Ecosystem Services
Introduction
More than 60% of Virginia is forest land. In addition to traditional forest products like sawtimber, pulpwood, and fuelwood, this vast forest land provides many other benefits and services that enhance our environment and quality of life. These services are often referred to as ecosystem services. Sometimes, these services are referred to as our “Natural Capital.”
Ecosystem services include clean water and air, fish and wildlife habitat, scenic beauty, recreational opportunity, carbon sequestration and plant pollination. Ecosystem services provide critical functions that help prevent ecosystem degradation. There is an important linkage between these services and human well-being. Economic sustainability is becoming strongly linked to environmental sustainability. Forest land and the ecosystem services provided from forests have and will play a huge role in that relationship.
This link between economic and environmental sustainability is driving the emergence and development of new ecosystem service markets. Recent developments in the markets for ecosystem services will present some new opportunities for forest landowners and land managers. Many of these services such as clean air and water have been provided by forestland with little consideration of their market value to the landowner.
In the past, many of these ecosystem services have been considered as free public goods and forest landowners have not been adequately compensated. If we are to slow the alarming trend of forestland being converted to other land uses, we must begin valuing these ecosystem services and financially compensating our forest landowners. Virginia annually loses approximately 26,000 acres of forestland to conversion to other land uses.
We need to develop processes and markets to begin transferring some of this ecosystem service value to private forestland owners to help slow this trend of forestland conversion. One of the first steps in this process is being able to quantify what these ecosystem services provide. The thinking is much the same as with traditional forest products like sawtimber. Before you can sell a sawlog, you need to be able to quantify how many board feet are in that sawlog. Before you can sell a water quality benefit, you need to quantify how forest land provides that benefit. For example, how many pounds of nitrogen, phosphorus, or sediment does my forest prevent from entering a nearby stream. In ecosystem service lingo, this quantity is often referred to as a credit. The credit is simply the unit for sale.
Below, three ecosystem service opportunities are discussed. This information is meant to be only an introduction to current market-based developments that are being explored.
Carbon Sequestration
Levels of Carbon dioxide (CO2) in the atmosphere are now capturing considerable interest. CO2 is one of the major greenhouse gases. Greenhouse gases have been linked to global warming. Forests play a major role in the global carbon cycle through the ability of trees to withdraw or sequester carbon from the atmosphere. In Virginia, it is estimated that our forests sequester approximately 20 percent of all carbon emissions that occur in the state. This amounts to approximately 6.42 million metric tons of carbon sequestered annually.
Market-based mechanisms are one way to regulate greenhouse gas emissions. Sectors of the economy that contribute to carbon dioxide emissions can offset their emission levels through purchasing carbon credits generated through forest management and tree planting projects. An example of this would be a power utility that has their emissions of greenhouse gases capped at specific level. The utility would we able to purchase carbon “credits” to help offset their emissions. Generally, a carbon credit is equivalent to a metric ton of carbon sequestered through forest management.
The development of the carbon market may lead to forest landowners being compensated through the sale of carbon sequestration credits. It is important to note that the credits generated for sale by the landowner must meet the test of “additionality”. Additionality means that the carbon sequestered must be in addition to what their forestland normally sequesters. For example, tree planting on an open field would generate marketable carbon credits because it is a new, additional source of carbon sequestration.
Water Quality
Unlike carbon markets, which can be global, water quality markets are usually geographically limited to a local or regional area. This is because water quality markets are usually driven by local or regional issues such as the needs of a wastewater treatment operating in a specific watershed or a local watershed issue like a Total Maximum Daily Load (TMDL). Waterbodies are classified as “impaired” when they exceed the determined TMDL for a particular pollutant. The TMDL implementation plan for some pollutants may allow forestry practices to mitigate addressing the impairment. The above factors all help contribute toward creating a market for the water quality ecosystem service.
Water quality trading provides a market based process for interested purchasers to buy water quality “credits”. Whether this credit is to promote forest cover in a municipal water supply watershed or to help mitigate wastewater treatment concerns, the markets work towards compensating landowners for maintaining forest cover on their property.
Wetlands and Species Mitigation Banking
Species and wetland mitigation banking is another market for ecosystem services. When land developers disturb or destroy wetlands or the habitat of an endangered species, they are required by regulation to obtain a permit. This permit will require the developer to offset any loss to wetlands or endangered species habitat.
Wetland and species mitigation banks are comprised of projects that create and enhance wetlands or endangered species habitat. For example, a wetland might be created that is twenty acres in size. This newly created twenty acre wetland can be enrolled in a wetland bank. Each acre of wetland could be considered as a credit once it meets regulatory requirements. These banks then sell credits to developers to satisfy permit requirements. Wetlands and species mitigation banking is a new industry that has emerged in the United States with the expressed purpose of providing developers and private landowners with mitigation credits they need to get their development projects approved.
Conclusion
The Department of Forestry is currently working hard at developing the capability to measure and quantify the ecosystem services provided by forest land. This first step will lead to developing opportunities for forest land owners to participate in emerging markets and environmental mitigation opportunities.