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. 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. IntroductionWetland restoration can contribute significantly to meeting many global, national, and local goals and initiatives, including several United Nations (UN) Sustainable Development Goals (SDGs).1Mitsch W.J. Bernal B. Hernandez M.E. Ecosystem services of wetlands.Int. J. Biodivers. Sci. Ecosyst. Serv. Manag. 2015; 11: 1-4Crossref Scopus (148) Google Scholar,2Seifollahi-Aghmiuni S. Nockrach M. Kalantari Z. The potential of wetlands in achieving the sustainable development goals of the 2030 agenda.Water. 2019; 11: 609Crossref Scopus (31) Google Scholar Using the Ramsar definition, wetlands include any inland, coastal, or marine waterbody, still or flowing, fresh or saline, permanent or temporary, to a depth of 6 m at low tide.3Ramsar Convention SecretariatAn Introduction to the Convention on Wetlands (Previously the Ramsar Convention Manual).5th. Ramsar, Gland, Switzerland2016https://www.ramsar.org/sites/default/files/documents/library/handbook1_5ed_introductiontoconvention_e.pdfGoogle Scholar This includes fens, peat bogs, swamps, marshes, oyster reefs, rivers, lakes and artificial water bodies, mangroves, seagrass meadows, mudflats, and some coral reefs. In many cases, wetlands also include adjacent riparian and coastal zones.3Ramsar Convention SecretariatAn Introduction to the Convention on Wetlands (Previously the Ramsar Convention Manual).5th. Ramsar, Gland, Switzerland2016https://www.ramsar.org/sites/default/files/documents/library/handbook1_5ed_introductiontoconvention_e.pdfGoogle Scholar Wetland ecosystems provide a range of ecosystem services (i.e., the benefits to humans from ecosystems), including water purification, carbon sequestration, food provision, flood regulation, storm surge protection, and ecotourism, and support biodiversity, and cultural and spiritual values.1Mitsch W.J. Bernal B. Hernandez M.E. Ecosystem services of wetlands.Int. J. Biodivers. Sci. Ecosyst. Serv. Manag. 2015; 11: 1-4Crossref Scopus (148) Google Scholar The global value of wetland ecosystem services is estimated at ∼$47.4 trillion/year, with estuarine and palustrine wetlands among the most service-rich ecosystems relative to extent.4de Groot R. Brander L. van der Ploeg S. Costanza R. Bernard F. 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Buelow C. Simenstad C. Nagelkerken I. Claassens L. Wen C.K.-C. et al.UN decade on ecosystem restoration 2021–2030—what chance for success in restoring coastal ecosystems?.Front. Mar. Sci. 2020; 7: 71Crossref Scopus (94) Google ScholarWhile promising, PES schemes do not often deliver the expected benefits from wetland restoration.15Salzman J. Bennett G. Carroll N. Goldstein A. Jenkins M. The global status and trends of payments for ecosystem services.Nat. Sustain. 2018; 1: 136-144Crossref Scopus (257) Google Scholar,18Bullock J.M. Aronson J. Newton A.C. Pywell R.F. Rey-Benayas J.M. Restoration of ecosystem services and biodiversity: conflicts and opportunities.Trends Ecol. Evol. 2011; 26: 541-549Abstract Full Text Full Text PDF PubMed Scopus (622) Google Scholar,19Hrabanski M. The biodiversity offsets as market-based instruments in global governance: origins, success and controversies.Ecosyst. 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This is in contrast to existing schemes that typically primarily focus on ecosystem service provisioning and have wetland restoration as a secondary objective.Notable types of PES schemes providing incentives for wetland restoration include carbon markets; water quality trading; habitat stamps and wild harvesting; eco-labeling; crowd funding; and water funds. While each scheme has advantages, disadvantages, and room for improvement (Table S1), three cross-cutting challenges exist: (1) demonstrating sustained financial viability; (2) establishing credibility with effective verification and accounting; and (3) balancing trade-offs to achieve general acceptability, and to establish and maintain social license to operate (Table S1).24Bellver-Domingo A. Hernández-Sancho F. Molinos-Senante M. 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Taking on board the challenges faced by many PES schemes (Table S1), we propose using a common asset trust (CAT) approach as the platform for a PES scheme designed to enhance wetland restoration efforts. Below we analyze the three main challenges for PES schemes and how these challenges may be overcome. We then outline how a CAT could solve many of these challenges to enhance wetland restoration, and identify the roles and responsibilities of key stakeholders.Common challenges across schemesThe three key challenges across schemes are financial viability, credibility, and maintaining a social license to operate.Financial viabilityFinancial viability is critical to the success of any PES scheme. Funding is often insufficient, intermittent, or highly variable, to confidently cover the costs of wetland restoration (including the opportunity cost of land use change), associated assessments, monitoring and administration, and on-going maintenance after construction.27Stephenson K. 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