The market for both terrestrial and marine conservation finance offers participants a wide array of opportunities to generate both financial return on investment and to direct environmental and social impact in the support of vital habitats. With the exception of the marine conservation sector, these markets share a common characteristic: the generation of a tradable or transferable credit or right which produces a financial return. The sub-sectors of conservation finance include:
- Wetland mitigation banking
- Habitat and endangered species banking
- Water quality and water temperature credit transactions
- Carbon sequestration projects
- Conservation easements and Transferable Development Rights (TDR’s)
- Marine protected areas and marine conservation agreements
In my previous article I highlighted some of the innovative products and services that provide greater transparency, liquidity and standardized metrics to the ecosystem markets. They create the critical infrastructure needed for this market to scale and appeal to a much wider audience of both philanthropic and PRI and mission investor funding sources. In the first of what will be a series of writings on this topic I will start with some basic observations.
Though some of these sectors have been in existence for over twenty years, they are still not considered an investment asset class. However, as investments in ecosystem services provide opportunities for long-term financial returns coupled with social and environmental impact, a valuable public image for investors, and benefits to stakeholders, they are uniquely attractive and will become moreso with the heightening consciousness among our society of environmental issues.The group of investors which I believe will be the most receptive to these markets includes corporate and state pension funds, foundations, family offices, investment advisors and financial intermediaries, faith based organizations and private equity investors.
With the current economic crisis investors limited to traditional investment choices have become increasingly dissatisfied, and have turned towards investing in the social and environmental sectors that reflect their personal values.
Before this market can be considered for inclusion in an asset manager’s portfolio, it must still overcome various obstacles:
- Lack of standardized financial and environmental metrics
- Limited or lacking transparency in historical financial return data
- Lack of clarity with regards to transactions data and price discovery
- Fragmented and regional/localized nature of the sector
- Limited ability to more effectively monetize credits beyond the current traditional buyers
- No centralized marketplace (exchange) to efficiently facilitate transactions between buyers and sellers
In Part 2 of this series I will detail the rapid innovation currently taking place that will provide the needed infrastructure to globally scale these markets and dramatically increase the flow of capital in support of environmental conservation.
- Mike
Mission Market's goal is to increase awareness of and conversation about the social and environmental capital markets. Postings focus on ways to effectively develop viable investment asset classes within the subsectors that make up these markets, with the goal of increasing the flow of capital, information, and transparency, in support of environmental conservation and socially focused initiatives.
Sunday, June 21, 2009
Friday, June 19, 2009
Ecosystem Markets Innovation Alive and Well In Portland Oregon!
I am sitting in the airport in Portland Oregon waiting for my flight back to JFK Airport after attending the two-day Northwest Environmental Business Counsel Conference on Ecosystem Services Markets and basking in the glow of inspiration, enthusiasm and hope for the future of these markets.
Portland Oregon is a hotbed of innovation where technology entrepreneurs are partnering with leading environmental NGO’s to create market based mechanisms for the environmental markets. Together they are improve ecosystem markets by enabling stakeholders to gain access to information and capital in order to ensure that vital habitats can be more effectively protected, measured and valued.
Below I include a list of organizations that are cutting a trail in these markets and helping to turn what most people feel is a vague and somewhat confusing concept into mainstream concepts and opportunities.
- The Defenders of Wildlife http://www.defenders.org/
- The Willamette Partnership http://www.willamettepartnership.org/
- Parametrix http://www.parametrix.com/
- The Other Firm http://www.theotherfirm.com/
- The Bonneville Environmental Foundation http://www.b-e-f.org/
- The Ecosystem Marketplace http://www.ecosystemmarketplace.com/
- The Bay Bank http://www.thebaybank.org/
- Biodiversity and carbon registry TZ1 http://www.tz1market.com/
About 250 ecosytem enthusiasts from around the country attended the Northwest Environmental Business Counsel Conference to hear speakers such as Sally Collins, who heads the new USDA Office of Ecosystem Services Markets, and environmental markets advocate Sara Vickerman of Defenders of Wildlife, discuss and debate the current state and future of these markets.
New Contributions in the Field:
- Innovations that will provide private landowners and environmental investors with a centralized data and information portal include The Conservation Registry (http://www.conservationregistry.org/) and LandServer (http://www.landserver.org/) (scheduled to launch in the fall).
- Other creative initiatives include The Bonneville Environmental Foundation's Water Restoration Certificates, which allow the public to purchase certificates that will offset their personal and business water use footprints. For a minimum $25 donation, BEF will return 25,000 gallons of water to rivers and streams, as 1 certificate = 1000 gallons. Visit http://www.befwater.org/.
- Parametrix is creating ecosystem metrics to measure and value ecosystem services, thereby opening the sector to a wider investor base where they can direct capital and impact in support of conservation.
The participants at the conference exhibited a strong sense of community and open collaboration, and a clear understanding of their leading roles in changing the way the world views and values our precious habitats. I plan to follow their example in becoming part of this cohesive community of pioneers supporting the environmental markets. I plan to supporting and collaborating with the above organizations so that my company, Mission Markets, can provide our members with the leading edge in technology, science, and information.
- Mike
Portland Oregon is a hotbed of innovation where technology entrepreneurs are partnering with leading environmental NGO’s to create market based mechanisms for the environmental markets. Together they are improve ecosystem markets by enabling stakeholders to gain access to information and capital in order to ensure that vital habitats can be more effectively protected, measured and valued.
Below I include a list of organizations that are cutting a trail in these markets and helping to turn what most people feel is a vague and somewhat confusing concept into mainstream concepts and opportunities.
- The Defenders of Wildlife http://www.defenders.org/
- The Willamette Partnership http://www.willamettepartnership.org/
- Parametrix http://www.parametrix.com/
- The Other Firm http://www.theotherfirm.com/
- The Bonneville Environmental Foundation http://www.b-e-f.org/
- The Ecosystem Marketplace http://www.ecosystemmarketplace.com/
- The Bay Bank http://www.thebaybank.org/
- Biodiversity and carbon registry TZ1 http://www.tz1market.com/
About 250 ecosytem enthusiasts from around the country attended the Northwest Environmental Business Counsel Conference to hear speakers such as Sally Collins, who heads the new USDA Office of Ecosystem Services Markets, and environmental markets advocate Sara Vickerman of Defenders of Wildlife, discuss and debate the current state and future of these markets.
New Contributions in the Field:
- Innovations that will provide private landowners and environmental investors with a centralized data and information portal include The Conservation Registry (http://www.conservationregistry.org/) and LandServer (http://www.landserver.org/) (scheduled to launch in the fall).
- Other creative initiatives include The Bonneville Environmental Foundation's Water Restoration Certificates, which allow the public to purchase certificates that will offset their personal and business water use footprints. For a minimum $25 donation, BEF will return 25,000 gallons of water to rivers and streams, as 1 certificate = 1000 gallons. Visit http://www.befwater.org/.
- Parametrix is creating ecosystem metrics to measure and value ecosystem services, thereby opening the sector to a wider investor base where they can direct capital and impact in support of conservation.
The participants at the conference exhibited a strong sense of community and open collaboration, and a clear understanding of their leading roles in changing the way the world views and values our precious habitats. I plan to follow their example in becoming part of this cohesive community of pioneers supporting the environmental markets. I plan to supporting and collaborating with the above organizations so that my company, Mission Markets, can provide our members with the leading edge in technology, science, and information.
- Mike
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