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Symbiotic Demand: An economic means to apportion ecological values

Market signals as a catalyst for ecosystem service transactions

Ag Resource Strategies, LLC

on 30 March 2016

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Transcript of Symbiotic Demand: An economic means to apportion ecological values

Symbiotic Demand An economic means for apportioning ecological values and costs Tim Gieseke, Ag Resource Strategies, LLC 1) agricultural producers respond to policies and market signals,
2) their decisions are based on nearly limitless information and events,
3) their behaviors and actions affect the landscape and its outputs, and
4) behaviors are associated with their self interests In 2009, the US - Minnesota Legislators directed the Minnesota Dept. of Agriculture to develop a "reasonable assurance" process for meeting the state's agricultural water quality goals. Strategic Doing A livestock group consortium, led by the Minnesota Milk Producers Association, agricultural professionals, state agencies and NGOs initiated the process.

Ag Resource Strategies, LLC incorporated concepts from EcoCommerce 101, published in February 2011. 1) Land management metrics
2) Standards
3) Assessment template
4) Planning and assurance processes integrated
5) Trained conservation and agricultural professionals
6) Full-circle accountability

Applied to 100 Minnesota farms EcoCommerce fundamentals: Components of a "Reasonable Assurance" Model the market signal:
metric - numerical standard - regulatory compliance A Farm EcoCommerce Portfolio 1) Inventoried by Land Management Unit and Type
2) Creates a "Starting Line"
3) Scores can be averaged, acre-weighted
4) Correlated to USGS HUC-8 Watersheds
5) Integrated with planning and assurance processes A succinct reporting format 1) Reporting is anonymous until choosen otherwise
2) Identifies deficient and sufficient scores per farm management unit
3) Provides land management data to be used for on-farm and off-farm assessment and goal-setting Watershed data is assembled... Watershed Intelligence emerges Government, industry, universities and NGOs chose metrics and numerical standards Agricultural professionals calculated land management metrics The ideal professional has a:
- trusted, financial relationship with farmers
- knowledge of each farm's resources
- understand overall objective of operator A picture is worth a thousand words...
what is a land management metric portfolio worth? Minnesota Board of Soil & Water Resources Minnesota Dept of Agriculture USDA Natural Resources Conservation Service Farmer and advisors adjust cultural management strategies Land management data is integrated with other farms and watershed data Land metrics can be correlated to water analysis The full potential of this effort resides in examining Symbiotic Demand as a legitimate component of our maturing economic system Shared Governance Scalable Geo-Intelligence shared governance shared governance scalable geo-intelligence scalable geo-intelligence strategic doing Minnesota Department of Agriculture's EQA Report Conclusions:
-1) Land management metrics provide an adequate market signal for environmental outcomes
-2) Metrics are the catalyst for strategic doing
-3) Shared governance is a cost-effective means to achieve objectives, particularly to develop "economic" relationships
-4) Integrating governmental sustainability demands with corporate objectives could capture "shared value"
-5) Scalable metrics that identify on-farm and off-farm impacts are key to multi-tiered value The fundamentals of symbiotic demand 1) agricultural producers respond to policies and market signals,
2) nearly limitless information exists in time and space,
3) behaviors effect landscape outputs,
4) centrally-planned processes are overwhelmed, and
5) value is multi-tiered and multi-directional
(government, corporations, NGOs, insurers, processors) The premise of a grand experiment is to illustrate the components, processes and relationships that are the essence of symbiotic demand A Grand Experiment shared governance in this experiment, developing economic relationships is as important as choosing the land metrics - as both will provide a starting point and evolve over time geo-intelligence corporate utility NGO government agriculture Supply, Demand and Valuations regulatory compliance market access and premium market access market access, premium carbon credits insurance premium reduction identify pockets and regions of sustainability efforts across the globe biomass watershed
quality environmental liability ag nutrient & energy credits sustainable cheese bio-energy The producer resides in multiple geo-defined sheds and simultaneously delivers goods and services watershed biomass shed cheese shed env. liability shed the scalable metrics are applied to individual farms within individual sustainability clusters A farm or landscape's ecosystem service portfolio addresses non-exclusive markets... Non-exclusive values allows symbiosis to occur among disparate entities that benefit from maintaining natural capital and the production of ecosystem services. It sets the stage to identify and to affordably include positive externalities within the economy... citizen groups
food processors
sustainability supply webs
bio-energy refineries
liability insurers ...that are seeking non-exclusive market values. ...and a baseline for exclusive ecosystem service markets. Adding value to the economic system is illustrated with a Production Possibility Frontier graphic investment Technical and Financial Assistance "Ecocommerce...provides the framework to build an ecological intelligence system that allows the public arena of commerce to define sustainability"

