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Moving Ecosystems Services from Theory to Reality
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Ecosystem Goods and Services Series: World Resources Institute Interview
A collaborative series by Hassan Masum, David Zaks, and Chad Monfreda.

As the ecosystem services meme trickles down from the science and policy worlds to on-the-ground programs, it's informative to peek behind the curtain to observe its evolution.

One group working very hard at mainstreaming ecosystems services is the People & Ecosystems program of the World Resources Institute. WRI has been at the forefront of this type of research for many years. Its Pilot Analysis of Global Ecosystems (PAGE) project was the precursor to the Millennium Ecosystem Assessment, and many of their publications carry weight in both the scientific and policy communities.

Here we interview WRI staff who are all playing a vital role at the interface between academic theory and real-world practice: Karen Bennett, Charles Iceland, Evan Branosky, and Stephen Adam.Keep reading to see their thoughts on how the ecosystem goods and services idea plays out in a policy environment.

Chad: What is the World Resources Institute, and what kind of work is it doing related to ecosystem goods and services?

Karen: The World Resources Institute (WRI) is an environmental think tank that goes beyond research to find practical ways to protect the earth and improve people's lives. We like to say that we’re "working at the intersection of environment and human needs."

Work on ecosystem services is therefore a natural fit for our organization. We have an institutional focus on developing and disseminating information about ecosystem services, and helping government, business, and multilateral institution decision makers use this information to achieve their development goals. We’re also working to align regulatory and economic incentives with ecosystem stewardship, through establishing markets for ecosystem services and other price signals.

On the information side, we just published a report titled Restoring Nature’s Capital: An Action Agenda to Sustain Ecosystem Services. It is a broad action agenda based on the key policy, institutional and governance implications of the Millennium Ecosystem Assessment findings. We’re working now on a guide for public sector decision makers on how to use an ecosystem service approach.

Charlie: We have a similar project working with the private sector to help them use an ecosystem service approach to analyze their business risks and opportunities. We’re working with six multinational companies to assess the ways they depend on and impact ecosystem services in order to build a business plan based on that analysis. We hope to publish the methodology at the end of the year.

Stephen: Another recent report was Nature’s Benefits in Kenya: An Atlas of Ecosystems and Human Well-Being which overlays maps of poverty data and ecosystem dependence to visually see the links between nature and the poor. We’re now working to build another layer onto these maps – financial flows – to see how fiscal allocations line up with need.

Evan: On the markets side, we’ve developed an online trading tool, NutrientNet, to manage nutrient use in the Chesapeake Bay region. It has tools to allow estimations of the cost and amount of nutrient reduction credits achieved through specific projects. Right now we’re working in Pennsylvania, West Virginia, and Michigan; work is being done now to roll out the system across the Chesapeake Bay watershed.

Hassan: Valuing ecosystem goods and services is getting an increasing amount of mindshare, but the idea can seem abstract. What do you see as some 'gold standard' examples where valuation was done well - examples which are worthy of being emulated and expanded upon?

Karen: I think what has proved successful in valuation is cases where services are valued in comparing a set of policy options. The most famous example here would be of New York City's water supply. Instead of building a US$6-8 billion plant as initially proposed, New York City decided to spend $1.5 billion to restore the watershed in the Catskill Mountains. This isn't to say that the watershed is worth $1.5 billion; the project provides additional services such as carbon storage and recreational and cultural services at no additional cost. The point here is that decision makers saw that the Catskill watershed, if managed appropriately, could provide the same water purification services as the planned filtration plant, but at much lower cost.

If you want a model where an exact dollar value is placed on services, then there is a project that WRI is currently undertaking that I believe does get a lot of things right - a project placing a dollar value on coral reef systems. The program uses only existing data and can be adjusted to work for nearly any level of available data, so the process is replicable in nearly any location. A method like this is much more meaningful and useful to decision makers than methods that may be more theoretically sound, but are only performed once.

Evan: WRI has also worked with state governments to efficiently allocate limited funding for conservation programs. At the state level (and, indeed, the federal level too) farmers demand more money to fund conservation practices than is available. To address this funding shortfall, WRI worked with Pennsylvania to run two "reverse auctions" - scenarios where sellers compete to supply buyers with a good or service instead of the traditional auctioning approach. In Pennsylvania, their reverse auction awarded $486,000 to farmers who implemented conservation practices that reduced Phosphorous (P) run-off by 92,000 lbs. Using this approach, more farmers were enrolled and more P was reduced than would have been possible through traditional funding allocation methods.

David: Markets and payments for ecosystem services are coming into place across the globe. What do you see as the opportunities and challenges of governments, NGOs and producers and consumers of ecosystem services as these systems are put into place?

Evan: Markets present many opportunities for both the producers and consumers of ecosystem services. By their very nature, markets are efficient, meaning they provide the largest amount of a good to the largest number of consumers for the least price. In terms of ecosystem services, markets often provide a least-cost means for achieving environmental goals. Markets also provide an incentive for violating facilities or individuals to reach further than just the "low-hanging fruit." Firms are often required to make minimal pollutant reductions, but markets can motivate them to go further.

