Today there is a large and growing market for greenhouse gas (GHG) offsets. Companies and individuals have a wide range of options for offsetting the GHG emissions of just about any process, from the fuel a global company burns to produce industrial machinery to the carbon cost of a cup of coffee. Consumers and CEOs alike are becoming more conscious of the need to seek offsets of acceptable quality: projects that would not take place if the offset funding were not available, and meet international standards that verify the amount of carbon removed from the atmosphere.
But the current offset market focuses exclusively on greenhouse gases. There are other environmental issues that are at just as important, but are not as yet being offset with internationally recognized credits. Consider the following…
Other Environmental Issues
- Deforestation is indirectly addressed through certain GHG offset projects because increasing the total forested area of the planet sequesters carbon. However, the impact of deforestation is not limited to an increase in atmospheric CO2. Removing trees from a region increases soil erosion and reduces evapotranspiration (the process by which trees return moisture to the air). These effects cause desertification, which has a negative impact on regional populations.
- Soil depletion can result from deforestation and from other effects–including conventional agriculture. Overuse of fertilizers and pesticides damages the nutrient balance of the soil and kills microorganisms and invertebrates, gradually turning healthy, organic soil into sand and gravel. This process, along with over-tilling and stubble burning, accelerates erosion and desertification.
- Fresh water depletion has numerous causes. Deforestation and soil depletion accelerate runoff, returning fresh water to the ocean more quickly. Irrigation removes groundwater more quickly than it can be recharged. If the irrigated land is polluted by excess fertilizer and pesticide, it is not usable. If this polluted irrigation water sinks back through the soil, the entire aquifer can be rendered unusable as a supply of drinking water. Use of fresh water for industrial processes can make it unavailable for biological processes, or harmful to life when it is released.
- Biodiversity depletion results from climate change, pollution, crowding out by introduced species, and over-hunting, fishing, etc. In particular, the pollution of farms by fertilizers and pesticides is destabilizing the population of bees and other pollinators, which is disrupting the growth of many plants.
- Marine pollution is possibly the most serious problem facing the planet. Well over half the photosynthesis on Earth occurs not in tropical rainforest, not in the vast boreal forest, but as a result of the growth of cyanobacteria (blue-green algae) on the continental shelves. The continental shelves are the areas most affected by industrial and agricultural pollution. Virtually all industrial effluent dumped into every river or stream eventually reaches the ocean,* where dissolved substances diffuse into the ocean as a whole, and suspended particles sink to the bottom of the delta and concentrate over time. The oceans used to be thought of as a vast abyss into which our emissions could disappear without a trace, but many of the pollutants that come from modern industry are accumulating in the oceans, destabilizing the ecological balance of marine life and of our atmosphere.
Eco-Credits – How to Quantify?
While it is true that the above problems and GHG emissions are interrelated, offsetting GHG emissions does not replace groundwater, restore soil, or reduce marine pollution. To address these issues, new offset systems must be developed. I envision a global market in Natural Capital (a term coined by E. F. Schumacher in 1973). A system of “Eco credits” would emerge with clearly defined quantities: tonnes of CO2 equivalent (the current credit market), megaliters of fresh water, tonnes of healthy soil, hectares of afforestation, megaliters of diverted effluent, and some quantity of biodiversity increase.
Some of the above quantities are easy to imagine. The number of hectares of afforestation is a straightforward quantity that is already used for GHG credit projects. Quantities of fresh water and healthy soil would require maximum thresholds of contaminants. Soil would also require minimum thresholds of organic content and invertebrate populations. Diverted effluent would have to be wholly recycled or treated to the quality of incoming water.
But how can you quantify biodiversity? How can a project guarantee a species is preserved, or that another will evolve? If a company uses gene modification to create a new species, would that qualify as an increase in biodiversity? Because of the level of complexity and uncertainty, biodiversity should certainly be the last quantity to enter the offset market.
Current Steps – Next Steps
While there is no global market for these quantities yet, work is being done by various organizations. Since 1997, the country of Costa Rica has paid farmers not to harvest trees on their land, seeing the forests as “water factories”. Mexico launched a similar project in 2003. (See this article for details.) Both countries have set their own arbitrary values for a hectare of forested land, so these projects would not qualify as verifiable credits, but it should be possible to study similar forested and deforested parcels of land to compare the amount of available fresh water that comes from each throughout the year. Such a comparison would help develop a standard measurement for this particular ecosystem service. Since a forest is a complex community of organisms, it would take some time to quantify all of the ecosystem services provided by one.
The Natural Capital Project, a joint venture of the Woods Institute for the Environment at Stanford University, the Nature Conservancy, and the World Wildlife Fund, is a comprehensive attempt to quantify ecosystem services. In other words, what does the biosphere do for us? How much would it cost to provide these services ourselves? The project works with governments around the world to promote an understanding of what the Earth does for us. This project will most likely be the main source of defined quantities for the new offset market when it emerges, although defining marketable credits is not its mission.
When will we see the emergence of comprehensive eco-credits? The carbon market has ballooned from its definition under the Kyoto Protocol in 1995 to a thriving market today. A comprehensive eco-credit system would be much more complex, and take a lot of effort to design (and more effort to achieve consensus on international standards). But the carbon trading market will serve as a framework around which to build the new system. Companies that start planning for a general eco-credit system today will have a considerable advantage in the marketplace ten years from now.
If your company is interested in participating in such a system, or if you are already working toward one, please comment below, or send me an e-mail.
—-
*The exceptions would be suspended particles that sink to the bottom of lakes and remain in the soil, and effluent that reaches the world’s few inland deltas.
Recent Comments