists was that we're losing high quality habitat of species and that's what's important to keep. But develop mitigation ratios in some way to help protect more than impacting. Important to note: there's no 'no net loss' stipulation in the ESA - but the imperative is a species' jeopardy of going into extinction.

Q: Has EBX sold credits to federal agencies & does that create any different kinds of issues. Does REDI program consider purchasing credits instead of going into partnerships / conservation easements.
A: DoD requires some kind of aspect of real property with REDI funds - but the transaction can be structured in any kind of way - so trying to figure out how to incorporate characteristics of conservation banking (eg - instead of 'handshake deal').

Ecosystem Marketplace Tools
Speakers: Joanna Silver (Markit), James Remuzzi (Sustainable Solutions, LLC), and Kevin Halsey (Parametrix)

The speakers followed a path of ecosystem credits to highlight tools that are available in the process of ecosystem credit creation to sale.

Here's the steps in the credit process:
• baseline assessment and eligibility
• market standards and education
• project design and development
• project validation
• credit estimation and calculation
• verification and certification
• project registration credit issuance and tracking
• marketplaces / reporting and transparency
• demand-side tools / reporting and transparency

More details on these steps...
James Remuzzi outlined the first few steps...

Baseline assessment and eligibility - at the landscape level and separately at the site level, where are markets possible? Landscape level investigations are looking at the areas of greatest ecosystem services. For example, the Natural Capital Project's InVest Tool can map out... and therefore show highest conservation priority... of areas with greatest ecosystem service value. The LandServer tool (created as part of the Bay Bank project) is a site-level identification of eligibility for ecosystem markets. LandServer allows a landowner user to identify their property using something like GoogleMaps, and then the tool opens up a 'layer cake' of data to tell the landowner about potential for ecosystem markets - both basic scientific/landscape information, and also ecosystem market opportunities (eg - such as carbon, forest conservation, water quality trading...).

Market standards and education - important to educate about what standards there are for creating ecosystem markets.

Project design and development - Willamette Partnership has been developing an Ecosystem Crediting Platform. The Freshwater Trust's StreamBank tool streamlines funding, permitting, and monitoring of stream restoration projects.

Project validation - is the step to ensure that an ecosystem credit meets requirements in the appropriate ecosystem market standard.

Kevin Halsey continued with description of the next steps...
Credit estimation and calculation - As opposed to project planning, in credit estimation, one needs to drill down more at the site level, and all require some level of site scientific data. The Willamette Partnership's Counting on the Environment Toolbox has credit measurement for water quality (thermal load reductions from riparian vegetation), upland prairie, wetlands, and salmonid crediting protocol. All of these crediting systems have a manual explaining the system, and all fall within a basic crediting framework. The World Resources Institute has a water quality trading tool called NutrientNet focused on nutrient reduction offsets. The tool is a simple excel-type calculation system that requires farm-level information and then determines pounds of nutrient reduction (from particular practices). EcoMetrix is a tool that ParaMetrix (a consulting firm) created and is testing in Arizona (Buckman Diversion District). The USDA has a site-level Nitrogen Trading Tool (NTT) that is being tested in Colorado, Alabama, North Carolina, and Oregon (and many states coming soon) - and also coming soon: expanding the tool for phosphorous, carbon, and more. The Nutrient Load Estimator (NLE) developed by Water Stewardship measures nutrient reductions at the site level (field/parcel/farm) and incorporates the Chesapeake Bay Program Phase 5.3 Watershed Model. Environmental Incentives' Lake Tahoe water quality tool (nutrients?).

Verification and certification - there's generally on-the-ground verification and certification

Joanna Silver then took the baton and continued to explain the next steps...

Project registration credit issuance and tracking - You can track these markets, it's easy once you set up the system. Tracking markets provides transparency to the public, and confidence to investors. It also allows one to track the progress of the underlying environmental policy of the market. Three types of tracking tools - project tracking (eg - Conservation Registry), inventory tracking (eg - CCAR), and credit tracking (eg - Markit environmental registry). The Conservation Registry is a tool developed by Defenders of Wildlife (with the Other Firm web design firm) that provides conservation project visibility by tracking/mapping on-the-ground conservation projects. Markit Environmental Registry tool allows users to register projects and list credits, and then follows transfers/sales/retirements of credits - think serial numbers - for all types of environmental credits (or could be used for any conservation outcome). The end goal from a project developer's perspective is seeing credits on a registry.
James Remuzzi again took the lead on final steps...

