Defenders' Experts
Washington Markerplace: Connecting Markets and Biodiversity
When market-based policies are considered as a tool for preserving biodiversity, one issue rises above all others as the formidable barrier to their creation and implementation. It returns us to the assumption, presented early on in the discussion about mitigation banking, that a defined natural landscape shares fundamental similarities that should allow for a destructive action taken in one place to be compensated for by a reconstructive action taken in another. Unfortunately, an acre is simply not like another acre when it comes to biodiversity. Different acres may have similar species, similar natural attributes, and a similar set of relationships between them all. Yet, in function, these acres can remain quite different. If we are to use market-based public policies to save biodiversity, these functional differences must be accounted for. In other words, the importance of these differences must be reflected in the market. If importance cannot be reflected in the indicators available to us, and in the services we pay for or the credits we exchange, then we must find an alternative that makes sense while providing protection for as many of the benefits of biodiversity as possible.
Another way to consider the barrier mentioned above is to assert that we currently lack the ability to capture all of biodiversity's importance in a property right. It has been noted that, "biodiversity services are the most demanding to protect because of the need to conserve many different elements essential for diverse, interdependent species to survive" (Landell-Mills and Porras 20). Furthermore, "If we intend to market [all of] biodiversity, it is essential that we are clear on what we are selling" (Landell-Mills and Porras 20). Mitigation banks require a government agency to approve what, and how much of what, they are preserving. A payment for an ecosystem service is tied directly to the amount of the service being used. If you can't define a property right for biodiversity, you can't possibly use either of these mechanisms to support or conserve it efficiently. In addition, if you can't define a property right comprehensively, there is little assurance that it will be comprehensively conserved.
This problem can be resolved a couple of different ways. First, we may accept that we can't preserve biodiversity in its entirety and, by using our limited scientific understanding, preserve what we can with the hope that future efforts will allow for a more holistic approach. Or second, we can establish a commonly accepted suite of indicators that represents biodiversity. Economists have long recognized that the gross national product (GNP) is not a comprehensive indicator of economic health. Along similar lines, no single indicator or measure might be able to represent an ecosystem's biodiversity. However, a combination of indicators aggregated into a single measure could allow for a significant portion of biodiversity to be measured. And, as long as the application of these indicators remains consistent, they should allow for trades to be made with confidence.
Current thinking suggests that the "stacking" of payments or credits on single piece of land or resource may allow for such indicators to be used in the way described above. For instance, a bank that sells wetland credits may also receive payment from a municipality for the flood control services that the wetlands offer. Or a farmer may receive separate payments for water purification and cooling achieved through planting trees and ground cover on his or her land. Stacking services allows private lands to be managed for conservation purposes in a way that is most competitive. It also diversifies the income landowners receive, making them less susceptible to the volatility of single good markets. In terms of biodiversity, this idea of stacking is attractive because it gets the public closer to preserving an area's entire spectrum of biodiversity. Another issue closely entwined with the stacking of services is the use of proxies. Some of those close to this issue conclude that, "Unless a unit of biodiversity can be defined, then we must resort to the use of proxies…" (Landell-Mills and Porras 20). One proxy is unlikely to capture all the importance of biodiversity, but if multiple proxies are stacked upon the landscape, then great gains may be made to capturing all of its ecological importance. The use of stacking and proxies for preserving biodiversity is no panacea. Proxies themselves are problematic because the market is designed to focus on the proxies, and if they become detached from the real goal of biodiversity, then there will be no institutional incentive to reattach as long as the proxies are thriving. Also, proxies are still unlikely to cover all the ecological importance of biodiversity, even if we stack them to the sky. When it comes down to it, "Defining what qualifies as a biodiversity offset or credit is subjective, but is likely to take into account diversity, abundance, uniqueness, and relative rarity" (Heal 30).
It may be impossible to do this completely, and to the satisfaction of all stakeholders, but a reasonable representation may be created through combining multiple proxies that produce multiple opportunities for private landowners to receive payment. Even if stacking payments and the use of proxies lead to an ultimately incomplete approach to conserving biodiversity, they may still be the best tools currently available and, through careful management, their risks might be minimized.
Next. . .
Washington's capacity to define, categorize, and prioritize areas of concern related to biodiversity is increasing. But it must be matched with governing institutions for it to be of any use, and some institutions are better suited for administering market-based policies than others.
