№2 Yellow Corn: The Most Successful Ecosystem Service Market

№2 Corn is the most successful ecosystem service market in the United States. It amasses nearly 90 million acres producing about 14 billion bushels with a gross value of just under $100 billion dollars a year.

As a provisional ecosystem service, corn has had its place in markets for centuries and policy for decades.

Carbon, on the other hand, is a regulating ecosystem service and has struggled to find its place in markets and policy for about two decades.

Economically speaking, №2 Yellow Corn enjoys a mature market, whereas carbon is stuck in an immature market where supply-and-demand dynamics and liquid trades are not commonplace or even in existence.

Mature vs. Immature Markets

A mature economic market is essentially a well-designed or well-evolved economic ecosystem with a robust collection of stakeholders, relationships, data, information, and interactions that results in a fluid exchange of values.

An immature market often relies on bi-lateral trades that have higher transaction costs and a lack of information flowing between markets.

On-Farm Ecosystem Service Production

Ecosystem service market participants may think it is disingenuous to compare provisional ecosystem service markets to regulating ecosystem service market, but as a farmer I use the same management plan to produce all types of ecosystem services.

In a field, I use a single management strategy to produce corn, sequester carbon, generate a degree of water quality, biodiversity, and a relatively long list of known and unknown ecosystem services. I can adjust that management strategy to shift the “quantities” of what is produced. Integrating ecosystem service markets needs to be as seamless as integrating ecosystem service production.

Why is №2 Corn King of Ecosystem Services?

It has taken decades, but №2 corn has succeeded because of shared governance. It is not really a secret, but no one really knows about it either. What has happened is that a market and policy regime that has been built around №2 Corn. The market and policy are designed to play tag team to always make planting corn attractive to farmers — pretty much no matter what.

Quasi — Private Sector

I figured this out early in my farming career. I had careers in government, NGO, and the private sector and began farming commodity grains beginning in 1996.

After a few years I recognized farming in America did not fall into any of those three categories. Farming was not the market capitalism I knew as a business owner, it was not the hierarchy structure of government, and it was not the network community of NGOs.

Farming was a quasi-private shared governance sector. And it worked grand for those provisional ecosystem services.

Floundering Regulating Ecosystem Service Markets

Regulating ecosystem services, like carbon sequestration, water quality, pollination, biodiversity, etc. are, of course, less tangible than №2 Corn, but they do have economic values.

Most of us know they are floundering, but few really know why. The reason they are floundering is that those markets do not have a shared governance model.

How to Mimic the №2 Yellow Corn Shared Governance Model

Mimicking success is probably the cheapest and quickest way to be successful. Right in front of us for decades is the shared governance model that has made №2 Yellow Corn king. The question is what is needed to catalyze shared governance for regulating ecosystem services and how can it be managed to make carbon, water quality, biodiversity, etc. into, well maybe not kings, but at least in the royal family.

I have the plan to utilize the №2 Yellow Corn success and turn it into regulating ecosystem service market success.