Marketplaces [ + linked to reporting and transparency] - One of the end steps is a [virtual] place where buyers and sellers can come together - or a 'marketplace.' The Bay Bank is a multi-credit marketplace for the Chesapeake Bay - a place where buyers can locate sellers and sellers can upload there project; but you can't buy credits here. Mission Markets Earth is an environmental markets exchange facilitating transactions, and facilitates investments in things like mitigation banks.

Demand-side tools [+ linked to reporting and transparency] - Typically, the tool used to calculacte the credit is the same as the tool to calculate the impact. Demand-side tools relate to the world of corporate 'footprinting' tools and sustainability measurement tools. Bonneville Environmental Foundation: Water Restoration Certificate - has a tool to calculate an individual's water 'footprint', suggests behaviors to reduce their footprint, and then offers water restoration certificate to offset the footprint. Chesapeake Fund's Nitrogen Calculator is another individual footprint calculator - this time for nutrient loading to the Chesapeake Bay, and again is intended to facilitate voluntary investments or 'offsets.' Markit Eco tool leads a company through a footprinting exercise. BSR (Business Sustainability Roundtable) has some tools for corporate sustainability decision-making. Landscape Auction was developed by TriplE (a Dutch consulting firm) where they define ecosystem credits [&/or conservation??] and then sells it via an auction.

Bundling Services and Stacking Credit Session
A discussion of multi-credit trading platforms. Core question: Does credit stacking result in real conservation offsets, or is it simply a case of "double dipping"? If only one ecosystem value can be monetized, will ecosystem services ever be able to compete?

Nicholas Bianco:
"Principles for Stacking Payments for Ecosystem Services." Stacking is based on whether there is enough potential opportunity on the property to warrant generating multiple ecosystem credits. The main issue then becomes how to generate the credits and calculate the benefits. There is a strong interest among the market participants to develop standards-based protocols focused on 'legal additionality' screens that include financial, legal, market penetration and other factors.

Jim Klang: "Stacking Ecosystem Credits in the Upper Mississippi River Basin"
Conservation Marketplace of Minnesota: Effort among like-minded conservationists in MN to devise a system for credit stacking that leverages multiple environmental benefits from one implementation site. Especially from the agricultural perspective, the key is to devise a credit that is priced to compete with traditional commodity markets. (Think ecosystem credits competing with corn and soybean futures.)

New and emerging market examples:
Source water protection
Pollinator habitat
Stormwater quality and quantity (which is inherently legally complex)

Regarding opportunities for source water protection, many communities are far behind in protecting well heads and source water. Sauk River Watershed/Streams County pilot project offers an on-the-ground experiment to protect the wellhead. Working with farmers to protect water quality through BMPs (BMP challenge program (a risk guarantee program for applying to agronomic rates www.bmpchallenge.org . Also looking at nitrogen inhibitors and nutrient mgmt plans. Wellhead protection pilot project: early participation includes 3 farmers.
Have sequestered 4076 pounds of nitrogen loading from some XX acres.

Other stackable BMP options: perennial vegetation in wellhead protection zones
buffers, ag drainage volume reductions, sediment reductions measures, livestock exclusion.

Urban storm water WQT credits: Stormwater example from Rahr Malting Company which worked to restore and stabilize a bluff reducing sedimentation from the site. The idea is to bring BMPs from water quality trading to storm water mitigation.
Scale could be bolstered by standard metrics. Towards uniform applications.

Brad Gentry: Summary comments: what management options is the owner giving up to receive the value? What are the changes in land use asked of the land managers. Key is get all players in the room at the beginning to negotiate the best deal for them and the markets themselves. Real question: can carbon be compared to wetlands and other more local commodities.

Q: What are barriers to using Latin America's Water Funds?

Discussion: Stacking doesn't answer the question of better land management.
Additionality is the key criteria. Does adding on the extra payment allow something additional to occur.

Q: Can land preservation serve to generate ES credits?


PES related to Source Water Protection and Water Use: Pilot Projects Session

John Gunn Case studies: Northern Forest Project.

Starting point of the project was to determine who are the beneficiaries and how do they benefit from clean water?

Demand side: is it a regulatory driver through the Safe Drinking Water Act.
Case studies:

Vision of watershed services marketplace: Users, NRCS, State Teams, Mitigation Funds.

