Ecosystem Markets for Urban Forestry

“All humans depend on services supplied by ecosystems, either directly or indirectly (Millennium Ecosystem Assessment, 2005).”

Human life wouldn’t survive without healthy ecosystems. Humans are dependent on ecosystem service ranging from pollination of food crops to oxygen from trees and other vegetation. However, human activities are causing the Earth’s greatest extinction of biodiversity (the key to healthy ecosystems). “The observed rates of species extinction in modern times are 100 to 1,000 times higher than the average rates for comparable groups estimated from the fossil record (Millennium Ecosystem Assessment, 2005).”

This mass extinction is a direct result of humans consuming and destroying ecosystems. Since the beginning of the industrial age, human populations have grown and individual consumption has increased. “Increasing consumption per person, multiplied by a growing human population, are the root causes of the increasing demand for ecosystem services (Millennium Ecosystem Assessment, 2005).”

While humans are destroying ecosystems, they are also flocking to cities. The world is rapidly urbanizing. “Recent reports by the UN suggest that by 2008, 50 percent of the world’s population lived in urban settlements, which together take up just 3 percent of the Earth’s land area (Barley, 2010).” According to recent research this is good for ecosystems but bad for human health and psyche. Urbanites consume less per capita than rural residents, but have higher incidents of physiological and psychological pathology (Barley, 2010).

The question now is: How can cities be good for both ecosystems and humans? How can people find the health benefits offered by a more natural setting while benefitting from the efficiency of high-density living? Urban forests, the trees along city streets and in parks, offer this opportunity. Urban forestry provides humans with a much-needed connection to nature as well as provides valuable ecosystem services, such as air quality benefits and water quality improvement.

One of the challenges for urban forestry is that urban trees are very expensive. It costs approximately $300 to plant an urban tree. Planting a tree in the forest costs only a few cents (depending on equipment and location). “Yet the benefits to urban environments are significant as trees shade urban environments, reducing urban heat island effect, reducing energy use and ultimately having a double impact in fighting climate change (Vargas, 2010).” The problem is, that the benefits of trees are not commodities that can easily be sold. Since there isn’t a way to monetize these benefits, urban forestry programs are typically underfunded and cities struggle to maintain their trees.

Ecosystem service markets may offer an opportunity to quantify and financially value the non-commodity benefits of urban forestry, helping to offset some of the costs. This document explores these opportunities, looking at the viability of participation in existing markets, and introduces the idea of viable potential markets.

Why Ecosystem Services for Urban Forestry?

The topic of ecosystem service markets is particularly interesting because it dives into both philosophical and practical questions around how value is assigned. For example, how do humans financially prioritize the world and how is value created and destroyed? Urban forestry is a useful lens through which to look at this topic. There is plenty of data and research to quantify the value of urban forest ecosystem service benefits. However there is no project to-date that generates revenue from the value of those benefits.

Since the emergence of carbon markets many urban foresters have been looking at how they can enter the ecosystem service marketplace (International Society of Arboriculture , 2007). In April 2010, The Urban Forest Map ( launched. The intent of this project is to provide a publicly accessible tool that enables urban forest managers to affordably and accurately assess and communicate the value of the urban forest. The benefit of this tool is that it provides the carbon calculations required by the Urban Forest Project Reporting Protocol for quantifying project direct CO2 sequestration (not indirect). This means that with some adaptations, this tool could potentially aid in inventory, management and calculations for project verification for the California Climate Action Registry.

The question is: Are CCAR credits obtainable and viable? Is there a market for CCAR verified carbon credits? If not, the next question is: Is there another urban forest ecosystem benefit that could emerge as offering the more value than carbon?


Planting trees remains one of the cheapest, most effective means of drawing excess CO2 from the atmosphere (Vargas, 2008). A single mature tree absorbs carbon dioxide at an average rate of 48 lbs/year (and up to 2.2 metric tons in a lifetime) and releases enough oxygen back into the atmosphere to support 2 human beings (Michigan State University).

In addition to direct sequestration, shade trees in urban environments can also affect atmospheric CO2 by shading homes and office buildings. This reduces air conditioning needs up to 30%, thereby reducing the amount of fossil fuels burned to produce electricity. “This combination of CO2 removal from the atmosphere, carbon storage in wood, and the cooling effect makes trees a very efficient tool in fighting the greenhouse effect (McPherson, 1998).”

In 2008, the California Climate Action Registry (CCAR) created the first opportunity for urban forest participation in the carbon markets, through the Urban Forest Project Reporting Protocol. “The protocol establishes eligibility rules, methods to calculate reductions, performance-monitoring instructions and procedures for reporting project information (California Climate Action Registry, 2008).” The protocol addresses direct carbon sequestration from trees, as well as indirect emission reduction from shade trees. Emissions reduction from shade trees can only be counted by utilities.

