New Currency for Conservation: how do you protect the services nature provides while still encouraging economic growth?

Despite all our technological advances, humans are ultimately sustained by the marvelous workings of nature. The conservation movement has been founded on the struggle to manage industrial progress without destroying the systems that have allowed the human population to prosper.

The past 100 years have seen some progress in this struggle for balance. As a society in general, Americans are more aware of the benefits of protecting the environment and of the harm we can do to the natural world.

Maintaining the services provided by these functioning ecosystems is key to maintaining our own well-being. The question is how: How can we better protect the services provided by nature's ecosystems while encouraging economic growth to sustain many of our social systems?

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A diverse group of interests met in Washington, DC, this past spring to discuss these questions and the potential role of ecosystem markets in addressing them. The meeting, A New Currency for Conservation, was sponsored by AMERICAN FORESTS, the Southern Environmental Law Center, and the U.S. Forest Service. Other participants included representatives from The Nature Conservancy, Environmental Defense, the U.S. Environmental Protection Agency, commercial forest managers, private land owners, academia, and others interested in identifying ways to conserve and restore priority landscapes.

Conservation is an investment and strategic conservation requires prioritizing landscapes where the greatest return will be realized. By establishing a system where the benefits of functioning ecosystems are tallied alongside land development, landowners will have more options for managing and enhancing the conservation value of their land. Participants at the DC workshop identified some venues for collaboration and debated the strengths and weaknesses of different approaches to establishing a system for ecosystem services markets and payments.

Other questions arose from the discussion: What role should federal and state governments play? What strategies should be used to encourage landowners, commodity producers, and environmentalists to form alliances? How can the cost and complexity of initiating a payment system be lowered?

How should standards and monitoring systems be developed?

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Ecosystem services markets may be an effective way to add value and maintain the services provided by private land. As urban areas grow, the value of surrounding private farm and forest land is perceived to be less than if that same land was converted to a more developed use.

Census projections put the U.S. population at almost 138 million by 2050, a growth rate that will trigger development despite the fact that while population is increasing, the average household size is decreasing. This translates to more houses, more land needed to build houses, and more resources needed to build houses.

The National Resource Inventory indicates that between 1992 and 2001 nearly 21 million acres of forest, cropland, and other open space was converted to more developed uses. By 2050, total forestland in the United States is projected to decrease by 3 percent--a total of 23 million acres--while agricultural land is projected to decline by 4 percent--43 million acres, according to the U.S. Forest Service's Pacific Northwest Research Station.

As these undeveloped landscapes become more fragmented, society loses both the sense of open space and the ecosystem services originally provided by these lands.

Another problem: Despite diminishing forestland, the number of forest landowners is on the rise. This fragmentation is detrimental to wildlife and could lead to incremental losses in forest cover as new access roads and houses are constructed. Family forest landowners now own 42 percent of the nation's forestland, a figure that promises to strain the resources of federal and state agencies that help landowners manage their land.

In the United States, both population and private forestland are concentrated in the southern and eastern regions of the country. Expanding urban centers and growth in smaller outskirts communities threaten these forests and farmlands. Lucrative real estate markets make forest and farmland financially appealing as sites for housing developments. With development often comes increases in property taxes or other local taxes to pay for sewage systems, roads, and schools. Even the staunchest holdouts may feel forced to sell, particularly if they are no longer able to earn a living from their land.

As neighbors move closer and the setting becomes more urban, tolerance for forest and agriculture management practices often declines. Research indicates that as population density increases, forest management decreases; without the income yielded by timber harvests, selling forestland to a developer can become a necessity.

Urban and rural residents depend on one another to find the balance between conservation and economic progress. The price of losing ecosystem services is high: If we don't let nature do the work, we must build our own crude replicates, such as filtration plants and levees, which are expensive and less effective. If ecosystem services are not tallied into the value of forest and farmland, the owners and communities reliant on this way of life may be forced to change, powerless against unchecked growth.

The carbon and greenhouse gas market is slowly becoming a reality. Carbon monoxide, or smog, contributes to climate change; trees capture and store atmospheric carbon as part of the photosynthetic process. A market is evolving in which producers of carbon, such as power-generating companies, buy carbon credits from a landowner who agrees to plant and manage a forest as a carbon "sink."