Examples of Creditable Practices: riparian buffers, culverts and drainage improvement,

Key Issue: How to quantify what you get from the implementation of the BMP?

Where to from here in the pilot project: develop the infrastructure for how to make payments. Understand the role of conservation easements. Leveraging other ecosystem service revenue streams. Demonstration.

Challenges: making the case (educating the beneficiaries), communicating the challenges to both buyers and sellers, assuring "we get what we pay for," creating self-sustaining system.

Eric Sprague: Upper Delaware River Clean Water Fund: A new funding approach for protecting private forests. It's a partnership with state and local governments, called Common Waters. About the Upper Delaware Basin: it provides drinking water to 17 million people (in NY, PA) and helps keep salt water out of the basin.
Mostly private lands, close to NY and Philadelphia so development pressure is the biggest threat to water resources.

Concept: Working on developing a program to incent upstream forest owners for conservation and protection efforts funded by downstream beneficiaries.

Approach: All funding mechanisms seek to interface with water users--water utilities and especially water utility customers. Focusing on mechanisms to target the user at the point when they are looking at their water bill. Also looking at how to use billing inserts and online ads.

Other consumer-driven models informing the design of the project:
-Tucson AZ, Conserve to Enhance Program: Incentivize conservation by allowing consumers to donate the value of real water savings to environmental restoration projects in need of water to proceed.

-Bend OR, check-box to allow donations to water trust for purchases of in-stream flow water rights.

-Santa Fe Municipal Watershed: PES scheme to pay for fuel treatment to mitigate threat to water quality from wildfires. Ecosystem Service Credit appears on the customer bill for first 5 years then it becomes a real charge.

Project Goal: seed a Fund which will be available to land owners. 2nd year start investing in projects upstream. 3rd year, hope to have a sustained source of funding beyond the pilot phase.

Lisa Creasman, Connecting Water Suppliers and Consumers through Land Conservation in NC's Upper Neuse River Basin.
No Notes.

Forest Trends' Michael Jenkins kicked off the event with a quick backgrounder on the organization and report, telling of the inception of Ecosystem Marketplace six years ago - which sought to be the "Bloomberg for environmental services" - and the subsequent launch of the first State of the Voluntary Carbon Markets (SVCM) report two years later. Now, 2010 marks the report's fourth year of providing invaluable - indeed free! - information on the size, trends and outlook for the voluntary carbon markets.

Kate Hamilton explained that the report targeted responses from every supplier in the markets, and was able to attract the largest number of responses that have ever been received for the SVCM report with over 200 this year. The report surveyed for information from every part of the supply chain - from project developers to retailers - and also included registration information sourced directly from third-party registries. Hamilton also clarified that all the information was received by completely voluntary responses, and that there was no "judgment" of credits, meaning that if a project developer said to have sold x amount of credits, that is what was included in the report (after making a concerted effort to confirm any outlier responses).

Milo Sjardin followed, discussing standards and the noted shifts and trends related to their roles in the voluntary carbon marketplace.

That's so last year

Ms. Hamilton noted that this report is exclusively about 2009, and so it is important to remember that a lot has changed between now and the beginning of '09 - and even more so between now and four years ago. In order to understand the report's context, take a step back to a time when President Obama was stepping into his Presidential role, the Waxman-Markey bill had just passed the House and Copenhagen had not yet headed south.

Despite the year's political setbacks and uncertainty (and in some cases as a result of it) the year saw a lot of development in the market - as infrastructure providers, standards and other market players became more interlinked and built bridges to project development in parts of the world previously absent from the markets' radar, including several projects in the Least Developed Countries.

Notable developments included:

