Portland Katoomba
June 7–9, 2006
Making the Priceless Valuable: Jumpstarting Environmental Markets
A conference hosted by The Katoomba Group, Forest Trends and Ecotrust.
The Pacific Northwest: Critical Challenges Meet Compelling Opportunities
In terms of environmental issues and, more specifically, issues of environmental markets, the Pacific Northwest of North America (stretching from Northern California in the US, to British Columbia in Canada) is a land ripe with opportunities and rife with challenges. First of all, it is a part of the world that is facing severe development pressures with populations growing at a breakneck pace. Couple this with a vocal environmental constituency and iconic endangered species such as the Northern Spotted Owl, Redwoods, and Salmon, and you have the potential for serious environmental confrontation.
Luckily, the Pacific Northwest — and the North American West in general — is also a place of has high environmental standards, the home of progressive thinkers (think John Muir and Silicon Valley), and globally significant natural resources. All of this would suggest a geography well poised for the development of markets for ecosystem services, a place where the services nature provides — climate regulation, pollination, clean water, habitat — are understood, valued, and invested in. And, if you look closely enough (as we have done), you find that this is indeed the case. Not only are cities like Portland meeting and surpassing emissions targets set at the global level by the UN Framework Convention on Climate Change and its Kyoto Protocol, but the state of California has actually developed one of the most robust climate change registries anywhere in the world. You also see organizations establishing innovative forestry investment funds, and public agencies dreaming up new approaches to conservation and wetland mitigation banking.
This publication further explores this leadership and what is being done in the Pacific Northwest to spur the development of these markets in ecosystem services. Our premise is that the region’s unique geography, history, and social fabric make it especially fertile ground for the development of environmental markets. And, as far as we’re concerned, and based on the articles in this booklet, the premise holds.
The bulk of this publication is a collection of articles commissioned by the Ecosystem Marketplace (www.ecosystemmarketplace.com) on emerging ecosystem markets in the west. The Ecosystem Marketplace is a web-based information service that was created two years ago to help spur the development of environmental markets worldwide. It seeks to become the world’s leading source of information on markets and payment schemes for ecosystem services such as water quality, carbon sequestration and biodiversity, and is based on the belief that by providing reliable information on prices, regulation, science, and other market-relevant factors, markets for ecosystem services will one day become a fundamental part of our economic system, helping give value to environmental services that, for too long, have been taken for granted. The Ecosystem Marketplace is a project of the DC-based non-profit, Forest Trends.
Beyond providing insights into the work being done in the Pacific Northwest, the articles here are intended to serve as context and provide background for the Pacific Northwest Katoomba conference, held in Portland on June 7–9, 2006. The conference is the ninth in a series of Katoomba conferences designed to stimulate and strengthen environmental markets around the world. Launched in Katoomba, Australia in 1999, the Katoomba Group is an international working group composed of leading thinkers and practitioners from academia, industry and government all committed to enhancing the integrity of ecosystems through market solutions that are efficient, effective, and equitable. The group is also organized and sponsored by Forest Trends.
In producing this booklet, and in the organization of the meeting in Portland, Forest Trends, the Katoomba Group, and the Ecosystem Marketplace are working hand-in-hand with Ecotrust, a Portland-based conservation organization working to build a restorative economy throughout the region. Ecotrust and its partners recognize the critical role that ecosystem service markets can and must play in the region, and the Pacific Northwest Katoomba conference is a launching point for a regional initiative to sharply accelerate their development and rapid adoption.
What Makes the West Different?
One thing that makes the West unique (at least relative to the rest of the U.S.) is the large role that the federal and state governments play in land ownership. For example, the government owns over half the forestland in Oregon, and has a similar presence in Washington, and a smaller but still influential role in California. This has significant implications for how westerners think about nature and how they protect natural resources and ecosystem services. This compares to the northeastern United States, for example, where public ownership is fairly minimal In the Northeast, if we are to preserve wildlands, open space, habitat, and clean water, private landowners must and often do, play a leading role. Hence the high levels of conservation purchases, conservation easements, tradable development rights, carbon credit purchases, and other market-based mechanisms. In the West, however, any public demand for intact landscapes and ecosystem services can — and often is — met instead by requiring public land management agencies to produce the desired outcomes.