The Canadian Greenhouse Emissions Management Consortium, comprised of power companies, has since 1996 sought a competitive advantage by minimizing the negative effects of its emissions through carbon sinks and improved technology. The Chicago Climate Exchange is a similar venture.

The Oregon Department of Forestry has a small program in which landowners can enter a 100-year lease to grow trees to offset emissions from power companies. In California, a carbon registry is a preliminary step to developing a market; other states, such as Georgia, are starting similar discussions.

Several reforestation projects along the lower Mississippi River illustrate the role forestry can play in the carbon market. In 2003, 25 power companies formed the PowerTree Carbon Company, LLC with the goal of reforesting Mississippi bottomlands to manage carbon dioxide emissions. Much of the land being reforested is marginal farmland lying within the flood plain. Improvements in farming techniques, plant breeding, and equipment have increased the productivity per acre of farmland, further decreasing the need to use these marginal lands for farming.

The cost of reforestation, however, has prevented most private landowners from changing the land use on their own. The PowerTree Carbon Company is working with the federal government, conservation groups such as Ducks Unlimited and The Nature Conservancy, and private landowners to replant native tree species in six projects located in Louisiana, Arkansas, and Mississippi.

As the trees grow over the 100-year life of the project, it is estimated they will capture about 1.6 million tons of carbon dioxide from the atmosphere. The average American family generates about 40 tons of carbon dioxide per year.

Reforestation projects such as this often have positive ripple effects. Wildlife habitat is created when you replant with pine, oak, sweetgum, and other native hardwoods. The Mississippi River is a major migratory route for birds, so the habitat created in Louisiana, Arkansas, and Mississippi will likely positively influence birders and hunters. The reforested flood zone will likely help filter nitrogen and phosphorous fertilizers from entering the river and contributing to algae blooms in the Gulf of Mexico, a boon for the Gulf's fisheries.

As ecosystem markets become more sophisticated, a mechanism for bundling these multiple services may be appropriate. In the future, bundling services into the same project may be a useful way to interest previously disparate buyers--a power company and shrimp processor, for instance--as common interests are realized.

Hunting leases are another example of a flourishing market for what is effectively wildlife habitat--an ecosystem service. Popular in the South and upper Midwest, they give a hunter the right to hunt on a forest or agricultural landowners' property.

In exchange, the landowners manage their land to provide habitat for the desired species. Private forest owners in Alabama sell hunting leases for deer in the years between harvests; sorghum farmers in Texas supplement their income with leases for doves. This income source for rural landowners provides an incentive to create wildlife habitat and, in essence, manage for biodiversity on their land.

An intriguing and confounding aspect of markets for ecosystem services is the scale at which they can operate. The reforestation project along the Mississippi River flood plain has potential buyers and seller along the whole drainage.

With other projects, the buyers require services from a specific seller. Consider what happened when New York City decided to forgo spending $6 billion on a water treatment plant and instead pay forest owners and farmers in the Catskills to maintain and enhance forests and riparian areas in the watershed that provides the city's drinking water. It was imperative that the maintenance and enhancement be done in that particular watershed. The location of land can play a key role in providing ecosystem services.

These examples involve uncommon alliances between buyers and sellers of ecosystem services. This openness to creative solutions will likely be a hallmark of the movement. A discussion of how these markets should function is occurring at many different levels.

At the federal level, the Department of Energy is drafting a program to reduce greenhouse emissions, which would include forestry projects. Discussions on reauthorizing the 2007 Farm Bill have begun. This may offer a venue for further development of ecosystem service programs, as many conservation programs for farm and forestland owners are housed in this bill.

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Discussion is needed at all levels, from grassroot organization to federal agencies, so that as markets for ecosystem services develop, they function as tools that address ecosystem protection and growth. What tools and approaches exist now to help landowners and managers stay on their land and manage it sustainably? How should we encourage civic engagement that seeks to increase environmental protection, rewards responsible behavior of landowners and managers, respects property rights, and increases economic prosperity?

Market-based conservation is strategic conservation. It is a tool envisioned to complement current governmental and philanthropic conservation efforts. It appeals to many who believe that conservation and economic development are not an either/or debate but a discussion of balance and an opportunity for creative solutions. Creating markets for ecosystem services acknowledges that functioning ecosystems are the most cost-effective way to preserve our quality of life.

To learn more about the A New Currency for Conservation conference or what next steps are planned, visit its website: www.naturesservices.org

Rhonda Mazza is a science writer for the U.S. Forest Service.