• For the first time since this report began tracking the voluntary carbon market, the number of transactions declined from the previous year (from 126.6 MtCO₂e to 93.7 MtCO₂e); however, overall transaction volume still exceeded 2007 levels.
• Total market value also decreased by 47%, with the extreme case being the CCX, which diminished in value by 84%.
• Prices dropped from '08 to '09, but not tremendously. The reason for the decreased value of CCX was its low prices compared those seen in the over the counter (OTC) market (averaging US$1.2/tCO2e vs. US$6.5/tCO2e).
• Methane, particularly landfill methane, projects were the most popular project type in OTC, collecting of 41% of OTC market transactions.
• After methane, forestry (24%) and renewable energy (17%) were the next primary project sources for credits, with methane and forestry doubling their respective market shares at the expense of renewable energy.
• The US emerged as the dominant credit source for OTC transaction volume for the first time since 2006 (supplying 56% of credits). Conversely, there was a substantial reduction in credits sourced from Asian projects.
• US buyers were primarily interested in offsets sourced from domestic projects, while European buyers sought international credits - particularly from developing countries.
• CAR and VCS established themselves as the two dominant standards - capturing ⅔ of transaction volume between them -fortifying themselves as the preferred standards for pre-compliance and pure voluntary activity, respectively.
• 2009 saw an uptick in the volume of transacted credits tracked in a registry (51%, up from 29% in 2008).
• Even in the face of market downturn, respondents expressed astounding optimism for the global voluntary carbon markets in 2009 and in years to come.

Table that

The subsequent panel discussion focused on several of the main themes in the report and presentation, and also introduced new topics like:

• The optimism in the marketplace despite seemingly glum circumstances;
• The uncertainty, potential, and possibility of legislation in the US and what it would mean to the voluntary carbon markets;
• The role of REDD and its emergence as a factor in the wider carbon market;
• The difference between US clients and European clients, and the different motivations for buying different types of credits

In recent months, Senator Cardin introduced senate bill S.1816, the Chesapeake Clean Water and Ecosystem Restoration Act of 2009. At its core this bill reauthorizes the Chesapeake Bay Program (by amending the Clean Water Act), as is required on a periodic basis. But it goes beyond 'taking care of business' and establishes a federally-enforced watershed TDML (Total Daily Maximum Load) for nitrogen, phosphorus, and sediment loading to the Chesapeake Bay. The bill will hold the Bay states accountable for meeting water quality pollution reduction goals.

Back on Capitol Hill, a group of investors representing private capital met to discuss the role of private capital in environmental policies, with emphasis on the Cardin Bill. The panel consisted of a group of tenured investors, including Chandler Van Voorhis of C2I, Pat Coady of Coady Diemar Partners, Gregg Garnick of Structured Growth Capital, and discussion leader John Campagna of Restore Capital.

The overarching theme stressed by the panel was the integration of private capital in environmental markets. Campagna noted that there were trillions of dollars loaned by local banks last year to commercial agricultural companies, so the private capital is out there. Campagna's goal is for the government to work together with private capital to create incentives and security to encourage private growth.

So how does this go into the creation of the up and coming water quality trading market, which is key in Bay restoration? Panelists stressed learning from past mistakes in the carbon and wetland mitigation markets. The brevity of previous Kyoto agreements, Van Voorhis noted dampened long regulations to avoid the confusion and uncertainty that tainted the early days of carbon markets.

And lastly the concerns of local Farmers and watershed property residents were considered. Political representatives from Virginia worried that farmers would not want to take out loans to participate in water quality trading -- citing lack of knowledge of trading policies and risk of failing to produce saleable credits. The investors countered that they usually pay money upfront, which provides financial certainty for the farmers, incentive for them to change their ways.

Listen to a clip on the the Farmer discussion
Blog clip- Farmers.wav

"With only a little over a week to go before *the* ecosystem markets event of the year hits North Carolina, our excitement barometer has just hit 100%. We hope yours has too. To drive it up even further, we have just released the Official Conference Program (found here), where you will find all the details for the conference, which will be held in Raleigh-Durham, North Carolina, June 23rd - June 24th. As well, we are delighted to announce we have well exceeded our registration target, with more than 230 distinguished guests registered and armed to help drive ecosystem markets forward. Hailing from conservation non-profits, federal & state natural resources agencies, academia, the private investment sector, forestry, and private tree farms, the participant list (found here) is comprised of some of the world's top thought leaders. *** Official 2010 Ecosystem Markets Conference Program Released Today (PDF) *** For those who haven't yet registered, it's not too late! We urge you to do so today before the event sells out. Please note that overnight accommodations are also limited and the special conference rate of $109 will expire in 1 week. You may click here to both register and book your hotel room. Through a partnership with the Triangle Land Conservancy (TLC), we are now offering participants the opportunity to compensate Raleigh-Durham for their ecological footprint in attending the conference. Please consider contributing to the enhancement of the local stewardship project, Horton Grove Preserve. Actively managed by TLC for habitat protection, climate change mitigation, and watershed enhancement, this site is an excellent ecological investment. It is considered a very high local priority because it serves as the terrestrial corridor between two river systems; its remoteness provides vital habitat for the region's forest interior wildlife; and it boasts some of the few remaining large blocks of undisturbed mature woodlands in the area. By contributing to the enhancement of this local reserve, you will be playing a significant role in protecting habitat, mitigating climate change, and enhancing watersheds in North Carolina's rapidly urbanizing Durham County. To do so, click here. For existing registrants, log-in to your registration profile and click the agenda option. For those who haven't yet registered, you will be given the option upon doing so. For more information on the Horton Grove Preserve, you may visit the Conservation Registry entry here."

