The term “ecosystem services” is used to describe all of the benefits that healthy ecosystems provide human communities. Often, these benefits are grouped into functional categories:

  • provisioning services such as food and water
  • regulating services such as flood and disease control
  • cultural services such as spiritual, recreational, and cultural benefits
  • supporting services, such as nutrient cycling, that maintain life on Earth

Quantification tools that can translate specific management actions into units of ecosystem function, such as gallons of clean water, degrees of water temperature reduction, or tons of carbon dioxide removed from the atmosphere can be used to create a market credit system that matches positive ecosystem benefits to an equal quantity of negative impacts. According to a recent World Wildlife Fund report, market based conservation activities that support healthy ecosystems total approximately US$10.4 billion globally.


Wetland Mitigation Banks

Markets that provide funding for the restoration of wetlands are often created in the form of wetland banks. In the United States, these banks are governed by regulations and policies under the EPA and the Army Corps of Engineers, based on legislation passed in 2008. If a developer will be converting wetlands to houses, roads, or offices, they will be required to restore an equal or greater numbers of acres within the same watershed to a functioning wetland ecosystem. Often it is easier for them to pay a wetland mitigation bank to restore and manage these assets rather than take on the restoration work themselves.


Water Quality Markets

Non-point source pollution is one of the most intractable water quality issues in the world. Land managers can receive payments for management actions that reduce these harmful effects. For example, planting riparian vegetation can improve water quality for the following pollutants:

  • Temperature
  • Sediment
  • Nutrients

In the United States, programs that provide market payments for water quality have already been launched in the Chesapeake Bay and Willamette Valley of Oregon.


Water Quantity Markets

Water quantity markets have been developed in areas where water is appropriated using a water rights system. Markets operate using the same units that are used in the agricultural water rights program, generally ‘acre feet’. These rights can be bought, sold, or leased just as any other commodity. There are requirements that must be met, including that the location of buyer and seller must not cause a shift in water removals to an area of the stream where other owners of rights are not negatively impacted (for example, moving rights upstream cannot reduce the amount available to downstream rights holders).


Biodiversity Markets

The loss of wildlife habitat due to the conversion of wetlands, forests, and other habitat types to development will continue to be a problem in a world where human populations continue to increase. For many years, environmental legislation aimed to halt the decline in total acreage of wildlife habitat through legislation that prevented development in areas that provided key habitat values for important species. As a new strategy, legislation has been passed in many states to allow the conversion of wildlife habitat as long as the developer provided alternative habitat within the nearby region that covered the same or greater area.