Ecosystem-services-based conservation has been gaining traction for more than a decade, but its moment may finally have arrived. The carbon-offset market established by the Kyoto treaty, the world's largest ecosystem market, is worth $126 billion; existing global markets for forests, water quality, open space, and other resources are valued at around $25 billion. Last May, Prince Charles introduced the idea of "rainforest bonds," issued by the World Bank, to raise as much as $25 billion to protect tropical forests. At this December's United Nations climate change conference in Copenhagen, one of the biggest topics on the agenda is Reducing Emissions From Deforestation and Forest Degradation (REDD)—a complex program designed to give developing countries financial incentives to stop deforestation. (See "GM's Money Trees.") A study released in June found that Indonesia could generate as much money from storing carbon in its forests as from cutting them down to produce palm oil.
Critics of ecosystem markets argue that to truly protect the natural world we must value it for its own sake, not because it helps the bottom line. In a September 2006 commentary in the journal Nature, Stanford biologist Douglas J. McCauley wrote that "to make ecosystem services the foundation of our conservation strategies is to imply...that nature is only worth conserving when it is, or can be made, profitable." Which, you could say, is what got us into this mess in the first place.
Skeptics also argue that monetizing nature risks exposing it to the fads and follies of the market; the price of biodiversity would bounce around like that of any other commodity. Additionally, rewarding conservation could create a perverse incentive to cut down additional forests to drive up the price of those that remain. What if, say, Indonesia clears its peat swamps before REDD takes effect to increase its potential reforestation profits? In an August editorial in the journal Conservation Biology, two scientists cautioned that protecting ecosystem services may not protect ecosystems themselves: Conceivably, in the name of carbon storage, you could raze an old-growth forest and set up a tree plantation engineered to soak up the greatest amount of CO2—and economic value.
A COUPLE OF MONTHS after I met Sarshar, things at the Malua BioBank hit a snag. The Roundtable, he reported, was concerned about the limited practical value of biobanks as offset mechanisms because there are none in the other regions where its members have cleared land. (For instance, you're not supposed to offset the destruction of peat forest by protecting lowland forest.) It was a chicken-and-egg-type problem, since the Malua deal was supposed to help fund the additional biobanks the palm oil producers wanted.
Ironically, Sarshar was optimistic that regulation might save his free-market experiment; Indonesian officials had told him they wanted to develop rules that would spawn new biobanks with guaranteed buyers. At press time, New Forests had sold only $215,000 worth of BioBank certificates, to the operator of an eco-resort in the Danum Valley and a few logging contractors.
For now, the future of Malua—and other voluntary ecosystem markets—remains uncertain. "It's a very pioneering project," says Nathaniel Carroll, director of biodiversity markets at Ecosystem Marketplace, a website run by the think tank Forest Trends. "So if it failed, it wouldn't mean the market isn't there. It'd be because it's ahead of its time."