- excerpt from foreword

Dr. Jerry Hatfield
Director USDA-ARS National Laboratory of Agriculture and the Environment
Lead Agriculture Author and Member, IPPC Process 2007 Nobel Peace Prize These extreme values limit the success of centrally-planned systems,
but are manageable by individuals in a open-market condition Deficient scores are noted sustainability "finish line" sustainability "starting line" watershed orgs and state can assess progress Completed July 2011 success and knowledge gained from this effort led to... January 2012 Minnesota Governor Dayton, USDA Secretary Vilsack and EPA Administrator Jackson signed an MoU to develop a water quality assurance program Local watersheds seeking a platform to incorporate local ag professionals to assist in targeting conservation and achieveing outcomes non-exclusive values exclusive values
Invite author and practitioner,Tim Gieseke to engage your students, business stakeholders or organizational leaders in this forward thinking topic. tgieseke@agresourcestrategies.com we are networked http://www.mda.state.mn.us/news/government/livestock.aspx Report link: http://www.ecocommerce101.com/ ecosystem service metrics Sustainbility buyers quality demanded Corporate "shared value" Governmental objectives NGO missions these seemingly disparate, yet Integrated Portfolios can capitalize on... ...costs per stakeholder to decrease as the # of demanders increase symbiotic demand Hypothesis:
Metrics that describe ecological outputs can act as market signals to create supply and demand forces. When organized in an ecocommerce framework, it can create values at multiple tiers and from multiple source simultaneously. These metrics will become tomorrow's "market marvel" to allow the public arena of commerce to define sustainability; economically and ecologically. national scale local scale The addition of any value expands the economic frontier. Due to the extensive value of natural capital, it has the potential to carry the economy to the next growth plateau Values related to Demand: General Food Processor, Inc.
- To make a sustainability claim for consumers
- To maintian the production capacity of the natural capital in its supply web
Market Signal
- Demand a certain quantity ofNo.2 Corn that has a sustainability index of 75
- Price is 2.5% above CBOT
Market Supplier
- Corn Grower - Local Cooperative - Grain Aggregator - General Food Processor, Inc.
- Corn Grower receives premium Enviro-Sure Insurance Company
- To reduce the risk of environmental damage
- To defend clients against environmental lawsuits
Market Signal
- A reduction in environmental liability insurance premiums for ag producers with a sustainability index of 85
- Premium reduction is 4.5% off standard rate
Market Supplier
- Ag producer manages land to meet sustainability index requirements
- Ag Producer receives reduction in premium cost County Government
- To maintain and improve recreational waters
- To address state and federal Clean Water Act issues such as TMDLs
Market Signal
- A 1.6% property tax reduction for land managed to a water quality score of 92
Market Supplier
- Land manager provides land management strategy that provides a high probability of shedding clean water Hillbury Cheese Company
- To maintain access to cheese market of major retailer
- To assist its milk producers in meeting water quality and sustainabiliy requirements of the local, state and federal regulators
Market Signal
- Market access to sell milk to Hillbury Cheese Company
- Provide milk producers with technical assistance to achieve the required sustainability scores
- Milk price premium
Market Supplier
- Milk producer manages land to meet market access requirements State Conservation Agency
- To report tangible water quality-related improvements to legislative body
- To allocate all the grant dollars it recieves from federal agencies and state government
- To effectively target conservation dollars to improve water quality, habitat, etc.
Market Signal
- Provide 75% of cost of conservation practices to farms that conduct a natural resource assessment.
- Technical Assistance
- Provide a "Certainty" certificate that reduces the liability risk of the agricultural producer
Market Supplier
- Ag producer manages land to meet Certainty requirements Etank Ethanol Processor
- To improve energy and carbon footprint life-cycle analysis
- To assist corn producers in maintaining highly productive soils
Market Signal
- Provide a 2.5% premium for corn that has a higher energy index
- Provide market access for corn producers that have a low carbon footprint
Market Supplier
- Ag producer manages corn production to meet energy and carbon requirements 2.5% premium 2.5% premium 75% cost-sharing and Tech Asst 4.5% cost reduction 1.6% tax reduction Market access and Tech Asst + + + + + + many other potential markets and values = Symbiotic Demand Conclusion:
The application of the current linear and singular valuation system of the economy to a non-linear and multiple valuation process of the ecology cannot capture the full economic value and therefore, it does not develop the capacity to generate an effectual demand to motivate entrepreneurs to supply the outputs needed.

EcoCommerce integrates the two essential forces of the ecology and the economy; symbiosis and self-interest, to generate an effectual and symbiotic demand.

Symbiotic Demand works on the premise that many demanders can consume a portion of the whole (ecoservice) simultaneously

Symbiotic Demand is the antithesis of the "Tragedy of the Commons" global internet traffic courtesy of ChrisHarrison.net strategic doing price # of Demanders ...Symbiotic Demand to cause... contrary to traditional economic theory With values returned to the landscape and individuals farms Self-Organizing self-organizing http://www.ecocommerce101.com/media.htm 20 Book reviews (from 8 industries/6 countries) - http://www.ecocommerce101.com/media.htm 20 Book Reviews (from 8 industries/6 countries) - Symbiotic Demand works on the premise that many demanders can consume a portion of the whole (ecoservice) simultaneously https://prezi.com/87xwfvhpnas0/symbiotic-demand/
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