The Back Forty

Payments for environmental services (PES) approaches to conservation, which five years ago were very much on the fringe of conservation practice save in a few local or national settings, are now firmly in the mainstream, at least in theory if not yet in practice. 

The journal Ecological Economics ran a special edition on PES in its May 1, 2008 issue. The issue includes 15 articles on PES, ranging from conceptual overviews to detailed case studies from Bolivia, Ecuador, Costa Rica, the United States, the EU, Zimbabwe, and South Africa.

Meanwhile, earlier in the week Ecosystem Marketplace and New Carbon Finance released their 2008 State of the Voluntary Carbon Markets report, the second such annual report on the growing voluntary carbon market following last year’s compilation.  The report details the rapid growth of the voluntary carbon market over the past 12 months.  The volume of CO₂ emission reductions traded on the over-the-counter market nearly tripled from 14.3 million tons of CO₂ equivalent in 2006 to 42.1 MtCO₂e in 2007.  The value of this trade increased from $58.5 million to $285.4 million over the same period.  These figures reflect the fact that prices for carbon off-sets on the voluntary market continue to rise, with the volume-weighted price of credits increasing from $4.1 tCO₂e to $6.1 tCO₂e from 2006 to 2007.

The expansion of markets for carbon off-sets and related ecological services (e.g. water catchment) presents tremendous new opportunities for creating economic incentives for conservation from forests and grasslands around the world.  Of course, not everyone is confident that these market-based strategies will bring more benefits than costs.  Some indigenous rights groups in particular have recently been critical of existing carbon off-set projects set up under the Kyoto Protocol’s Clean Development Mechanism. 

In terms of conservation outcomes, it is clear that carbon off-set projects can have either negative or positive impacts depending on how they are structured.  They can create incentives for conservation if they structure off-sets in terms of reducing deforestation or through re-foresting previously denuded landscapes, and if they are able to channel benefits to local communities who are, in many instances, the ultimate determinants of forest conditions.  By contrast, if off-setting carbon means clearing native vegetation and replacing it with exotic plantations or producing biofuel monocultures, the impact will clearly be negative.  The ultimate impact that the carbon markets have on conservation outcomes lies in the nuance of how off-set deals are structured and how the market captures bundled biodiversity, community, and carbon emission reduction values.