Ecosystem markets and eco-labeling both aim to incentivize good environmental behavior, and now they’ve been combined into the “Incentives Trifecta”, which aims to promote good stewardship of salmon habitat by using eco-labels to drive consumer demand, ecosystem markets to provided additional income, and regulatory assurances to provide a degree of security.
12 March 2012 | One of the trickiest aspects in the world of environmental markets is encouraging people to get involved – an activity that usually employs a combination of carrots and sticks.
On the West Coast of the United States, a coalition of organizations developing tools for environmental finance and an eco-labeling group are working together to layer the carrot of financial incentives onto the stick of regulation. The coalition is the Willamette Partnership; the eco-labeling group is Salmon Safe; and they’ve dubbed their project the “Incentives Trifecta” – so-named because it uses eco-labels to drive consumer demand, ecosystem markets to provide additional income, and regulatory assurances to provide a degree of security.
Basically, a homeowner will have the opportunity to incorporate practices on their land that will enable them to qualify for both the Salmon-Safe certification and the Willamette Partnership’s Counting on the Environment (COTE) ecosystem credits using a efficient verification process to keep it simple. When it comes to layering different incentives on one piece of land, questions often arise around double dipping. These two organizations, however, think they have found the right approach – and so do the regulators – because the organizations are not proposing layering two different kinds of credits. Instead, they’re using ecosystem credits to support the creation of a certified commodity.
A Partnership Built on Mutual Strengths
To further their work and ensure that all projects are location-specific, Salmon-Safe and Willamette actively seek partnerships with complementary organizations.
The focus of Salmon-Safe’s work has long been certification programs that emphasize watershed management practices that positively impact and restore the ecosystems that allow wild salmon to thrive. Their purview is wherever a salmon habitat exists along the West Coast, which includes British Columbia, Washington, Oregon, and California. With a small staff at the headquarters in Oregon, much of the outreach and certification is performed through partners.
“That is something I really love to tell growers because I can assure them that Salmon Safe is not trying to create an organizational empire,” says Kevin Scribner who leads Salmon-Safe agriculture outreach in mid-Columbia Basin and advises Salmon-Safe on special projects. “What we are trying to do as well is to culture in place-based partners.”
The Willamette Partnership brings together a diverse group of people to increase the “pace, scope, and effectiveness of conservation.” Since 2004, the primary focus has been to actively support the development of ecosystem markets or market based approaches to restoration.
Through COTE, the Willamette Partnership is developing the tools, credit protocols, and market infrastructure for a functioning ecosystem marketplace in Oregon and the Pacific Northwest.
Willamette continues to pursue perspectives and support from organizations, government agencies, and individuals to further develop the program.
“We take a partnership approach because we feel that including more people with more diverse thoughts and perspectives ultimately leads to better outcomes,” says Harmony Burright, an intern with the Willamette Partnership. One of the Partnership’s first projects focused on the development of a water quality trading program, developed using a 2007 grant from the EPA. The Partnership built metrics and tools to help groups meet clean water regulatory requirements, manage risk associated with clean water projects, and provide transparency through the entire process. “That required a lot of work just to get that up and running,” says Burright.
These tools are being used in pilots and by utility districts who want to utilize innovative approaches to meet their clean water act requirements. The metrics from Willamette have expanded beyond water, with only two of the seven current metrics relating directly to water. The COTE program utilizes these metrics to either generate credits or to measure and monitor ecological outcomes of different practices.
“Counting on the Environment, I think, is best represented as a Suite of Tools,” says Burright. “They can be used towards any number of things.” Such as establishing baseline conditions, monitoring ecological conditions, and generating ecosystem credits.
When Scribner was working on river restoration and salmon recovery in the Walla Walla river basin, he heard about Willamette’s suite of tools. “I was very intrigued by this new world of ecosystem services, and markets, and credits,” he says. “I have an appreciation for what the market can do.”
So he invited himself to COTE meetings. “At that time, I was really trying to see if what they were developing could be relevant for the Walla Walla watershed,” he says. But through that process, he got to know Bobby Cochran, the Executive Director of the Willamette Partnership.
With the prompting of the NRCS Innovation grant opportunity, the two organizations began thinking of how they could bring their interests together. Both organizations were market-focused as well as interested in engaging with regulatory agencies.
“We realized that we had a common interest that then gave rise to the incentives trifecta,” says Scribner. “We are just really excited about that.”
Cochran was specifically interested in how incentive tools can be used more effectively, by layering different market-based incentives programs and by offering regulatory assurances. The question became how to leverage the different tools to gain efficiencies in the regulatory processes to ensure it is a user-friendly process for landowners.
