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Conservation Markets
Conservation markets are financial markets for restoration and conservation “products” produced on private land. The demand often originates with a regulation or mandate that requires a conservation action to compensate for environmental damages.
For example, the largest conservation market in the world—although not yet a market in Washington—is that for carbon credits. It is driven by regulations on greenhouse gas emissions under the Kyoto protocol. Other markets are driven by water quality compliance and environmental mitigation requirements.
Several types of conservation markets exist. Among them are:
- Environmental mitigation
- Mitigation and conservation banks
- Biodiversity offsets
- Payment for ecosystem services
- Tourism
Environmental mitigation. Projections point to a substantial demand for environmental mitigation. The best opportunities for large-scale restoration projects are concentrated on rural private land, so Washington farmers and forest owners will be in a favorable position for creating conservation and restoration products.
The most familiar type of environmental mitigation is wetland mitigation, and recently there has been a renewed interest in wetland mitigation banking.
Mitigation and conservation banks. Wetland mitigation banking creates an economic incentive for restoring, creating, enhancing and/or preserving wetlands. Wetland mitigation banks typically involve the consolidation of many small wetland mitigation projects into a larger, potentially more ecologically valuable site. Wetland banks require up-front compensation prior to affecting a wetland at another site.
Washington State’s first wetland bank was approved in late 2005 by state, local and federal agencies under a Department of Ecology pilot wetland mitigation bank program. They signed a memorandum of agreement with Habitat Bank LLC for a 225-acre project located near the Snoqualmie River just north of the King County line.
The privately funded project is open for business. Developers of certain smaller tracts in nearby locations will have the option of buying credits to set aside some of the bank's wetland to satisfy their own obligations to mitigate—or offset—the loss of wetlands resulting from their developments.
Conservation banking broadens the idea of a bank beyond wetlands, to consider other types of environmentally important lands.
Biodiversity offsets. Biodiversity offsets are another type of environmental mitigation. The City of Bainbridge Island is working with the international Business and Biodiversity Offset Program to explore the use of biodiversity offsets as it wrestles with the impacts of increasing development pressure.
Payment for Ecosystem Services. An innovative market approach is Payment for Ecosystem Services (PES). PES schemes reward those whose lands provide ecosystem services, with subsidies or market payments from those who benefit.
Tourism. Ecotourism and agri-tourism can provide markets for landowners and enhance rural vitality.
Definitions
Mitigation: Restoration, enhancement, or creation of functions and values that are lost on converted land. back>
Ecosystem services: Ecosystem services: Services that ecosystems such as wetlands, forests, grasslands, and oceans provide to human beings. These include water filtration, climate regulation, nutrient cycling, pollination, pest control, disease regulation, and flood control. back>
Wetland bank: An existing wetland restoration project that developers whose projects require wetland mitigation may buy credits in, instead of doing the specialized work on their own. back>
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