Markets can also complement the efforts of existing government programs. US Farm Bill Conservation Programs award grants to farmers for the implementation of agricultural best management practices (BMPs), which are meant to mitigate some of the harmful effects of agriculture on the environment. Water quality trading achieves the same purpose, but offers another source of funding: purchasers of credits pay for the establishment of these conservation practices.

There are two big challenges to the establishment of these programs. One is a lack of political will. The other is a lack of information on the key decision points that must be reached when a program is developed. Since these programs are generally still in their infancy, the successes and hurdles of market development have not been widely circulated.

Karen: Another challenge of establishing markets that is particular to ecosystem services is the question of how to handle trade-offs. As the Millennium Ecosystem Assessment pointed out, historically certain services (mostly provisioning services such as food or timber) have been enhanced at the cost of other services. How do we ensure that this won't happen with the ecosystem services featured in markets?

There is also the matter of geographic scale. The use and preservation of ecosystem services is not zero-sum. For example, the coastline protection service of a wetland in Maryland is not necessarily equal to the coastline protection service of a wetland in Louisiana. Nor does protecting one service nullify over-use of the same service in a different location.

Hassan: It's interesting how you're talking about valuations at a number of different spatial scales: from a local ecosystem (the Chesapeake bay watershed), to a region, to a country as with your Kenya atlas, to global valuations. You could also consider various time scales, e.g. since the time horizon on which benefits are being measured directly impacts the value of ongoing services.

Which of these spatial / temporal scales do you feel we understand best, and which pose the greatest challenges? And how might we in the future integrate valuations done at different scales into a coherent framework?

Charlie: The selection of spatial and temporal scales should be issue-specific. For example, if you are looking at water availability and flows, it makes more sense to look at catchment-level data, rather than state or national-level data. Similarly, the temporal scale would be different when looking at a forestry operation, where rotation cycles are quite long (30 years in many cases), as compared to an agricultural operation, which might see several harvests per year.

Stephen: In terms of starting to get at a coherent framework to deal with these, the tool I mentioned earlier involving financial flows mapping, Funnel the Money, is attempting to handle scales by hosting different spatial and temporal data.

One of our biggest challenges is data availability. Traditionally, governments and researchers haven't collected data designed around ecosystems, so one solution colleagues at WRI are pursuing is to create standardized ecosystem indicators. Funnel the Money's solution is to allow users to add new data, e.g. geo-spatial, statistical, photos, and commentary, which will start piecing together data at different scales - similar to a wiki or blog. The end goal is a comprehensive tool for policy-makers to make informed decisions on resource distribution to help the poor.

Hassan: You've told us some of what you do, at a conceptual level. Now please tell us, what does it feel like to work on ecosystem services at a personal level?

How tough is it being in a field so new, that's still taking shape? What kind of reaction do you get when you walk into a company, institution, or politician's office? What's the community of people working on this issue like, and what conferences or other venues do you share ideas at?

Evan: I work mainly on markets, and for that area the idea of "paying for ecosystem services" is not as new as one may think. Cap-and-trade was first proposed as a means to efficiently regulate environmental externalities in a Resources For the Future white paper in the 1950s. Water quality trading has been around since 1984, when the State of Colorado instituted a trading program in the Lake Dillon reservoir. The driver was a state-imposed phosphorus regulation.

I've found that potential stakeholders understand the concept of trading quite well. This is due, in part, to the advent of carbon markets. The main criticism (and sometimes, skepticism) is more focused on the regulatory driver and design of the market. No one argues that emissions trading is a tool to efficiently regulate CO2; they argue instead about the science of global warming, the regulatory driver behind the program, the design of the market structure, and the market's geographic scope.

There are 21 active water quality trading programs in the United States today (though not all have facilitated trades), approximately 11 inactive trading programs, 13 states with full trading policies or developing policies, and increased engagement from the Environmental Protection Agency with regards to trading. People at all levels of government understand the concept; they just need to see a functioning, robust program in order to accept that trading can achieve environmental goals. This will need to be overcome by the development of cohesive regulatory drivers, which is an incredible challenge.

Karen: I came upon the field of ecosystem services mostly by accident. I had a friend who recommended my current position to me, and that's really how I ended up working on ecosystem services. Pretty amazing luck!

I'd always been interested in working in the environmental field, but every issue used to be a separate problem that needed fresh work to find its solution. The ecosystem services approach provides a framing for every issue. It's a complex, dynamic system - just like our natural world. It is a new area, and like I said it is complex; a lot of the underlying science and economics is still being figured out.

When I talk to decision-makers or other people already in the environmental community, they're sometimes wary of a new term ("how does biodiversity fit into this model?" "Is climate change an ecosystem service?") Even more difficult is the fact that we're asking people to change their entire mind set, from the traditional approach of protecting ecosystems from development to protecting ecosystems for development. But mostly, I'm glad that I was fortunate enough to stumble upon this new framing and will be able to witness its coming of age.