From the start, the two saw the possibility for COTE to be a potential alternative funding source for Salmon-Safe participants as well as demonstrate the measured ecological outcomes of the practices. “That’s really important as we look more seriously at how these different programs can be used to gain regulatory acknowledgement or assurances for landowners,” says Burright.
Salmon-Safe and the Willamette Partnership completed the first deliverable for the NRCS grant earlier this year. The first stage in the grant focused on the technical aspect of how the two organizations can work and changes that might be necessary.
“Just through looking at our respective programs, and trying to figure out where those synergies are, we found that we complement each other very well and we actually don’t need to make that many modifications to our program to use them together,” says Burright. “Rather than having to completely re-tool our programs to make sure they fit together, it’s just a matter of working together more closely and becoming familiar with each other’s tools and promoting these different incentives.”
In a sense, the COTE metrics will provide an aspect to the Salmon Safe process that has been lacking in the past—i.e., the scientific metrics required in the regulatory process.
“We confirmed in our research in comparing the two strategies that COTE can provide some of the more rigorous baseline and trends monitoring data that is not customarily a part of what Salmon-Safe develops,” says Scribner. “What we have heard particularly from the National Oceanic and Atmospheric Administration (NOAA) in the past is that NOAA respects and endorses the Salmon-Safe standards… but what they are missing when they are looking at the certification process is just the baseline information and the trends monitoring…”
Moving forward, the two organizations will have to continue to refine how the different metrics will be used on different lands. By the end of the grant, the goal is to utilize the merged metrics and regulatory assurances—known collectively as a Salmon-Safe Plus program—on 10 different properties in the Willamette and Walla Walla regions. The lessons they learn on these properties can then be applied to a broader geography.
As they apply the merged metrics to different lands, they will cross train verifiers to ensure that both the Salmon-Safe standards and COTE metrics are being used effectively—and that the process is efficient for landowners.
Bring on the Regulators!
As Scribner noted, this verification piece will be even more important when regulatory assurances or acknowledgements are bundled with these incentives.
Before this project began, Salmon-Safe and NOAA were already building a relationship. NOAA provided feedback during the development of the Salmon-Safe standards. In addition, the community in Walla Walla was in conversations with USFWS and NOAA while working on developing a watershed-wide habitat conservation plan.
“We were always trying to figure out how to innovate within the Endangered Species Act (ESA) purview,” says Scribner. “For the growers in Walla Walla, the holy grail was federal assurances.”
Though this is still a work in progress, Scribner brought the initial experiences to Salmon-Safe and continued conversations with NOAA around broader regulations. Conversations between NOAA, Salmon-Safe, and the Willamette partnership are a key part of the grant—though neither organization is sure of what these will look like moving forward.
And Scribner is hesitant to use the word assurances with landowners. “The operative word here with the services is to not presume that we can get full-fledged assurance because there is an aspect that has a lot of formality to it,” he says. “We are actually using the word acknowledgement; some aspect of acknowledgement that will give the growers some tangible acknowledgement that the services view them as contributing to recovery. At minimum, it would ensure growers that that they are not going [to be on the first round of enforcement actions.”
Within the Willamette Partnership and their COTE program, however, the focus is on assurances when it comes to developing credits. They kept the ESA and Clean Water Act (CWA) in mind while developing their regulatory and voluntary metrics.
For the CWA credits especially, it was important that the credits meet the regulatory requirements.
Though both the organizations have a history of working with regulatory agencies, these conversations are beginning to ramp up as they seek regulatory acknowledgement to move these conservation efforts forward.
The focus of current conversations may seem unlikely for many outside of Oregon: the Fender’s Blue Butterfly. The USFWS actually approached Salmon-Safe about creating a “Butterfly Safe” standard to protect this endangered species.
Rather than creating a separate standard, Salmon-Safe is interested in integrating or overlaying the butterfly recovery requirements with the Salmon-Safe biodiversity standards in the uplands area. This is how Salmon-Safe approaches work with certification partners: they do a gap analysis between the two and determine whether overlay or integration would be more effective, according to Scribner. They are currently in the midst of this gap analysis.
The relationship between COTE and USFWS is developing along the same lines, focusing on species of concern in prairie habitat. “We don’t have much prairie habitat left and we have a number of ESA listed species, such as the Fender’s Blue Butterfly, as well as candidate species who rely on this habitat,” says Burright. “We really want to incentivize restoration and preservation of the remaining prairie habitat in the Willamette Valley.”
