The term “markets” is too limiting: Is it time for a change?

Practitioners who work to value ecosystem services use a number of market terms to describe a broad suite of conservation finance activities.  Is it time for a change? Join the discussion on Ecosystem Commons.

Practitioners who work to value ecosystem services use a number of market terms to describe a broad suite of conservation finance activities.   Is it time for a change? Join the discussion on Ecosystem Commons.

26 September 2011 | The Ecosystem Commons is an online portal where members of the ecosystem services community can kick around ideas, showcase projects, and track trends.  

Tracy Stanton launched this discussion on the Ecosystem Commons earlier this month.   You can join it here.

The Discussion

Valuing Ecosystem Services, Ecosystem Markets, Payments for Ecosystem Services, Ecosystem Services Transactions, Environmental Markets, and Market-based approaches are but a few of the many terms practitioners who work to value ecosystem services use to describe a broad suite of conservation finance activities.

The traditional definition of market(s), when applied to ecosystem services, implies a fairly narrow set of activities or transactions such as banking, purchasing, and trading ecosystem services credits. Further, there seems to be growing acceptance by practitioners that while the term markets itself is narrow, it implies a wide spectrum of activities ranging from traditional market transactions, such as the buying and selling of nutrient or temperature credits, to the purely voluntary payments for ecosystem services and a range of other types of transactions in between. For example, at the Ecosystem Markets conference in Madison, WI back in June, members of the one panel (myself included) prefaced a discussion about the future of ecosystem markets with a qualification that while we use the term markets, what we really mean is this broader array of activities described above.

Many recognize the limitations of the term “markets”; and the fact that the word itself triggers sensitivity and confusion. Is it time to identify more descriptive language for discussing the work around payments for ecosystem services, ecosystem services markets and the myriad of ways in which we aim to pay for the conservation of natural infrastructure?   If so, what can we call this suite of activities? Chime in with your ideas!

Author bio:
Tracy leads the work on expanding coverage of issues related to payments for watershed services and other markets-based mechanisms for water-related ecosystem services for Ecosystem Marketplace and Forest Trends. Tracy was lead author of the foundational report, State of Watershed Payments: An Emerging Marketplace, published in June 2010, which served to quantify global investment in payment for watershed services. Prior to joining Forest Trends, Tracy worked as a consultant for the National Academy of Public Administration where she collaborated on an assessment of US EPA’s delivery of environmental services using the Chesapeake Bay watershed as a learning platform. She holds a Master in Public and Environmental Policy from the University of Maryland and a BA from The Ohio State University.


I think the biggest issue is

I think the biggest issue is are you talking about government activity or private sector investment?   I think when it comes to the idea of “paying” a landowner for a environmental benefit  with the dollars coming from the private sector, you are going to have to stick to the term “market” if for no other reason that the business or individual can recognize this as an activity where they have gone to the market place and purchased something–whether they are  buying this environmental good for their own personal benefit  because they wish to help the environment with their dollars (and often in the case of a business get good p.r.) or they are purchasing an offset to mitigate activity they are involved in that has some negative impact on the ecosystem in an effort to avoid a fine or other negative result of a existing or potential government regulation,  most  I think  recognize the concept of the market place as a way to offset any negative activity they are undertaking through a direct purchase.

When you are talking about making a  payment directly to a landowner (especially someone involved in agriculture) from a governmental source, I feel we should talk about “direct payments” since this  is a term most folks who deal with farm programs understand.    Unlike traditional NRCS and like programs  that “cost-share” with producers, sharing the cost of implementing a practice that provides a environmental benefit, we are in this case  talking about a “direct payment” tied to the type of stewardship activity they are undertaking.   The big difference is that you are being paid for how you manage your land, not for what kind of crops you grow or based on the price that crop is currently bringing in the market place.   Agriculture producers understand this concept straight  on  while it often  takes a little while to explain how someone is buying the carbon that is sequestered on their land or the acres of habitat they are improving for a certain species.

As I mentioned in an earlier post, we have a partial blue print for this kind of direct ecosystem payment in the existing Conservation Stewardship Program (CSP) at NRCS.  This is one way to place a value on environmental  protection on privsate land.   We also could  explore ways of encouraging  EPA and state environmental agencies to start having  businesses and individuals  who are facing penalties offset these penalties through some form of ecosystem payment program where they pay roughly the same dollar amount as their fine into a carbon credit program or a wildlife credit program  or the like that helps with the area of the environment they are hurting  (say,  you have a clean air violation?  Instead of paying  the government  the fine,  go pay  the same amount to landowners to plant grass  or trees or better manage forest ground and grassland or convert to no-till farming–all to sequester carbon dioxide).

just a couple of thoughts        

Yes, I agree with the

Yes, I agree with the statement that the term “market” may be too limiting to explain all the exchangeable values of ecoservices.     The list I often refer to includes monetary payments, resource-credit trading, regulatory assurance/compliance protection, market access, participatory benefits and liability protection.   This list contains both monetary and non-monetary values, but of course, they all are economic values.   The traditional version or  definition  of a market may not capture the breadth of these values.  

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