The UK is taking big strides in developing its idea of 'conservation credits,' but does it know where it's going? In November of last year, the UK's Conservative party floated the idea of conservation credits, and now that they're in power, there's moment to make good on the promise to "pioneer a new system of conservation credits to protect habitats." UK's Department for Environment, Food and Rural Affairs (DEFRA) will be the lead on developing this promise to fruition.

Even though it doesn't sound like the rules of the game are fixed yet, the Guardian reports that a private company, the Environment Bank, announced the launch of the first UK project developing 'conservation credits.' The company has invested £100 million in restoration "to restore and reconnect fragmented wetlands, woodlands and grasslands around the headwaters of the river Thames in the west of England." Developers could voluntarily purchase credits to help meet requirements associated with planning permissions.

Ian Dickie, Senior Consultant at economics for the environment consultancy (eftec) and co-author of a major report for the EC on habitat banking tells Ecosystem Marketplace:

"This is an innovative scheme. It will be interesting to see whether planning authorities recognize the 'conservation credits' it produces, and if they check that these credits are based on additional actions that benefit biodiversity. The potential market for conservation credits is indeed large, but is much more likely to grow if requirements are placed on developers and others who damage biodiversity to provide adequate compensation. These requirements should be designed to achieve no net loss of biodiversity."

Meanwhile, Big Carbon is weighing in and wants biodiversity to be... just like Carbon. In an earlier Guardian article (dated 17 May), Ben Caldecott, head of UK & EU climate change and energy policy at Climate Change Capital (CCC), argues that Britain should lead a charge for an international biodiversity market. The author thinks that in designing the UK's new conservation credit system, Britain could create rules for 'biodiversity equivalency' and scale-up international investment in biodiversity. The article notes that one of the reasons biodiversity has not been able to attract global investment like the carbon market is because of the problem of a common currency. The article suggests developing an equivalency: "One species per km², or "1 species equivalent", could be the common unit of account, with endangered species on the IUCN Red List given a multiplier that significantly increases their value."

This concept of trading conservation credits globally goes against the current stream of thinking on biodiversity offsets, which generally argue that an offset should be of the same ecosystem or species type as that impacted. The comments section of the article highlighted opposition to the concept, from general wariness of markets to complete disagreement with the commoditization of biodiversity.

Sources

UK's first 'conservation credit' scheme launched

http://www.guardian.co.uk/environment/2010/may/28/uk-conservation-credits-scheme-thames

We have an international market for carbon, why not one for conservation?

http://www.guardian.co.uk/environment/2010/may/17/international-market-conservation-credits

"BioBanking is an initiative which seeks to address the decline of biodiversity and threatened plants and animals on private land by giving them an economic value through the creation of biodiversity credits. These credits can then be sold on an open market"

NSW's Minister for Climate Change and the Environment Frank Sartor announced that the Department had signed its first official BioBanking agreement on an 80-hectare property near Camden in Western Sydney. The property, owned by the Missionaries of the Sacred Heart, includes 36 hectares of critically endangered Cumberland Plain Woodland, and habitat for 17 threatened species such as the Large-eared Pied Bat, Little Lorikeet and Cumberland Land Snail. Buyers have apparently already been secured, with the Sydney Growth Centres Biodiversity Offset Program purchasing two-thirds of the credits now (607 ecosystem credits), and the remainder in August. The Growth Centres funnels levies from developers in southwest and northwest Sydney. The Epoch Times reports that the purchase of credits will offset planned development of 180,000 additional houses over the next 40 years.

Of the AUD$1.7 million paid by the Growth Centres in its current purchase, $1.1 million was paid to the landowner and over $555,000 went into the BioBanking Trust Fund, to be distributed in annual payments to the landowner for management costs (removal of existing rubbish, installation of new fences, ongoing weed and feral animal control and revegetation of previously grazed land).