The Willamette Partnership has already developed a metric for upland prairie habitat credit type based on functional acres. The metric is a tool for understanding the function of prairie habitat and ensuring that the prairie with the highest functional value is preserved. Which is helpful, as there is currently little demand for the prairie credits that the metric can generate. The USFWS is, however, working with landowners to encourage voluntary preservation and restoration through regulatory tools such as Habitat Conservation Plans, Safe Harbor Agreements, and Candidate Conservation Agreements with Assurances. Layering these tools with incentives could increase landowner participation and further regulatory mitigation requirements could lead to a more active market in the future.
“The USFWS is interested in ramping up and getting people involved and excited about this,” she says. “It would be great if we could offer Salmon-Safe certification, connect landowners with the necessary funding to restore and conserve habitat on their land and also offer regulatory assurances that will protect them from potential future enforcement. In this way, we would be able to turn these species of concern into an asset rather than a liability.”
As this project moves forward in integrating species standards and ecosystem metrics, there will need to be this type of regional variation, according to Scribner. The USFWS is concerned about different species depending on the land type and geography. “We’ll have to recognize how to build in that regional variation,” he says. “But I think it can be done! If there is enough incentive to make it happen, we can make it happen.”
Motivating the Landowners
For both the Willamette Partnership and Salmon-Safe, the ultimate motivation for increasing regulation around ecosystems is increasing the involvement of landowners in the ecosystem protection. That is always the challenge, as landowners are not interested in time-consuming processes that yield little to no-benefits.
That is why they are striving to make the process more efficient, pushing for regulatory incentives, and working with landowners to help them understand the existing benefits.
“We are really interested in finding ways to gain efficiencies in the regulatory process,” says Burright. “If someone is enrolled in Salmon-Safe, managing their land to these very high standards, and are demonstrating the ecological benefits using trust habitat metrics, then that should count for something. How can we use our respective programs, our capacity to assist in species recovery efforts and offer landowners regulatory protection.”
“We just kind of want to keep instilling this idea that we can have multiple incentives working together to maximize benefits for landowners and to minimize transaction costs for those implementing the programs,” she adds.
Though they are pushing for regulatory assurances, there are other reasons for landowners to engage with these programs. For Salmon-Safe, Scribner focuses on the value-added.
“The hypothesis we are trying to prove with Salmon-Safe is that the Salmon-Safe eco-label can help growers get 1) Market access; 2) One’s access to an increased market share; 3) To the prospect of getting market certainty, i.e. contracts over a span of time, not just one year contracts,” says Scribner.
Landowners are also motivated to utilize COTE for a number of reasons already: 1) Satisfying a regulatory requirement; 2) The desire to invest in measurable outcomes; 3) Capital investment firms can restore purchased property, measure the benefits, and sell at a profit; 4) Wetland mitigation banks to comply with regulatory requirements; and 5) Organizations and companies can use the metrics for the purpose of public relations and community development. As land use laws change, Burright expects there to be increased interest from these sectors and others.
With the first deliverable complete, these two organizations must now work together to motivate landowners to incorporate aspects of both of the programs. “For this particular grant, we have made a commitment to work with 10 different landowners to basically use both of our programs or tools on their property and see how it works,” says Burright.
If they have the opportunity to incorporate regulatory assurances, these landowners will then have the potential to sell the credits generated by enrolling in the COTE and Salmon-Safe programs. However, there is still the challenge that there is a lack of buyers.
“Right now, there aren’t that many buyers, especially for the voluntary markets,” says Burright. However she expects a greater number will engage with COTE as the conservation world puts more emphasis on demonstrating measurable outcomes.
But as Scribner points out, it is difficult to expand the base of funding for ecosystem markets. And that limits where COTE can work—and therefore where Salmon-Safe and COTE can work in conjunction as it relates to this grant. Currently, in preparation for the pilot, Salmon-Safe is developing a GIS database of certified properties. Then they will correlate that with where COTE currently has activity and has the funds to generate credits. After that, they can begin the piloting process.
Spreading the Impact
“We are building a much stronger partnership with them,” says Burright about Salmon-Safe. “We are hoping to find ways to continue to partner with them in other geographic areas.”
When it comes to replicating in other parts of the country, Scribner thinks that regions with emerging ecosystem markets need to think about their own charismatic animals, as Salmon-Safe is only relevant to a specific region. Other regions could create Blue Crab-Safe or even a Bats Safe—if there was regulatory potential around those.
For now, these two organizations are focused on getting this project off the ground. As Scribner says, “We are having great fun because we think this can go someplace.”