Ecosystem Marketplace

What is an Ecosystem Marketplace?

An ecosystem marketplace is an economic tool used to reward the conservation of ecosystem services—such as water quality, flood control, carbon sequestration, and biological diversity. Defenders is a leader in investigating the potential for using payments for ecosystem services as an additional incentive mechanism.

What are ecosystem services?

An ecosystem service is a function the earth provides for society naturally. Trees give us oxygen and shade, forests purify our drinking water, and wetlands filter our waste water. Conservation, restoration, and stewardship of our environment allows nature to deliver these services and more, including providing fish and wildlife habitat, pollination, lessening environmental hazards, tempering our climate, controlling pests and disease, locking up carbon, and fertilizing our soils.

A market for natural functions.

Although ecosystem services are not typically bought and sold the way that food, building products and manufactured goods are, an ecosystem market can arise when people are willing to pay to establish or enhance a particular natural function. For example, a developer wanting to build a new subdivision might choose to meet air quality requirements by paying a nearby farmer to plant trees to absorb the greenhouse gases over the life of the project.

Why is an ecosystem marketplace needed?

As a society, we value clean air, water, fish and wildlife and natural landscapes. We have regulations that constrain activities that are harmful to the environment, like discharging toxic chemicals, destroying endangered species habitat, killing migratory birds, or harvesting fish beyond a legal limit. Although these regulations are effective at stopping or limiting harmful acts, they are not always helpful in establishing positive or restorative actions.

Ecosystem markets offer new conservation tools.

Regulations tend to be narrowly focused and often do not address important environmental values, especially the protection of wildlife habitat. Ecosystem markets can provide an approach to conservation that may achieve better results at a lower cost than compliance with existing regulations alone. Under most current mitigation schemes, industries, businesses, developers, and individuals whose activities cause adverse impacts to some natural resources must compensate for unavoidable impacts. For example, a city might require a developer who cannot avoid impacts to a wetland to replace it, either on site or elsewhere. Carefully structured ecosystem markets can reward strategic investment in the conservation or restoration of important lands than would otherwise be achieved with smaller, isolated projects near development sites.

Ecosystem marketplaces pay.

Where impacts cannot be avoided completely or where a resource can be better protected elsewhere, ecosystem markets provide an alternative option:  regulated parties (buyers) can pay other land and water managers (sellers) to restore wetlands, plant trees along streams, or provide other ecosystem improvements.

Reasons to create an ecosystem marketplace :

• Ecosystem markets increase the level of investment in conservation by tapping sources that are currently not participating in conservation activities, or could be directed to higher priority areas;

• An efficient market-based system can provide greater ecological benefits at much lower cost than current mitigation schemes;

• Rural landowners find it increasingly difficult to remain profitable in the face of intense foreign competition and pressure to reduce prices for resource-based commodities like food and fiber. Markets for ecosystem services can supplement income from commercial products and diversify revenue for rural landowners, while also providing society with greater ecological benefits.

How is Defenders involved?

Economic Incentives: Defenders is investigating the potential for using payments for ecosystem services as an additional incentive mechanism. View presentations and publications developed by Defenders' Economics team on the use of market-based mechanisms for conservation of ecosystem services.

Defenders is a member of the Willamette Partnership, a nonprofit organization in Oregon working to create a multi-credit ecosystem marketplace to conserve fish and wildlife habitat, improve water quality, and find more effective ways to restore ecosystems. View the publication Policy Cornerstones and Action Strategies for an Integrated Ecosystem Marketplace in Oregon prepared by the Institute for Natural Resources for the Willamette Partnership and Defenders of Wildlife.

For more information about ecosystem marketplaces, read the following Defenders publications:

Buying, Selling and Trading Biodiversity in Washington
The State of Washington is one of the few in the nation with an official policy acknowledging the importance of biodiversity conservation. Some of the most promising approaches to conservation are a new generation of market-based tools. This report provides extensive background information on market-based strategies and outlines the opportunities and challenges they present. 45 pages.

Oregon Ecosystem Marketplace
This paper identifies the opportunities that exist within Oregon that will support development of an ecosystem marketplace, as well as some of the limitations that could hinder this development. Specifically, it examines primary statutory and institutional limitations in Oregon.