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Why we need an ecosystem services market

Why we need a market | How traditional and market-based approaches differ

People in the Willamette Basin spend tens of millions of dollars every year to improve the quality of their environment. They trust that their investment, guided by the regulatory framework and the work of environmental organizations, will protect the ecological integrity of the places they care about. Yet despite the many successes of state and federal regulations and the good intentions of those who engage in voluntary ecosystem restoration, we have not achieved what we really want: (1) healthy and resilient ecosystems that provide the things we depend on and support our native species and habitats, (2) a vibrant economy that supports us, and (3) livable cities and towns over the long term.

It is becoming clear that, even if everyone meticulously followed all the rules and laws created to protect the environment, our ecological systems would continue to decline.

Why is this so?

Conventional site-by-site, species-by-species, and pipe-by-pipe approaches to taking care of our natural resources simply cannot keep up with the environmental losses, especially as more people move to the Willamette Basin and we face complex new environmental problems, such as climate change. We need large-scale ecosystem restoration, but current approaches are too narrowly focused, they are not coordinated, and they do not support dynamic, interconnected natural processes—processes that we depend on for clean air, clean and abundant water, healthy populations of fish and wildlife, and a stable climate.

The rub is that, if these natural processes continue to decline, we cannot replace them without great difficulty and expense—if at all. Thus we must find ways to increase the pace, scope, and effectiveness of our conservation efforts. This is what a market-based approach to conservation can do.

How traditional and market-based approaches differ

Traditional approach

  • Is driven by regulatory requirements
  • Includes two main parties: the regulatory agency and the regulated entity
  • Is good at addressing individual environmental problems, such as discharge of industrial waste
  • Involves technological control or mitigation that takes place at or near the specific site where the impact occurs
  • Results in compliance with laws intended prevent harmful actions
  • Focuses attention on easily measured parts of an ecosystem, but not the way those parts interact.  

Market-based approach

  • Is driven by regulatory requirements but introduces market dynamics and economic incentives to get results
  • Includes multiple parties: the regulatory agency, the regulated entity, sellers of credits, and third-party verifiers
  • Is good at addressing multiple, systemic, or diffuse environmental problems, such as a lack of habitat or disrupted river flow
  • Involves conservation or restoration that takes place at strategic locations throughout the basin
  • Results in conservation or restoration that provides multiple environmental benefits and improves ecosystem health
 

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