Financial incentives for large-scale wetland restoration: Beyond markets to common asset trusts

Abstract

Wetlands provide $47.4 trillion/year worth of ecosystem services globally and support immense biodiversity, yet face widespread drainage and pollution, and large-scale wetlands restoration is urgently needed. Payment for ecosystem service (PES) schemes provide a viable avenue for funding large-scale wetland restoration. However, schemes around the globe differ substantially in their goals, structure, challenges, and effectiveness in supporting large-scale wetland restoration. Here, we suggest wetland-based PES schemes use common asset trusts (CATs) to build investment portfolios of wetlands across landscapes that sustain and enhance overall provision of multiple ecosystem services. CATs can meet the needs of multiple investors, permit bundled payments, and provide flexibility to invest in the restoration of numerous services/values, all using a coordinated, highly collaborative, prioritized, and transparent process. CATs would support financial viability, facilitate efficiency to reduce administrative burdens, and enable credibility and social licence building to restore wetland values and services globally. ll

Operationalizing marketable blue carbon

“…Furthermore, financial viability is often enhanced with project size, which necessitates working with multiple land and carbon owners, thereby increasing the transaction costs associated with project establishment, and requiring novel solutions that might include mechanisms like common-asset trusts. 40 A broad range of finance approaches are needed to underpin proposed advances in social and governance uncertainties; these approaches span public funding (e.g., environmental levies, covenanted tax deductions, debt-for-nature swaps), philanthropy (e.g., corporate social responsibility, corporate-cause marketing programs), and private investment (e.g., blue bonds), as well as the potential for innovative economic accounting tools (e.g., blockchain) to reduce transaction costs. There are good examples of where these aforementioned approaches have been tested for other forms of conservation finance (e.g., for terrestrial ecosystems), providing a rich knowledge base to learn from and trial in a blue carbon context.…”

Capitalizing on the global financial interest in blue carbon

“…Payments for Ecosystem Services (PES) beyond carbon may help financialise a range of other ecosystem services, stacking them to increase the overall payment to a project. Common Asset Trusts can extend this by building a portfolio of different ecosystem service investments that target a range of ecosystem services [90]. Ecosystem service insurance has real potential to generate funding for restoring coastal ecosystems and re-establishing their ecosystem services if damaged [91].…”

Tackling the mangrove restoration challenge

“…New solutions for reporting are on the horizon. The post-2020 Biodiversity Framework (OECD 2019; [ 67 ]) recommends that area of mangrove extent could be a potential indicator ( Table 2 ), which could provide a direct measure of restoration outcomes, and is feasible given the high level of data availability [ 60 ]. Additionally, the benefits of mangrove restoration could be reported in the Environmental Economic Accounts indicator ( Table 2 ), allowing further assessments of the benefits derived from investments in mangrove restoration.…”

“…Better alignment of funding with mangrove restoration projects could be achieved through establishing clearing houses whereby smaller projects could be aggregated into a single portfolio for investors. For example, common asset trusts [ 60 ] could maintain an inventory of funding opportunities for mangrove restoration projects. These projects would be endorsed by local stakeholders and adhere to social safeguards, including comanagement arrangements with communities and fair benefit sharing [ 50 ].…”