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Eco cosy system m Mar arkets ts Pr Prim imer er T.J Mascia Troutman Sanders, LLP New York State Wetlands Forum, Inc. Annual Conference and Meeting April 29 30, 2014 Ecos osystem m Mar arkets: ts: Fundame dament ntal l Concep

SLIDE 1

Eco cosy system m Mar arkets ts Pr Prim imer er

T.J Mascia Troutman Sanders, LLP New York State Wetlands Forum, Inc. Annual Conference and Meeting April 29 – 30, 2014

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Ecos

system

m Mar arkets: ts:

Fundame dament ntal l Concep cepts ts

Impacts are Inevitable
Market-Based vs. Command-and-Control
Restoration vs. Restriction
Natural vs. Built Capital
Benefits/Advantages vs. Limitations

Before After

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Ecos

system

m Mar arkets: ts:

Primer er Foca cal l Po Points nts

Driver(s)
Units
Participants
Practices/Process
Status/Trends

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Wetlands and Stream Mitigation Banking

Eco cosy system m Mar arket t Exam amples ples

Voluntary Greenhouse Gas (GHG) Offsets

Species Conservation Banking

Water Quality Trading (WQT)

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Volu

lunt

ntar ary y GHG Of Offse sets ts

GHG

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Mar arket t Ba Basi sics cs

Driver(s): Pre-Compliance / Sustainability / Philanthropy Units: MtCO2e Buyers: Unregulated Corporations / NGOs / Universities / Individuals Sellers: Offset Project Developers / Retailers / Aggregators Others: Standards / Registries

GHG

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Pr Prac actice tices/Pr s/Process

cess

Offset-Generating Practices:

GHG Sequestration
GHG Capture

Offset Certification & Sale

Verification
Certification
Registration

GHG

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Stat atus/T us/Tre rends nds

GHG

Source: Forest Trends Ecosystem Marketplace

SLIDE 9

Wetla land nd & Strea eam m Mit itig igati ation

n Ba

Banking ing

Mitig igat ation ion

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Driver(s): CWA Section 404 / WRDA / 2008 Mitigation Rule Units: Acres of Wetlands + LF of Stream Buyers: Section 404 Permittees Sellers: Mitigation “Bankers” / ILF Sponsors Others: USACE / Interagency Review Team (IRT)

Mar arket t Ba Basi sics cs

Mitig igat ation ion

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Pr Prac actice tices/Pr s/Process

cess

Credit-Generating Practices:

Creation
Enhancement
Restoration
Preservation

Banking Process:

Initial Regulatory (IRT) Review and Approval
Credit Release(s)
RIBITS
Bank Closure and Long-Term Management

Mitig igat ation ion

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Pr Prac actice tices/Pr s/Process

cess

Mitig igat ation ion

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Pr Prac actice tices/Pr s/Process

cess

Mitig igat ation ion

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Stat atus/T us/Tre rends: nds:

Market t Growth wth & Succ cces ess s

Source: Forest Trends Ecosystem Marketplace State of Biodiversity Markets 2011 Update

900+ Approved Banks  960,000+ acres restored/protected (2010)
Average Bank Size = 174 acres (2008)
Average Credit Price = $74,535 (2008)
Estimated Annual Market Value = $1.3 - $2.2 billion/yr

Mitig igat ation ion

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Stat atus/T us/Tre rends: nds:

Pe Permittin itting g Effici cienc ency y

Source: Birnie, Katherine (Ecosystem Investment Partners),. May 9, 2013."State of the Market: National Market Analysis and Overview.” Presentation at2013Natonal Mitigation &Ecosystem Banking Conference. New Orleans, LA

Mitig igat ation ion

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Stat atus/T us/Tre rends: nds:

Reg egion ional al Variabil ility ity

Source: http://www.restorationsystems.com/wetland-mitigation-bank/

Mitig igat ation ion

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Stat atus/T us/Tre rends: nds:

New w York

3 Approved Banks as of Jan. 2013 (RIBITS)
Future Market Potential ?

“NYCEDC Releases Request for Expressions of Interest to Establish First Wetlands Bank in New York City” Press Release December 20, 2013

Mitig igat ation ion

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Sp Spec ecie ies s Con

servation ation Ba Banking ing

Specie ecies

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Mar arket t Ba Basi sics cs

Driver(s): ESA Sections 7(a)(2) and 10(a) Units: Acres of Habitat / Population Buyers: ESA Permittees Sellers: Species Conservation “Bankers” ILF Sponsors Others: USFWS / State Resource Agencies

Specie ecies

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Stat atus/T us/Tre rends nds

Source: Forest Trends Ecosystem Marketplace State of Biodiversity Markets 2011 Update

Specie ecies

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Black-capped vireo - TX California Coastal Gnatcatcher - CA California Tiger Salamander - CA Carolina Heelsplitter – SC Chinook Salmon – CA, WA Conservancy Fairy Shrimp- CA Florida Panther - FL Florida Scrub Jay - FL Giant Garter Snake- CA Giant Kangaroo Rat - CA Swainson’s Hawk - CA Golden Cheeked Warbler - TX Gopher Tortoise - MS Oregon Chub - OR San Joaquin Kit Fox - CA Sand Skink - FL Utah Prairie Dog - UT Steelhead - CA Cheat Mountain Salamander – WV Western Burrowing Owl - CA Valley Elderberry Longhorn Beetle - CA Delta Smelt - CA

Species currently protected by US conservation banks:

Stat atus/T us/Tre rends nds

Specie ecies

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Current Efforts: Indiana Bat

Indiana Bat habitat enhancement: cave gate installation at Nature Conservancy project in the Missouri Ozarks

Other Species Banking?

Stat atus/T us/Tre rends: nds:

NY Conse servatio tion n Banking ng

Specie ecies

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Wat ater er Qu Qual ality ity Trad ading ing

WQT

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Mar arket t Ov Over ervie view

Driver(s): CWA Sections 402 and 303 / TMDLs EPA WQT Policy / State Laws & Regs Units:

Lbs. N or P / Sediment / Thermal

Buyers: NPDES Permittees Sellers: “Bankers” / Farmers / Point Sources Others: EPA / State Agencies

WQT

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Pr Prac actice tices/Pr s/Processe

cesses

WQT

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Stat atus/T us/Tre rends nds

WQT

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Ecos

system

m Mar arkets: ts:

Criteria eria For Succ ccess ess

Driver(s):

Strong enforceable “cap”

Units :

Real / Verifiable / Appropriate Ratios

Participants :

Role of Private Entrepreneurs

Practices/Process:

Clarity / Consistency / Transparency

Status/Trends:

Monitor and Adapt

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Qu Ques estions? tions?

T.J. Mascia Troutman Sanders, LLP TJ.Mascia@TroutmanSanders.com 804-697-1421