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Evaluating and Trading Ecological ServicesA Lone Star Coastal Exchange

Adam DavisPartner

April 29, 2013

Towards a ‘Lone Star Coastal Exchange’Environmental Markets1. Fundamental elements of an Exchange• Aligning economic incentive & environmental performance• 4 universal framework elements

2. Examples of other regional efforts

3. Demand and Supply

4. Key next steps• Measuring increments of desired outcomes• Landowner access and eligibility

From ‘Stop It’…Laws & regulations for the environment

Environmental HarmEnvironmental Harm RegulationRegulation Market StructureMarket Structure

air pollutionair pollution Clean Air ActClean Air Act

RegulationRegulation

species endangermentspecies endangerment

overfishingoverfishing

wetland losswetland loss

sprawl, imp. surface losssprawl, imp. surface loss

nitrogen runoffnitrogen runoff

Ntl. Resource DamagesNtl. Resource Damages

climate changeclimate change

Endangered Species ActEndangered Species Act

NOAANOAA

AB32, RGGI, voluntaryAB32, RGGI, voluntary

CERCLACERCLA

Clean Water ActClean Water Act

local land use regulationlocal land use regulation

Clean Water ActClean Water Act

…to aligning incentives.The government innovation of incentives

air pollutionair pollution SO2 tradingSO2 trading

species endangermentspecies endangerment

overfishingoverfishing

wetland losswetland loss

sprawl, imp. surface losssprawl, imp. surface loss

nitrogen runoffnitrogen runoff

Ntl. Resource DamagesNtl. Resource Damages

climate changeclimate change

conservation bankingconservation banking

total allowable catch & ITQtotal allowable catch & ITQ

CO2 tradingCO2 trading

DSAY’sDSAY’s

TMDL’sTMDL’s

TDR’sTDR’s

wetland mitigation bankingwetland mitigation banking

Environmental HarmEnvironmental Harm Market StructureMarket Structure

Restoration Economy jobs and assetsE-Sector market activity is robust & growing

Market StructureMarket Structure Market SizeMarket Size

$ 3.0 billion3.0 billion

$ 800 m800 m

$ 2.2 billion2.2 billion

$ 4.5 billion4.5 billion

$

(value of landed catch)

48 programs48 programs

>300 programs>300 programs

560 m

SO2 tradingSO2 trading

conservation bankingconservation banking

total allowable catch, ITQtotal allowable catch, ITQ

wetland mit. bankingwetland mit. banking

CO2 tradingCO2 trading

TDR’sTDR’s

Ntl. Resource DamagesNtl. Resource Damages

Four common elements…A pattern emerges from early innovationsTARGET UNIT

GEOGRAPHY TRANSFER

• “flood storage capacity”• “no net loss”• “public access”• “breeding habitat”

mitigation bank

• functional acres• tons CO2e• lbs of fish landed• lbs of N reduction

• service area• historical range of species• fishery• watershed

• mitigation bank• conservation bank• catch shares• water quality trading

Using science and verification to know what we’re buying with the money we’re spending.

arkets” vs. “Payments for E-Services”private

investmentpublic

spending

Shared metrics and reporting

coastal protection

public priorities

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Examples of Regional Exchanges

Environmental Accounting and Trading• Beyond “compliance”• Efficient and effective procurement

Key features:• Match goals of buyers with benefits

provided by sellers• Scientifically verified units of measure• Monitoring and management included

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Examples of Regional Exchanges II

Baseline, design, verification, credit trackingWillamette Ecosystem Crediting Platform • Standardize the operations and management of

credit creation• Focus on salmonid, prairie and riparian habitatsBay Bank • Match goals of buyers with benefits provided by

sellers• Focus on forest and habitat conservation, water

quality, Brook Trout credits

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Examples of Regional Exchanges III

Lake Tahoe Clarity Crediting • Accounting for

sediment reduction actions

Colorado Habitat Exchange • Focus on Greater Sage

GrouseMokelumne Watershed• Forest, meadow and

streamside restoration

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Demand and Supply on the Texas Coast

Regional goals:• Flood protection/flood storage capacity• Essential bird and fish habitat• Water quality• Outdoor recreation/coastal accessCategories of buyers:• Corporate sustainability interests• Voluntary or regulatory offset purchases• Traditional conservation finance• Flood storage beneficiaries

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Critical elements of the LSCE

Establish credible baseline (GIS)Standard SettingSupply side interactions (Landowner Eligibility)Project Development toolsVerification and Certification ProtocolsTransparent Transaction Platform• Connects Buyers and Sellers• Credit Tracking

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Baseline and Standard Setting

Baseline conditions and priority setting:• Aggregate existing INVEST, SSPEED Center and NPCA

data base information with publically available data sets.

• Both “green and grey infrastructure” identified along with natural features

Develop criteria for demand driven credits• Combination of ecological success criteria with legal

and/or financial assurances• Ecological ‘uplift’ above a baseline• Clear rules for participation

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Eligibility and Project Development

Physical location and property characteristics• Match with desired outcomesProject templates simplify participation• Predict credit yield• Step by step process and technical

assistance for participants

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Verification and Transaction Platform

Consistent criteria for tracking outcomes• Tools and methods for participants• Audit and monitoring designOnline market infrastructure• Serialized credits avoid double counting

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Next steps

The next level of clarity for both demand and supply. To that end:

Metrics and standard settingKevin Halsey, Ecometrix Solutions

Establishing market infrastructureJames Remuzzi, Sustainable Solutions

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Contact:

2002 Clipper Park Rd. ~ Suite 201Baltimore, MD 21211(443) 921-9441

www.ecosystempartners.com

adam@ecosystempartners.com