Ecosystem Markets Primer T.J Mascia Troutman Sanders, LLP
New York State Wetlands Forum, Inc. Annual Conference and Meeting April 29 – 30, 2014
Ecosystem Markets:
Fundamental Concepts
• Impacts are Inevitable
• Market-Based vs. Command-and-Control
• Restoration vs. Restriction
• Natural vs. Built Capital
Before • Benefits/Advantages vs. Limitations
After Ecosystem Markets: Primer Focal Points
• Driver(s)
• Units
• Participants
• Practices/Process
• Status/Trends
Ecosystem Market Examples
Voluntary Greenhouse Gas (GHG) Offsets
Wetlands and Stream Mitigation Banking
Species Conservation Banking
Water Quality Trading (WQT) Voluntary GHG Offsets
GHG Market Basics
Driver(s): Pre-Compliance / Sustainability / Philanthropy
Units: MtCO2e
Buyers: Unregulated Corporations / NGOs / Universities / Individuals
Sellers: Offset Project Developers / Retailers / Aggregators
Others: Standards / Registries
GHG Practices/Process
Offset-Generating Practices:
• GHG Sequestration • GHG Capture
Offset Certification & Sale
• Verification • Certification • Registration
GHG Status/Trends
Source: Forest Trends Ecosystem Marketplace GHG Wetland & Stream Mitigation Banking
Mitigation Market Basics
Driver(s): CWA Section 404 / WRDA / 2008 Mitigation Rule
Units: Acres of Wetlands + LF of Stream
Buyers: Section 404 Permittees
Sellers: Mitigation “Bankers” / ILF Sponsors
Others: USACE / Interagency Review Team (IRT)
Mitigation Practices/Process
Credit-Generating Practices:
• Creation • Enhancement • Restoration • Preservation
Banking Process:
• Initial Regulatory (IRT) Review and Approval • Credit Release(s) • RIBITS • Bank Closure and Long-Term Management
Mitigation Practices/Process
Mitigation Practices/Process
Mitigation Status/Trends: Market Growth & Success
Source: Forest Trends Ecosystem Marketplace State of Biodiversity Markets 2011 Update
• 900+ Approved Banks 960,000+ acres restored/protected (2010) • Average Bank Size = 174 acres (2008) • Average Credit Price = $74,535 (2008) • Estimated Annual Market Value = $1.3 - $2.2 billion/yr
Mitigation Status/Trends: Permitting Efficiency
Source: Birnie, Katherine (Ecosystem Investment Partners),. May 9, 2013."State of the Market: National Market Analysis and Overview.” Presentation at2013Natonal Mitigation &Ecosystem Banking Conference. New Orleans, LA
Mitigation Status/Trends: Regional Variability
Source: http://www.restorationsystems.com/wetland-mitigation-bank/ Mitigation Status/Trends: New York
• 3 Approved Banks as of Jan. 2013 (RIBITS)
• Future Market Potential ?
“NYCEDC Releases Request for Expressions of Interest to Establish First Wetlands Bank in New York City”
Press Release December 20, 2013
Mitigation Species Conservation Banking
Species Market Basics
Driver(s): ESA Sections 7(a)(2) and 10(a)
Units: Acres of Habitat / Population
Buyers: ESA Permittees
Sellers: Species Conservation “Bankers” ILF Sponsors
Others: USFWS / State Resource Agencies
Species Status/Trends
Source: Forest Trends Ecosystem Marketplace State of Biodiversity Markets 2011 Update Species Status/Trends
Species currently protected by US conservation banks:
Black-capped vireo - TX Golden Cheeked Warbler - TX California Coastal Gnatcatcher - CA Gopher Tortoise - MS California Tiger Salamander - CA Oregon Chub - OR Carolina Heelsplitter – SC San Joaquin Kit Fox - CA Chinook Salmon – CA, WA Sand Skink - FL Conservancy Fairy Shrimp- CA Utah Prairie Dog - UT Florida Panther - FL Steelhead - CA Florida Scrub Jay - FL Cheat Mountain Salamander – WV Giant Garter Snake- CA Western Burrowing Owl - CA Giant Kangaroo Rat - CA Valley Elderberry Longhorn Beetle - CA Swainson’s Hawk - CA Delta Smelt - CA
Species Status/Trends: NY Conservation Banking
• Current Efforts: Indiana Bat
Indiana Bat habitat enhancement: cave gate installation at Nature Conservancy project in the Missouri Ozarks
• Other Species Banking?
Species Water Quality Trading
WQT Market Overview
Driver(s): CWA Sections 402 and 303 / TMDLs EPA WQT Policy / State Laws & Regs
Units: Lbs. N or P / Sediment / Thermal
Buyers: NPDES Permittees
Sellers: “Bankers” / Farmers / Point Sources
Others: EPA / State Agencies
WQT Practices/Processes
WQT Status/Trends
WQT Ecosystem Markets: Criteria For Success
• Driver(s): Strong enforceable “cap”
• Units : Real / Verifiable / Appropriate Ratios
• Participants : Role of Private Entrepreneurs
• Practices/Process: Clarity / Consistency / Transparency
• Status/Trends: Monitor and Adapt
Questions?
T.J. Mascia Troutman Sanders, LLP [email protected] 804-697-1421