Markets for Ecosystem Services from Agriculture: Outlook · Markets for Ecosystem Services: New...
Transcript of Markets for Ecosystem Services from Agriculture: Outlook · Markets for Ecosystem Services: New...
Markets for Ecosystem Services from Agriculture: Outlook
Laila Racevskis Assistant Professor, Food & Resource Economics Department
University of Florida/IFAS
Presented for Florida Agricultural Commodity & Policy Outlook Conference November 15, 2012
Photo credit: Brian Belcher, Christian Cossalter & Sven Wunder
What Are Ecosystem Services (ES)?
• “The benefits people obtain from ecosystems”
• Millennium Ecosystem Assessment, 2005
• Also known as ‘Environmental Services’ • (will use both terms interchangeably in this presentation)
• We rely on them for our well-being, but their quantity and quality are being rapidly degraded worldwide
• Most farms and ranches provide some form of ecosystem/environmental services
Ecosystem Services and Human Well-being
MARKETS FOR ECOSYSTEM/ENVIRONMENTAL SERVICES (ES)
Ecosystem Services from Agriculture: Policy & Market Trends
• Increased federal funding in recent years dedicated to working lands (as opposed to land retirement) programs
• An Office of Ecosystem Service Markets has been created at USDA to assist in design and implementation of markets
• Over 800 ES markets created in the US since 1970s
• Represent increased potential for sources of on-farm income – But, they are not perfect
– Many markets are still in early stages
– Farmer and rancher input is important as these markets continue to develop
3 Types of ES Market Approaches
Direct Payments
– Subsidies
– Tax incentives
– Payment for Ecosystem/Environmental Services (PES)
Certification
– Eco-labeling
– Agricultural product certification (e.g. Fresh from Florida™)
– Forestry certification
Tradable Permits
– Carbon credit trading
– Biodiversity Offsets • Wetland Mitigation
Banking
• Conservation Banking
– Water Quality Credit Trading
Who Participates in ES Markets?
BUYERS
- Government
agencies
- NGOs
- Private
individuals
- Corporations
- Developers
- Utilities
- Public Works
INTERMEDIARIES
- Government
agencies
- NGOs
- Academic
institutions
- Local
government
bodies
SELLERS
- Private
landowners
(farmers,
ranchers,
timber
companies)
- Conservation
organization
Adapted from Stuart & Canty 2010 and Mercer et al 2011
MARKET RULES
Successful ES Markets Will:
• Minimize loss of agricultural productivity and maintain active agriculture
• Work with farmers and ranchers directly to establish and maintain credits for ecosystem services
• Allow farmers and ranchers to make a profit (price/credit > cost/credit)
• Offer simplicity and flexibility in market standards and processes
Based on feedback from farmers and ranchers in Stuart & Canty 2010
ES MARKETS: EXAMPLES
Typical ES Markets
• Carbon:
– Current voluntary market, prices low and will remain low unless national legislation creates emissions cap
• Wetlands and Habitat:
– Driven by regulation on wetland and habitat disturbance; Wetlands Mitigation Banks; Wetlands Reserve Program
• Water Quality:
– Water Quality Credit Trading, potential for but does not exist yet for agriculture in FL
• Renewable Energy:
– Growing markets for solar, wind, biofuels
• Water Quantity: NE-PES, Florida example
Northern Everglades Payment for Environmental Services Program: NE-PES
• Evolved out of the Florida Ranchlands and Environmental Services Program (FRESP), a demonstration project from 2007-2010
• Today, the South Florida Water Management District (SFWMD) is buyer of Water Management Alternatives (WMAs) on ranchlands within these watersheds
www.fresp.org
NE-PES: How It Works
• SFWMD solicits call for proposals from ranchers within designated watersheds
• Ranchers submit proposals for:
• Water Retention WMAs (environmental service = acre feet of water retention), and/or
• Nutrient Removal WMAs (environmental service = lbs. of phosphorous (P) removed)
• SFWMD selects contracts to be awarded and selected ranches enter into 10-year contracts with SFWMD, which monitors progress and distributes payments
www.sfwmd.com
10-year contracts awarded to 8 ranches in 2011
$7 million investment
All contracts secure average of 4,800 acre feet of water
Future of NE-PES
• Proposal solicitation was scheduled for release in March 2012 but status unknown
• Program expected to continue through fiscal year 2016 with $46 million total allocated
• More information can be found at www.fresp.org
• Details on criteria, procedures, etc. found at: http://www.fresp.org/ne_pes.php under Frequently Asked Questions about the NE-PES Program
Willamette Partnership
www.willamettepartnership.org
NutrientNet
Water Quality Trading in
Chesapeake Bay
http://pa.nutrientnet.org/
Future of ES Markets Will Depend on Farmer and Rancher Involvement
• Identify opportunities for ES credits on your land
• Evaluate market demand
• Evaluate cost vs. return
• Assess risks
• Develop an environmental markets plan
• Produce market credits
• Consult with agency and/or academic personnel who work with ES markets
Adapted from Stuart and Canty 2010
ES Markets Outlook: Concluding Thoughts
• Markets for ES from agriculture provide opportunities for additional revenue streams for farmers and ranchers, but programs have design and implementation challenges that need to be overcome.
• Funding sources are uncertain.
• Input and participation from farmers and ranchers will be critical to the future success of these markets.
• More information is needed on limitations and farmer perceptions of the pros and cons of different market approaches.
ES Markets: Resources The Use of Markets To Increase Private Investment in Environmental Stewardship, Ribaudo et al 2008
Baselines in Environmental Markets: Tradeoffs Between Cost and Additionality, Marshall and Weinberg 2012
Guide to Environmental Markets for Farmers and Ranchers, Stuart and Canty 2010
Markets for Ecosystem Services: New Challenges and Opportunities for Businesses and the Environment, World Business Council for Sustainable Development
Innovations in Market-based Watershed Conservation in the U.S.: Payments for Watershed Services for Agricultural and Forest Landowners. 2011. Ecoagriculture Partners
Taking Stock: Payments for Forest Ecosystem Services in the U.S. Mercer et al 2011
Other ES Resources / Forums
World Resources Institute and Business Interests in ES http://www.wri.org/ecosystems/sustainable-business-and-markets
FAO Payment for Environmental Services from Agricultural Landscapes
http://www.fao.org/es/esa/pesal/index.html
Performance-based Environmental Policies for Agriculture http://www.uvm.edu/~pepa/
Ecosystem Marketplace http://www.ecosystemmarketplace.com/
The Katoomba Group http://www.katoombagroup.org/
Ecosystem Commons www.ecosystemcommons.org