As part of California’s cap-and-trade program, major polluters in the state are charged for the carbon emissions they generate. Some of that money is set aside for programs that both promote economic development and cut carbon pollution in disadvantaged communities.

The Capitals Coalition will work collaboratively to ensure that the value that flows from nature, society and people – as well as the economy – collectively inform public and private sector decision-making.

Some of the money raised from aviation offsetting could be plowed into renewable energy and energy efficiency programs. But finance could also be used to protect a lot of ecosystem carbon.

A key goal of the Environmental Markets and Finance Summit, hosted by Forest Trends and AEMI, was to begin mapping out what a coordinated financial strategy could look like, in order to scale up global restoration and sustainable land use dramatically. Environmental markets (the most prominent of which focus on carbon offsets, wetland and habitat credits, sustainably certified products, and water quality offsets and trading) have matured mostly in silos. It is time to start putting the pieces together and cross-pollinating solutions.

The Green New Deal has been the focal point of the climate debate among the Democratic presidential candidates. Less publicized is the Climate Risk Disclosure Act, a proposal from senator and presidential contender Elizabeth Warren, that seeks to frame climate change as a threat to the public markets.

In February 2019, the EPA’s assistant administrator for water issued a memo updating the agency’s water quality trading policy “to promote market-based mechanisms.” The memo includes six principles intended to clarify aspects of the federal water quality trading program, provide tools and incentives to states and local governments to implement trading programs, and promote increased investment in conservation.

A new paper, Sandboxing Nature, suggests taking an approach called a “regulatory sandbox” — a flexible testing ground for new innovations — and applying that to conservation, for faster conservation and restoration outcomes.

The public and private sectors can incentivize sustainable land use and forest conservation. While still only one part of the solution, there are encouraging signs of new efforts to finance sustainable agribusiness.

Recently demand for offsets has risen fast, and could rise faster if federal or state climate legislation created compliance markets for them. Voluntary carbon markets are relatively small, and voluntary carbon offsets cut less than two tenths of a percent of annual global greenhouse gas emissions — but in a larger compliance market, where offsets help meet climate policy requirements, they could cut orders of magnitude more.