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NA-WO Seminar Series The Chesapeake Bay: A Model for Ecosystem Service Markets

NA-WO Seminar Series The Chesapeake Bay: A Model for Ecosystem Service Markets. Presented by: Albert H. Todd, NA Watershed Program Leader. Goals of Presentation. Eco-service Markets 101: A primer for private forestry Describe markets and issues

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NA-WO Seminar Series The Chesapeake Bay: A Model for Ecosystem Service Markets

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  1. NA-WO Seminar SeriesThe Chesapeake Bay: A Model for Ecosystem Service Markets Presented by: Albert H. Todd, NA Watershed Program Leader

  2. Goals of Presentation • Eco-service Markets 101: A primer for private forestry • Describe markets and issues • Opportunities for private forests and Forest Service and S&PF Role • Model for the Chesapeake Bay Region

  3. Forests and the Northeastern Area • Northeast and Midwest forests • 20 states & District of Columbia • 25% of the nation’s forests and 93% of forests are non-federal • 43% percent of the Nation’s population! • Demand for forest ecosystem services increasing NA

  4. “Forests are at the root of clean water” • Chesapeake Bay Program • USFS – a partner since 1990 • NA coordination • Integrate forests into the Bay restoration effort • Focus on positive role of forests • Crucible for innovation/testing

  5. Goals of Presentation • Eco-service Markets 101: A Primer • Describe Markets and Issues • Model for the Chesapeake Bay Region • Opportunities for Private forests and FS-NA Role

  6. Marketable Non-Marketable $$$$ $$$ $$ $ Priceless Ecosystem Services …the benefits people obtain from ecosystems

  7. Valuing Ecosystem Services • Global Environmental Services are over US $ 33 trillion annually (Costanza, 2005) • Chesapeake Bay – over $30 billion annually from trees alone (more than seafood industry) (“State of the Forests” Report; TCF & Forest Service, 2006)

  8. Marketable Non-Marketable $$$$ $$$ $$ $ Priceless What is an Ecosystem Service Market? • Mechanism for placing value on marketable eco-benefits • Platform where services can be bought, sold or traded • System through which those receiving benefits can compensate producers of those benefits

  9. A marketplace example… Let’s try to think of an ecosystem marketplace in terms that we might all understand.

  10. Scenario 1 : BuyingLegos Seller Buyer

  11. Scenario 1: Buying Legos Buyer Seller market transactions Buyer is

  12. Scenario 2: Ecosystem Services Seller Carbon Wetland Endangered Species Buffer

  13. Seller Buyer Judd Brooke

  14. Scenario 2: Ecosystem Services Buyer Seller X X X market transactions Buyer is

  15. ? ? ? ? ? ? ? ? Ecosystem Market Issues • Transaction costs • Verification • Trust • Certification • Buyers and sellers

  16. Buyer Seller Bill of Sale Ajs tn aoiernhkganlautg klxf kdlngosdiutwojgvnc;xlgj lksxgjosijgkln salknjgosdjge xlljgsd, mosjgnklzngb ,ljoajnsknm lldjgosjfdok nb;ld ljmlgnmsobnnsom, slkjolnmhlodnmbldm blm dslmbl dlmb dlb dlbmjdlmbnd bdlnmb xlbnml,dxb eopgjeoigjo0eibvl slonm, vkkmdpog sooej gkkst0wj vk slljg lkl;sg agofjsa kjfgoag aglag algjm algj aljmg alnmlkg llanjg aong alng a gl alnmg aljg a glm903948 a gljag oag893o algjagfn wop856ns ___________skgnoa _ngoajgnod Nutrients Wetland Endangered Species Carbon Ecosystem market issues… • Transaction costs • Verification • Trust • Certification • Buyers and sellers

  17. Salamander habitat credits Ecosystem market issues… • Transaction costs • Verification • Trust • Certification • Buyers and sellers • Transaction costs • Verification • Trust • Certification • Buyers and sellers

  18. Ecosystem market issues… • Transaction costs • Verification • Trust • Certification • Buyers and sellers

  19. Buyers Sellers Ecosystem market issues… • Transaction costs • Verification • Trust • Certification • Buyers and sellers

  20. What makes a Market Successful? • Low transaction costs • Clear rules/protocols for market transactions and trades • Certainty – ability to accurately define and deliver benefit • Adequate number of buyers and sellers that are easy to locate • Experience

