Tag Archives: Ecosystem services

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Who Cares About Water Articles on Ecosystem Marketplace?

11345573736_83dc972152_oWater was a hot topic in 2013 as companies became more aware of their water risks, nations struggled with drought and other water crises, and water pollution continues to endanger people, agriculture, and ecosystems. Ecosystem Marketplace tracks all of these stories, acting as a one-stop shop for people interested in news about water and water markets.  So who cares about water – and what do they care about?

 In 2013, readers were interested in learning more about classic examples of water-related ecosystem services markets, like New York City’s revolutionary project to protect its drinking water. They also learned more about the basics of watershed markets, seeking out articles on the scale and basic structures of the water trading market. In addition, summaries of reports showing how ecological value should be included in economic assessments drew readers.

In addition to the basics, readers also sought to learn about newer watershed payment schemes in the region, from a USDA initiative to protect the endangered Mississippi River Basin to a water trust set up to restore water flow in the Colorado River.  On-the-ground examples of using ecological value to assess the true cost of environmental degradation or economic value rounded off the selection, with readers seeking to learn more about the true cost of water pollution from new fossil fuel development in Arkansas and Alberta and how to finance wetland restoration in the Gulf Coast through engagement of business stakeholders with high water-related risk.

Coming up next time… a look at water readership on Valorando Naturaleza, the Spanish-language version of Ecosystem Marketplace.

The Top 9 Water – Related Articles on Ecosystem Marketplace

  1. Ecosystem Services in the New York Watershed

  2. Watershed Payments Topped $8.17 Billion in 2011

  3. A New Strategy to Improve Water Quality One Targeted Watershed at a Time

  4. Charting New Waters – SOWP Report

  5. Water Trading: The Basics

  6. Arkansas Oil and the High Cost of Dirty Water

  7. New TEEB Report Integrates Wetland Value and Economic Policy

  8. Building a More Resilient Gulf

  9. In the Colorado Delta, a Little Water Goes a Long Way

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Conservation Finance in the Pacific Northwest

In the latest installment of the Yale University Center for Business and the Environment’s webinar series, Nature’s Returns: Investing in Ecosystem Services, Brad Hunter of Craft 3, a community development financial institution (CDFI) based in the Pacific Northwest, discussed financing of conservation and ecosystem services projects.

CDFIs were created in the United States in 1994.  Unlike banks, the primary mission of a CDFI is community development, and many are created to serve specific underserved markets (minorities, low-income areas, women-owned businesses, etc.) where traditional banks are unable to provide lending assistance.  As Hunter described it, Craft 3 is unique in that it has a triple bottom line.  Most CDFIs focus on the bottom line of community development, while Craft 3 includes ecological resilience and equitable distribution of wealth in their bottom line.  One of Craft 3′s goals is to look at what seem like high risk markets, take the headwind and the risk, then de-risk it so that traditional financial institutions can see these investments as non-risk areas.  Hunter provided the example of financing home energy efficiency programs.  In 2009, Craft 3 started a program where customer loans for energy efficiency programs were paid back using on-bill payment.  After building a huge portfolio of these individual loans, Craft 3 recently announced that it was able to seek the entire portfolio of loans to a regulated market – effectively showing that these loans are no longer seen as high-risk investments.

Wetland Mitigation Banking

Craft 3′s very first ecosystem services project was the Willapa Demonstration Bank.  Craft 3 provided the acquisition and development financing, since banks were not interested in financing the project due to low appraised land value.  However, because Craft 3 felt sure that the market for wetland credits would be robust and generate enough income in the future to pay back the loan, they were able to provide the money.  In addition, lending to this entity also improved the returns for other investments that Craft 3 had made.  The shellfish producers Craft 3 lends to would be better able to increase their product after restoration of the wetland, making the investment win-win for Craft 3.

Carbon Finance in Windfall Forest

A less successful investment came when working with a small family-owned timber company who wanted to buy an additional bit of land adjacent to their current property.  Craft 3 financed the purchase, with some of the loan being paid back through sale of timber, but with the remainder repaid through the sale of carbon credits on the land.  Because of the proximity to California and the projected development of a robust carbon market, the investment was seen as less risky.  However, since the carbon market unfortunately did not develop as quickly as predicted, the landowners were eventually forced to sell the land in order to repay the loan.

Water Temperature Credits with the Freshwater Trust

The third example that Hunter described was a new market approved by the Oregon Department of Environmental Quality for water temperature credits.  The DEQ approved the sale of credits for reforestation that provides shade over the water, offsetting discharge by municipalities of clean, but warm water.  The warm water was a problem because it caused a thermal blockage in the river, past which migratory species such as salmon couldn’t pass, and were thus unable to breed.  One municipality was given the option of building big chilling towers for the water at a cost of $14-15 million of investment in one chunk.  Investing in the water temperature credits allowed them to invest $8 million over a ten year period, a huge savings in capital, as well as ensuring some degree of environmental protection for the municipality. In addition, the investment saved the citizens of the municipality money, since the municipality didn’t have to seek out a loan, and the loan payments were not passed on to the consumers through higher fees.

You can listen to this podcast and all the other podcasts from Yale’s Center for Business and the Environment on iTunes.

Learn more about Craft 3 and their Stories of Change here.