This is a Preprint and has not been peer reviewed. This is version 5 of this Preprint.
Governing high-integrity ecosystem markets
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Authors
Mark S Reed 
Abstract
There is growing global interest in the potential for ecosystem markets to facilitate climate and nature recovery. Yet, poorly designed and operated markets are prone to corporate “greenwashing” and negative consequences for nature and local communities.
With the rapid emergence of ecosystem markets around the world, there is a need to systematically analyse ecosystem market governance principles, and identify the practical steps needed to implement these principles at national scales across multiple high-integrity ecosystem markets. Markets are considered high integrity when they are governed by clear and consistent principles that address governance, measurement, reporting and verification, and wider benefits. The majority of principles published to date are designed to be applied at international scales or within single markets. However, national policy oversight is essential to ensure emerging ecosystem markets deliver natural capital outcomes and wider public benefits appropriate to the jurisdictions in which they operate. Relying on international voluntary initiatives alone is unlikely to prevent the operation of low-integrity schemes.
This paper therefore analyses principles for the development and operation of high-integrity ecosystem markets, proposing how these could be operationalised to in the UK, where governments in Scotland and England are actively developing new governance regimes for rapidly proliferating domestic ecosystem markets. To do this, the paper:
1. Provides the first comprehensive overview of compliance and voluntary carbon and other ecosystem markets alongside the first analysis of relevant ecosystem market actors in the UK ;
2. Conducts a comparative analysis of existing national and international principles, identifying 14 core principles for governance, measurement, reporting and verification, and delivering wider benefits of high-integrity ecosystem markets that could be applied by relevant market actors to the range of ecosystem markets identified in the UK; and
3. Proposes how these principles could be applied in an ecosystem markets governance hierarchy, showing policy, governance and market mechanisms and infrastructure that are being developed to implement the proposed principles in the UK.
Taken together, the proposed core market principles and governance hierarchy could be used to ensure the development of high-integrity ecosystem markets across the UK and internationally, helping national governments to responsibly build and scale these markets.
DOI
https://doi.org/10.31223/X5ZH3D
Subjects
Social and Behavioral Sciences
Keywords
Payment for Ecosystem Services, Ecosystem markets, Nature markets, Natural capital markets, governance, policy, market infrastructure, market principles
Dates
Published: 2023-04-07 05:13
Last Updated: 2023-05-19 13:53
Older Versions
License
CC-BY Attribution-NonCommercial 4.0 International
Additional Metadata
Conflict of interest statement:
Mark Reed sits on the Executive Board of the Peatland Code, where he works closely with the Woodland Carbon Code and is Research Lead for IUCN UK Peatland Programme. He is a board member for Landscape Enterprise Networks. He was or is a member of teams developing a Saltmarsh Code and Agroforestry Code, and helped produce recommendations for minimum requirements for agricultural soil carbon codes, now being followed up by the British Standards Institute (BSI). He is an unpaid advisor to The Habitat People, focussing on biodiversity and soil carbon offsetting. He is a Commissioner on Scottish Government’s Just Transition Commission and a member of the Agricultural Reform Implementation Oversight Board, is advising Scottish Government on the development of their nature markets framework and advised Defra on the production of its 2023 nature markets framework and the subsequent work led by BSI.
Data Availability (Reason not available):
This article mainly uses publicly available secondary sources. Data for the stakeholder analysis contains sensitive information that cannot be shared publicly.
Comment #96 Mark S Reed @ 2023-04-13 04:33
Agreed Doug, but your comment applies specifically to agricultural soil carbon markets, and my goal was to generalise principles that could work across multiple carbon and other ecosystem markets. For example, it would not be possible to apply your suggested principle to peatland carbon markets which are about reducing emissions (rather than sequestering and storing carbon). Following the recommendation in this paper for the creation of standards to govern codes, my colleagues and I made recommendations for minimum requirements for agricultural soil carbon codes, which align with your proposals. You can read more here https://sustainablesoils.org/soil-carbon-code/minimum-requirements, but here's an excerpt: "The Code must include SOC stock increases, reduced SOC stock loss, and farm and soil derived GHG emission reductions. Hereafter, we refer to this combination of climate benefits from soil carbon projects as net carbon abatement. At a minimum, the Code must address carbon dioxide (CO2) emissions from agricultural soils and, where significant, nitrous oxide (N2O) and/or methane (CH4) emissions from soils. The Code must also include GHG emissions from livestock and farming equipment used within the field boundaries where those emissions are significant."
Comment #95 Douglas Wanstall @ 2023-04-11 06:58
Thank you for the paper, very detailed and mirrors our assessment of the market and direction of code development. The UKCCC team would like to take an active part in the development and implementation of these standards.
one area of weakness is that there is very little mention of projects attaining net zero status. The UK Carbon code of Conduct, insists that projects are at net zero before they sell any credits, this is done by calculating a landholdings total carbon sequestration and its total CO2e emissions on all land, thus establishing its true net position. This helps projects identify areas where emissions can be reduced and sequestration further improved. This has the added benefit of enabling the UKCCC to be confident that any leakage has been avoided as the whole landholding and all its activities have been taken into account and that no double counting can take place. All projects will be entered onto a single source of truth mapping system.
Our main concern is that with the likely development of many codes, is how sectoral codes can give the same assurance that leakage and double counting have not occurred?
Above all we would like to immerse activities into the wider carbon code market to ensure that as far as possible standards are aligned.