  21. Additional limitations of current markets for forest ecosystem services • Fragmentation of markets • Accountability • Lack of intermediary organizations

  22. Check-in • Ecosystem Markets 101: A Primer • Description of markets and issues • Opportunities for private forests and Forest Service Role • A Chesapeake Bay model

  23. Ecosystem Service Markets: Demand Drivers • Government incentives • Private markets • Environmental regulation • “Green Goodwill”

  24. Opportunities for Private Forest Lands • Private markets • Timber, paper, non-forest products • Hunting leases • Biofuels • Government incentives • Riparian buffers, CRP, etc. • Conservation easements • Tax reduction programs

  25. Opportunities for Private Forest Lands • Environmental regulation • Carbon • Water quality/Water supply • Endangered species • Wetlands mitigation • “Green Goodwill” • Carbon – voluntary offsets • Goodwill stewardship projects, green labeling

  26. Forest Service S&PF Role • Convene partners and connect efforts • Create a framework for establishing credits & trading ecosystem services • Provide technical forest information • Learn, pilot, demonstrate, & promote examples

  27. Northeastern Area The Chesapeake Bay ME MN VT NH WI NY MA RI CT MI PA IA NJ OH MD DE IL IN WV VA MO

  28. The Chesapeake Bay Program • Established in 1983 • A unique multi-state watershed partnership guiding the conservation and restoration of the Bay and its watershed. • USFS Partner

  29. Why the Chesapeake Bay as a Model? • National focus - Political capital • Science, data, and modeling • Interstate/watershed agreements • Chesapeake 2000 goals • Need for alternatives to lower costs/accelerate implementation • Some market trading has begun

  30. Executive Council Commitments • “State of the Forests” • Urgency for forest conservation • Foundation for forest sustainability policy • Permanent Protection • Reduce forest loss • Private sector innovation

  31. www.forestryforthebay .org

  32. The “Bay Bank” • for Chesapeake forests!? • Multi-state • Multi-market • Privately led (NGO)

  33. Components of the “Bay Bank”? • Membership through Forestry for the Bay • Spatial land registry • Credit estimation • Trading and market protocols • Verification procedures • Contract brokering • Marketing

  34. Create a Spatial Land “Registry” • Participants join and register • Build on Web-DET technology • Watershed wide GIS database • Spatially linked data used to characterize property • Identify opportunities for practices & estimate values for carbon, water quality, conservation, etc.

  35. Establish Bay Bank Protocols • Methods for ecosystem service calculation • Common rules for transactions • Eligibility requirements, advice on contract types, and proposed methods of tracking and verification

  36. Identify Multiple “Bay Bank” Accounts • Carbon • Water quality • Air quality • Wetland banking • Mitigation banking • Biodiversity conservation • Development offsets • Restoration trust fund

  37. Determine Eligible Practices • Tree planting forest expansion • Riparian Buffer/wetland Planting • Forest Management to enhance carbon or nutrient storage • Habitat enhancement • Avoided Deforestation • Urban tree planting • Others…

  38. Market to Potential Buyers… • Sewage treatment plants • Drinking water providers • Energy companies • Big box retailers • Large residential and commercial developers • Industrial point source polluters • Other businesses: Rental car companies, event coordinators, airlines, etc. • Federal, state and local governments

  39. Buyer Seller Meeting place Carbon Wetland Endangered Species Buffer How the “Bay Bank”addresses market issues? • Transaction costs • Registry of landowners • Identification of credits • Aggregation • Buyers and sellers • Centralized location • Multiple markets • Verification and certification

  40. Can these market approaches also … • Promote public awareness of the importance of forests • Provide an incentive for private landowners to retain and sustainably manage forest land • Encourage ecological restoration • Inspire individual efforts to reduce consumption

  41. “Bay Bank” Development • Forestry for the Bay launched • Establish “Bay Bank” Baseline (’07) • Develop Spatial Land Registry (’07-08) • Chesapeake Bay Trust Pioneer Grant to build Bay Bank Components. (‘’08 - ’09) • Network w/Willamette & other efforts (ongoing) Partners

  42. Questions “We need more than a reinvigorated commitment to fighting for the Chesapeake Bay and the environment. We must redefine the nature of the struggle.” Tom Horton,author from the Forward of the “State of the Chesapeake Forests” (2006)

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