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3 Ways Markets Are Protecting Our Environment

Markets can save the environment. In fact, they’re already doing It.

  • Kat Dwyer
  • This article was originally published by FEE.

    This Earth Day, pessimism is looming over the conservation community: War in Ukraine seems to have stymied ambitious climate solutions; rising fuel prices have brought into sharp focus our current and future dependence on fossil fuels; and here in the West, we’re preparing for another drought-stricken summer. These challenges surely won’t be easily solved. In the wider conservation landscape, however, there is still cause for some environmental optimism and it comes from an unlikely source: markets.

    Innovative entrepreneurs are harnessing the power of markets and property rights to enhance conservation in a variety of ways. They aren’t always flashy or headline-grabbing, but these three examples are making a real impact that provides some much-needed hope this Earth Day.

    Drought is routine in the West, and with growing populations, creative ways to allocate scarce water are more important than ever.

    Trout Unlimited is one innovator harnessing water markets for conservation. TU works with farmers and ranchers across the West to temporarily divert some of their water from its agricultural use, leaving it instream at critical times of the year to support fish populations. In exchange, TU financially compensates the water rights holders, a win-win for farmers and fish.

    Where instream flow is legally considered a beneficial use, water rights holders can enter into a voluntary agreement with conservation groups to leave some of their water instream without risk of forfeiting their water rights. Harnessing markets in this way allows for this precious resource to be put to its highest-valued use and gives conservationists a price mechanism by which to realize water’s conservation value.

    With a surge in popularity in recent years, western states like Montana face increasing pressure from population growth and urban development. This growth threatens the habitat integrity of the region’s large, private working lands that provide essential winter range for a variety of wildlife including elk, a keystone species of the region’s ecosystem. Private partners are pursuing innovative agreements to conserve these landscapes and habitats.

    In the Paradise Valley of Montana, the Property and Environment Research Center and the Greater Yellowstone Coalition have partnered with a ranching family to conserve 500 acres of their ranch for elk winter range. This elk occupancy agreement is entirely voluntary, privately funded, and doesn’t require government oversight.

    In many cases, a landowner is willing to manage land for conservation but is unwilling to enter into a government-managed conservation easement, which requires conservation in perpetuity. The elk occupancy agreement or shorter-term habitat lease offers a less onerous, private alternative for many landowners. More flexible tools like this mean more opportunities to conserve habitat.

    Wildfires out West have grown larger and hotter due to a build-up of fuels like dead trees and overgrown vegetation after a century of the federal government striving to put out all forest fires quickly. This, unfortunately, has become the new normal, with western communities bracing themselves each season for more devastating fires.

    The Forest Service has flagged 63 million acres at extreme risk of wildfire and in need of active forest restoration. At the current pace and scale, it would take the agency decades to address the ever-growing backlog of restoration projects. Thankfully, innovators have found a way to tap the private sector to help get some of this desperately needed restoration done.

    Blue Forest is a conservation group that, in partnership with World Resources Institute, has pioneered the Forest Resilience Bond. With this innovative financial tool, private investors, such as an insurance company or impact-investment firm, fund the bond, and stakeholders who benefit from forest restoration, like a state or utility company, agree to pay the investors back plus a reasonable rate of return as restoration benefits are achieved.

    The first Forest Resilience Bond was piloted in the Tahoe National Forest, where the Forest Service estimates that this tool will shorten the project time to 4 years rather than a decade or more. This creative model provides the financial assistance needed to increase the pace and scale of critical forest restoration projects, a benefit to forest health and western communities.

    Certainly, many environmental challenges remain that require our attention and creative thinking. Thankfully, market tools like property rights, price signals, and incentives are working to conserve our natural world through flexible, cooperative agreements. This type of market approach helps bridge the divide among various stakeholders and offers sustainable solutions. So despite what you might hear to the contrary, this Earth Day, thanks to markets, we have plenty to be optimistic about.

    Written By
    • Kat Dwyer
      Kat Dwyer
      • Marketing & Media Manager

      Kat Dwyer is PERC’s marketing and media manager.

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