Market Based Approaches to Conservation--Hip or Hype?

Entrepreneurs are approaching habitat restoration and conservation efforts from a market-based perspective in many places around the country.  And while the jury is out on the long-term prognosis for this approach, it's worth keeping an eye on.  As noted in a previous blog post, pinning all our conservation efforts solely on protection of public lands, or designating areas as “wilderness” will not change the current trajectory of impoverishment that many of the world's ecosystems are experiencing.  So, creating incentives, either markets or other mechanisms, that encourage conservation and support ecosystem functions on private lands will be needed to assist in maintaining healthy ecosystems and biological diversity.  As Aldo Leopold noted almost a century ago, "Conservation will ultimately boil down to rewarding the private landowner who conserves the public interest." [Conservation Economics (1934) in River of the Mother of God].

So, what is "market-based conservation"?  A number of variants can be found that provide definitions.  For instance, the National Association of Conservation Districts defines Market-Based Conservation as:

Conservation [that] quantifies economic values for natural resource conservation strategies and develops or enhances public and private markets in which these values can be sold and/or traded to achieve natural resource and environmental goals. Market-based initiatives use an economic driver to cause implementation.

The American Forest Foundation defines Market-based conservation as: conservation of natural areas supported by market mechanisms.

Other groups define market-based conservation as a means of bringing the power of market incentives, pricing mechanisms, and entrepreneurial creativity to bear on protecting watersheds and waterways.

Market-based systems may include

  • Green payments from public funds, including programs that reward producers for good conservation practices.
  • Direct private sector payments for ecosystem services, in which the private sector defines and purchases benefits.
  • Market-based environmental standards and certifications that add value to products and services, such as those that promote farming practices that reduce or eliminate pesticide use and enhance biodiversity.
  • Environmental credits for strategies that provide ecological services, such as carbon and water quality credits.

Further, when talking about market-based conservation, the end product, which is conservation of biodiversity and ecosystem functions, is based on the concept of "ecosystem services" as a way for markets to get a toe-hold on quantifying, and trading, conservation values.  In this context, ecosystem services can be defined, as Boyd and Banzhaf suggest in their paper, as those that include end-products that are: “…components of nature, directly enjoyed, consumed, or used to yield human well-being....” (Cited in "What are ecosystem services?" Resources for the Future, Washington, DC. 2006).

Yet, the “market” and commodities of trade in ecosystem services are largely defined by governmental institutions and are not inherently defined by the markets themselves.  This creates certain problems for market-based approaches to conservation, since the market, per se, is not merely a function of the rules of supply and demand.

But the question of efficacy soon becomes unavoidable when discussing market-based approaches to conservation.   Do these approaches actually make a difference on the ground?   And, when it comes to restoration, what constitutes something as “restored”?  In other words, how should we define it?

I had a chance to spend time on private ranches in Montana that had been purchased by a developer who sees possibilities in adding habitat for fish and wildlife, and conservation enhancements, to what had been extremely degraded lands, mostly from over-grazing.  The previous owners had straightened the streams that ran across these lands to maximize pasture or crop utilization; cattle had been beaten down the riparian areas and banks, and the streambeds had been pounded into wide, shallow troughs that allowed stream temperatures to spike well over 72º F.  On one ranch that the Jefferson River coursed through, a stream restoration firm restored 7300 feet of the stream and its banks.  The contractor removed silt from the streambed, reconstructed meanders in the stream, created deeper pools, and built overhanging cut banks.  The result was a decrease in stream temperatures along that reach of the river from 72º F to 60º F, and an increase in native trout populations.  (The trout were not planted.  As soon as they found more suitable habitat, they migrated to the restored reach of stream—an instance of when you build it, they will come.) 

Is this stream restoration?  Probably not, but as the contractor noted, by constructing the stream reaches to a more ecologically functional state, the landowner is providing a “jump start” for changing the trajectory of the stream’s overall capacity.  At the property boundary, the Jefferson River flowed off the restored section and back to a more degraded, over-grazed, condition.  

But the property owner, in this case Beartooth Capital, Inc., sees this restored ranch as having greater market value to clients who want to own large properties that include a blue-ribbon fly fishing stream, or riparian areas that support migratory water fowl and other game.  Beartooth is also betting that enough clients are willing to make an investment in land that has restored habitat and/or species conservation imbedded in the price, to make the company profitable.  And Beartooth isn’t the only real estate investment firm that uses such a model.  Other companies, such as The Lyme Timber Company, incorporate other strategies that build in conservation evaluations into their investments, with pricing that reflects the added conservation value. 

When it comes to defining “restoration,” a wide range of perspectives come into play, from those who see restoration as a return to “pre-European settlement conditions,” to those who take a more pragmatic definition.  The Society for Ecological Restoration, a non -profit organization that publishes the peer-reviewed journal Restoration Ecology, promotes a broader definition of restoration than the “pre-European” model.  They see restoration as “the process of assisting the recovery of an ecosystem that has been degraded, damaged, or destroyed,” and note that “full recovery” may not always be possible or even desirable (www.ser.org)

Making broader definitions of “restoration” may not satisfy those who see restoration as returning a landscape, watershed or other area to its pristine, pre-European settlement state.   Yet, such a standard may not be feasible both financially, and ecologically, as many landscapes have been permanently altered by hardscapes, infrastructures and other impoundments.   Is incrementalism appropriate here?  As more private lands are treated to some level of ecological recovery, will that be enough to make a difference?  Our grandkids may know the answers, but we may not.

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