Greens take a cue from financiers
Environmental ‘derivatives’ encourage creative, proactive conservation.
(Page 2 of 3)
Saving land and being paid for it
Conservation banking – where a third party restores or preserves endangered habitats, like wetlands, and then sells credits to developers to offset their destruction of similar habitat – is established and growing. Businesses spend some $3.5 billion yearly to comply with the Endangered Species Act and Clean Water Act. Before new regulations, 15 percent of the money spent to comply with the Clean Water Act went to mitigation bankers, says Davis. With new regulations, that figure will probably increase, he says.
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And there’s evidence of movement toward standardizing this market. Last December, the US Department of Agriculture opened an office of Ecosystem Services and Markets. Its mission: to develop tools by which to measure and price biodiversity.
Other examples come from fisheries management, where the “tragedy of the commons” has too often prevailed historically.
For decades, economists have noted that the best-managed fisheries – off Iceland, New Zealand, and Alaska, among others – use catch-share systems: Fishers get a percentage of the year’s total allowable catch. Economists theorize that, like employees who own shares in their company, owning a percentage of the stock incentivizes efficiency – good fishing practices. If the company (fish stock) does well, then the share value (what a fisher can catch) goes up.
A paper in the journal Science last September – one of the first systematic reviews of global catch-share programs – found that they could halt, even reverse, a fishery’s collapse. A World Bank study titled “The Sunken Billions” highlights what’s at stake: It puts the amount lost to poor fishery management at $50 billion yearly. That’s $2 trillion over the past three decades or so.
In 2007, the Gulf of Mexico’s commercial red snapper fishery began operating under an Individual Fishing Quota (IFQ) program, a kind of catch share. Several things happened quickly after that, says Pam Baker, the Environmental Defense Fund’s ocean policy director for the Gulf Region. Fishers could take their time and keep what they caught, which dramatically decreased bycatch. A government review of the IFQ program after its first year estimated a 70 percent reduction in the ratio of discards to landings. Previously, discards were estimated at 2 million pounds in a fishery with a 4.5 million-pound limit on red snapper overall. And because they could fish when market conditions were favorable – when snapper prices were high – fishers began getting more for their catches.
“By all measures, it’s an overwhelming success,” says Ms. Baker. “All the things that people anticipated, both in terms of conservation benefits and that fishermen would stay within their catch limits … happened immediately and continue” to happen.
Pollock vs. salmon in Alaska
George Sugihara, a professor of natural science at Scripps Institution of Oceanography, University of California at San Diego, proposes adding another level of sophistication to fisheries management: an arrangement akin to a cap-and-trade system. Alaska’s pollock fishery is generally considered well managed. But occasionally pollock fishers accidentally catch chinook salmon.
Chinook fishers have called for a hard cap on allowable bycatch of salmon in the pollock fishery. If chinook bycatch rises beyond a certain limit, then shut down the pollock fishery, they say.