Although this is the first official BioBank, another 37 'expressions of interest' have been received by NSW's DECCW and applications for 5 sites (200 ha) are currently being assessed.

Not everyone is a fan of BioBanking. The Sydney Morning Herald The Sydney Morning Heraldlaid out the pros and cons of the scheme...

Pros: "In its favour, there are limits on the process. The arrangement will be available for developments on land for which equivalents elsewhere can be found. Land of unique significance and value will still be subject to a conservation order. And though it ensures some land will be developed, it also ensures that other land, presumably of greater or equal value, is preserved."

Cons: "There are reasons to be dubious about the BioBank system. It involves a net loss of land of conservation value. It will ease the way for development on land which might otherwise have been preserved. And it co-opts the Department of the Environment into becoming part of the development approval process, possibly compromising its conservation role."

The Epoch Times reports that environmentalists are not happy with the scheme allowing the destruction of one area for a swap of protection of another area. Perhaps that is because of distrust of the Minister for Climate Change and the Environment, who was involved in a development/land swap deal while in a former position in the NSW Planning Department that was later deemed illegal. ABC (Australia) has a short news video that nicely lays out the nuances and history of BioBanking and Mr. Sartor's tarnished reputation with "land bribes."

Sources

Sydney Morning Herald article

http://www.smh.com.au/opinion/editorial/a-chance-on-the-ocean-wave-20100517-v95i.html

Epoch Times article

http://www.theepochtimes.com/n2/content/view/35753/

New South Wales Press Release

http://www.environment.nsw.gov.au/resources/MinMedia/MinMedia10051701.pdf

StreetCorner.com.au article

http://www.streetcorner.com.au/news/showPost.cfm?bid=14528&mycomm=WC

ABC.net.au

http://www.abc.net.au/news/video/2010/05/21/2906460.htm?site=centralcoast

Second was the release of the federal government's new strategy for protecting and restoring the entire Chesapeake region. This strategy is pursuant to the May 12, 2009 Executive Order (13508) issued by the Obama administration declaring the Chesapeake bay a national treasure and declaring a new era of federal leadership, action and accountability in protecting and restoring the nation's largest estuarine ecosystem.

The strategy outlines four essential priorities for healthy Chesapeake: restore clean water; recover habitat; sustain fish and wildlife; and conserve land and increase public access. The strategy also features four cross-cutting themes that directly support achievement of the essential priorities: expand citizen stewardship; respond to climate change; develop environmental markets; and strengthen science.

Here at Ecosystem Marketplace, we'll be keeping track of the work of USDA's Office of Environmental Markets as they work with other federal agencies to develop and support markets for ecosystem services across the Chesapeake. Initial focus will be on developing tools for measuring performance of conservation practices; establishing protocols for setting baselines; developing vital infrastructure such as registries and certification processes; creating opportunities for stacking and bundling of ecosystem services and exploring options for insurance mechanisms.

Suggested in an article in the Washington Post on May 12, one way to help solidify EPA's new commitment to measurable pollution reductions and provide overarching support of the priorities of the new federal strategy to restore the bay is to enact the Chesapeake Clean Water and Ecosystem Restoration Act. The bill, sponsored by Senator Benjamin Cardin, would help defend pollution reduction targets against legal challenges, ensure that targets would be sustained by future administrations and provide much needed federal funding to support the new federal strategy.

Other coverage of the new federal strategy can be found on WRI's website.

***THIS JUST IN - SEE 5/20 UPDATE BELOW***

RIBITS Tour from Becca Madsen on Vimeo.

UPDATE: After listening to online conference proceedings from the National Mitigation & Ecosystem Banking Conference, I thought I'd update this RIBITS tour/tutorial with planned enhancements noted by Steve Martin, US Army Corps of Engineers, Institute of Water Resources:

• Integration of RIBITS with the Corps' internal regulatory tracking database ORM, which would make information on impacts available to the public


• User-generated reports that could roll up data (don't know specifically what data) by watershed, state, District, or national


• A tool to translate credits to a common credit currency


• Functionality to export GIS shapefiles or GoogleEarth kml files


• Functionality to allow regulators to upload other data layers such as landuse, soils, National Wetlands Inventory


• Modifying RIBITS for conservation banking