For example, rancorous public debate over the fate of the region’s old-growth forests and the continued decline of forest dependent species such as the northern spotted owl and marbled murrelet led to federal intervention by President Clinton in 1993. This resulted in the development of the Northwest Forest Plan which has guided the management of the region’s federal forests ever since; and severely restricted federal timber harvests. The Plan put the burden of habitat creation squarely on the shoulders of federal land, leaving private lands relatively unburdened in terms of obligations to create and maintain habitat for endangered species. But this is beginning to change, and as it does — as we increasingly recognize the need for species recovery plans across the entire landscape — we can instead imagine that the West will see even greater use of market-based approaches to conservation; approaches whereby willing landowners are paid for creating habitat, paid by landowners or constituencies wishing to focus more intently on, say, industrial timber production.
This sea-change (away from public management and towards public-private partnerships) will also generate a considerable shift in the politics and the tone of debate in the region. Whereas before, everyone believed they were best served by demonizing the other (and the resulting “jobs versus environment” plays well in terms of a battle call), all parties will soon find out that such posturing does little to advance the public interest and develop creative solutions which will produce both abundant natural resources and vibrant communities. Developing environmental markets and market-based solutions to these problems — which could accomplish a more inclusive vision — requires full engagement of industry, the conservation community, and the public sector, and is best cultivated in an environment of trust and cooperation which is often undermined by heated and acrimonious debates over public land management.
Another unique feature of the American West is the presence of tribes, some with significant landholdings. This tribal presence could become a positive contributor to the development of robust markets for ecosystem services. This is so because many tribes truly understand the inherent value of nature and the services it provides. They have long managed their holdings for a range of benefits — commercial production, subsistence food gathering, spiritual values. In their case, the concept of managing resources for future generations (for sustainability) is infinitely more than theoretical; it is rooted in a long and rich history, in traditions and inherited patterns of use, and in deep (often spiritual) relationships to the lands they inhabit. It is therefore no accident that tribes are becoming more active in developing and using markets for ecosystem services, with strong leadership by the Tulalip, Lummi, Confederated Tribes of Warm Springs, and many others. Additionally, with their standing as sovereign nations, tribes may also have a unique — if often misunderstood — status in international markets and accords not available to other U.S. political entities.
From Premise to Promise
The premise is that environmental markets can and will take root in the fertile soil of the Pacific Northwest. That this premise is well-founded becomes evident in reading the stories in this compilation. For instance, in 1997 Oregon became the first state in the U.S, to have a regulatory carbon dioxide standard in place when the Legislature enacted the first law in the U.S. aimed at reducing greenhouse gas levels. This law (the Oregon Standard) requires new power plants built in Oregon to offset part of their emissions of carbon dioxide (CO2), the most abundant greenhouse gas.
The Oregon Standard allows power plants to comply by paying mitigation funds to a non-profit organization that meets certain qualifications. In turn, the qualified organization must use the funds to carry out projects that avoid, sequester, or displace the carbon dioxide the plant will emit in excess of the required standard. To date, The Climate Trust — the non-profit in question — has contracted for ten high-quality projects worth $4 million that will offset more than 1.6 million metric tons of carbon dioxide, and is in the process of sourcing about $5 million more in carbon offset projects. So, long before Europe had its Emissions Trading Scheme, Oregon had already created a type of carbon market (even if today it is considered modest by global standards).
Likewise, in California, the simple act of creating a voluntary registry for carbon emissions could one day lead to a robust carbon market in the region, as described in detail in “California Leading: New thinking on Carbon Accounting”. Not only are states filling in for the lack of federal leadership on greenhouse gas reductions, cities and counties are also leading global efforts through innovative approaches to reducing emissions. “Portland and emission reductions: much gain, little pain” chronicles Portland’s approach and success in reducing greenhouse gas emissions, with the goal of achieving a 10% reduction below 1990 levels by 2010.
Other stories in this series chronicle how California and the Pacific Northwest are beginning to create markets for endangered species habitat, how these approaches are being used with respect to fish species, and how pioneers on Oregon’s Willamette river are looking to environmental markets — specifically a water temperature trading system—to facilitate the cooling of an entire river. The articles in this series also describe the emergence of new investment funds aimed at capitalizing on environmental markets. One such fund, Ecotrust Forests LLC, has been created to acquire and manage forestland for the production not only of timber, but also for the provision of an array of ecosystem services. The Fund’s premise is that by getting value for the full range of products and services a forest produces — timber, water quality, carbon storage, habitat, flood storage, recreational opportunities, and scenic vistas — the Fund can produce returns that outperform a strategy based solely on timber production. In addition to these stories we also have a series of profiles and guest editorials on issues related to environmental markets. So, read on and see why we think that the Pacific Northwest is a “region to watch” — a Northwestern Light — when it comes to environmental markets.
From The Katoomba Group's Ecosystem Marketplace, 2006, "Northwestern Lights: Regional Leadership in Environmental Markets." (1.55mb pdf)