However to-date nobody has used the protocols to verify an urban forestry project. After a thorough assessment of the protocols, there are three major obstacles preventing a successful project:

  1. The protocols require a 100-year guarantee for the survival of the trees. With a 70-year average life span of an urban tree and a 10% attrition rate, no smart verifier would risk losing his state forester license and put his career on the line by signing a verification document guaranteeing 100% survival for 100 years.
  2. Verification is Costly and Difficult. The protocols require 100% verification, which means that every tree has to be accounted for. The Current rate of tree inventories is $3/tree, more than one would receive for the sale of the associated carbon. There is language in the protocols that state “once remote sensing is sufficient, it can be used” but remote sensing technology is far from being sufficient (Vargas, 2010).
  3. Legal Rights to Carbon – Because of the dual benefit of direct carbon sequestration and indirect through shade trees, the best project participants are utility companies. Shading, reduce use – if they can show reduced energy use, they get benefit. The problem is that the only room for trees in urban areas are typically on private homeowner property. The property owner owns carbon right. But once the project is registered, the property owner has to sign away that right for 100 years. Eventually, when a property is sold, the carbon right is retained by utility company. The only way this could work would be if the property owner is a large institution with a lot of land.

Ultimately is appears that registering urban trees for carbon offsets may not be viable. There are cheaper ways to reduce atmospheric carbon, like encouraging public transportation. However in lieu of using the protocols and selling credits on an open market, San Francisco is piloting a project to offset internal carbon emissions from city operations with a small group of trees tracked by the Urban Forest Map. So far the credits have not been sold and no revenue has been generated for the project (Hui, 2010).

Air Quality

Unfortunately a 14-year old report has set a precedent stating that Urban Forestry Projects were not viable for emission reduction credits according to EPA standards. This 1996 report discounted the viability of air quality credits stating: “Despite existence of these [market and regulatory opportunities], urban forestry ERCs (emission reduction credits) are not feasible based on the findings of this investigation and the recommendation of the scientific review committee (Luley).” This conclusion was based on the fact that in 1996 there was a lack of research and evidence that urban forestry ERC’s (emission reduction credits) were real and verifiable. Until today, this assertion has not been challenged. However, according to an anonymous source, the city of Sacramento is discussing the option of challenging this report in light of the latest research on air pollution removal and newly available tree mapping technology.

Potential Markets


According to the latest research both physical and mental health improve when we have access to green space. According to a Dutch study “the prevalence of 15 common illnesses depended on the amount of green space within 1 kilometer of the patient’s homes (Barley, 2010).” The list included anxiety, asthma, heart disease, diabetes, bone and muscle pains, headaches and respiratory infections. (Journal of Epidemiology and and Community Health). A study in Portland Oregon shows with a high level of certainty that the ecosystem services for air quality improvement of trees and shrubs in the city of Portland is directly responsible for a 23 percent reduction in respiratory illness for all of Multnomah County (City of Portland Bureau of Environmental Services, 2010).

In a 1990 report “The estimated annual health costs of human exposure to all outdoor air pollutants from all sources range from $40 billion to $50 billion, with an associated 50,000 premature deaths (American Lung Association, 1990).” Since 1990, those numbers have nearly doubled, according to a 2010 report by the American Public Health Association. As much as $80 billion in health care costs and premature death caused by air pollution from traffic (American Public Health Association, 2010).” If we apply the results from the Portland Urban Forestry study and project them to a national scale, a 23 percent reduction in those costs would save approximately $20 billion annually. Unfortunately very few cities in the United States have Urban Forestry Programs such as Portland

“Federal and state spending on Medicaid, the nation’s primary health insurance program for low-income Americans, jumped nearly 10% in 2009 (Levey, 2010).” While there are currently no markets for the ecosystem health benefits of urban forests, there may be a strong business case for exploring a market-based solution to help reduce both public and private health costs through greening urban environments.

Areas For Further Consideration and Research

Potential Changes to the CCAR protocols for Urban Forestry

In order for the urban forestry protocols to be put to use they need to be adapted so that urban forestry programs can easily and affordably participate. The primary change should be in the 100-year guarantee.

Research Possibilities for a Health Care Offset Market

One of the most interesting ways to reduce health care costs is to improve urban ecosystems and create healthier environments. Now that the data is available to quantify the direct health benefit of urban forestry, it would be interesting to conduct further research and explore the possibility of developing of a regulated/verifiable ecosystem service health care offset market.


While currently there is no viable option for participation for urban forestry projects in ecosystem service markets, there is potential for future participation. The viability of participation would require a complete revision of the CCAR protocols, a change of EPA regulations for air quality emissions credits, or an entirely new market. None of these possibilities will happen anytime soon, as they will take many people to engage in lengthy processes. In the meantime many are working to communicate the value of urban forests to policy makers and urban residents with the hope that trees aren’t “cut” from the budgets.



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