Stephen: Working with and promoting a new, or re-packaged, concept like ecosystem services is wonderful and overwhelming. The study of ecosystems marries ecology, business, communications, and numerous other disciplines, and so the ecosystem services concept can be hard to figure out for oneself, much less to explain to someone new to the area.

What I've found is that people can be pretty savvy when it comes to separate issues like deforestation or coastal run-off, but not when explaining the benefits (financial especially) derived from ecosystems. Helping people make these connections to ecosystems is one of the most enjoyable parts of the job.

Charlie: Our corporate partners have been quite amazed to discover how deteriorating local ecosystems, along with the services they provide, are literally shifting the landscape in which their companies have traditionally operated. These shifts pose daunting risks to the companies, but they also present potentially lucrative opportunities for those that are able to move swiftly and intelligently to capitalize on them.

Chad: Thank you so much Karen, Charles, Evan, and Stephen. You have given us a lot to think about in this interview, and just to round things out we'd like it if you could touch on one more question: How do you see the field of ecosystem goods and services evolving in the coming decade or two? And what do you think most needs to be done to move research and implementation forward?

Charlie: The main indirect drivers of ecosystem degradation include population growth and economic development. These indirect drivers influence direct drivers of ecosystem degradation such as habitat transformation, over-exploitation, pollution and climate change.

I think we have reached a level of population growth and economic development that is forcing us to confront trade-offs among competing uses of ecosystems and make difficult choices among competing economic development priorities. Will we use the forest to maximize carbon sequestration, or do we convert it to forest plantations to produce paper and wood products, or do we cut it down altogether to make room for oil palm or grain cultivation? Do we use available water for human consumption, to maintain ecological functions, to supply industry or to supply agriculture? Do we accept that everyone will buy an SUV or do we heavily discourage this by imposing large taxes on gasoline?

I think that ecosystem degradation is going to force us to develop a much deeper understanding of the role of ecosystems in economic development, and of ecosystem service trade-offs inherent in development and land-use decision-making. So I see the field of ecosystem goods and services moving forward at a brisk pace in the coming decades, spurred by the necessity of addressing the difficult problems that we are already beginning to encounter in our daily lives.

Evan: I think the "ecosystem services approach" will become the premier method for dealing with environmental externalities caused by societal processes like the many Charlie just mentioned. The ES approach spans many areas of public finance, including taxes, regulations, and markets for ecosystem services. As environmental problems become increasingly widespread and larger in scale, public policy that incorporates ES thinking through these traditional schemes will become absolutely necessary.

Smart tax policy, carbon trading, and nutrient trading brings people together and provides economic incentives for pollutant reductions. Therefore, they are efficient, fair, and politically palatable. In order for this to really take off, we need a large, successful program to become established. Ideally, it would address a major environmental concern and be accompanied by intense public outreach and education - something akin to a thriving Kyoto Protocol followed by an ecosystem-focused "An Inconvenient Truth" might do it.

Stephen: Based on my experience, what's most needed to move implementation forward is political buy-in. While some individuals, businesses, and local governments will adopt ecosystem-minded policies and practices, it'll take a progressive federal government to allocate the necessary funds and create incentives for long-term programs oriented toward ecosystem goods and services. The debate over ecosystem goods and services will no doubt continue over the next decade, but government intervention and support is vital in the mainstreaming of ecosystems.

Karen: We've already said that this field is still new and uncertain, and, like Stephen said, the debate on ES will almost certainly continue for the foreseeable future. But what is also certain is that 'business as usual' is no longer enough. The Millennium Ecosystem Assessment finding that nearly two-thirds of ecosystem services are degraded demonstrates that humanity has been squandering its natural assets. In fact, we have treated many as if they had no value at all.

Like Charlie said, humanity is now facing a different set of challenges than it did a half century ago - challenges that existing institutions and ways of making decisions cannot handle. Fifty years ago, the costs of lost services from converting natural landscapes to production may not have exceeded the benefits, but in this new century, that will no longer be the case. Thus comes the realization that we need a new way of managing nature, a paradigm shift that challenges past assumptions and practices. Everyone - government, business, civil society, research institutions - will have a role to play in this new regime. Implementing this will be disruptive, but letting things continue the way they currently are will not ensure that nature will be able to provide services to support human well-being far into the future.

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Comments

this was really cool to read... ok I'm not done yet really, but anyway it would be cool to see this go beyonds economics. to see actual product designers take the data from natural services and then combine and match, what correalations could u find? what products can nature provide? weather services? earthquake forecasting? etc. it's nice to see markets popping up.


Posted by: andrew on 5 Sep 07

How would a company such as ours-Mara River Airboat Safari Ltd.- build a support group to help preserve the Mara River wetlands?


Posted by: Ted Rademacher on 8 Sep 07



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