Decentralized, Farmer-Centric NCU Ecosystem Service Marketplace

Few people appreciate the “bushel” as the simple, but powerful market decentralization agent.

Farmers sold [provisional ecosystem services] grain for thousands of years prior to the institutionalization of the bushel. They sold it in bags, boxes, wagons, buckets, or whatever container the buyer wanted to use.

Bushel Basket Magic

“Why do I need a bushel to sell grain?”, must have been said a million times. And the bushel was not needed to sell grain. The bushel was needed to organize and create a decentralized global grain market. Imagine if the bushel disappeared today. The global grain market would collapse in chaos. If it reappeared, the global grain market would reorganize. It is such a simple and magical force that people refuse to spend a moment to even think about it. It is what it is.

Missing Magic in the Ecosystem Service Market

Fast forward about 300 years and farmers began selling [regulating ecosystem services] carbon, water quality, and biodiversity. They sold it in as many ways, forms, methods, and units as the buyers wanted, just like every emerging market does.

A market does not know how to organize itself until it gets unorganized enough. It took the grain market a few thousand years to get so unorganized that someone could understand how to organize it. It has taken the eco-markets about three decades to get so unorganized that someone can understand how to organize it.

That understanding comes from listening to the weak signals of those struggling within the unorganized state and observing how others continue to contribute to the chaos.

The trajectory of the regulating ecosystem service market today is to create more metrics, methods, measurements, methodologies, and market models. Just like 300+ years ago relative to provisional ecosystem services. The unorganized state of emerging markets is normal. The agrarian society did not begin with the bushel basket, and the ecosystem service market could not begin with a Natural Capital Unit (NCU). There just isn’t enough market information to figure out which arbitrary unit of measurement should be instituted.

Carlson’s Law

In the current ecosystem service market model, the demanders create their own accounting system. Suppliers of ecosystem services also need to figure out their market needs. And so, there are thousands of different accounting systems with few to none associated to another in any meaningful manner. According to Carlson’s Law, this is predictable behavior.

“When society has access to cheap technologies, you get innovation from the top-down that is orderly and dumb, and you get innovation from the bottom-up that is smart and chaotic.”

Industry players have a specific need for a specific commodity(ies) and so they demand it is delivered in a certain manner. Farmers need some organizing structure to produce and account for the many things they produce, so they create a supply using a certain method.

Demand-Side Leadership

Where will ecosystem service market leadership come from? The demand side or the supply side, or somewhere between? It seems to up for grabs.

The government sector gave a run at an outcome-based ecosystem service program with the Conservation Security Program in the early 2000s. A good start, but it lumbers on.

The NGO sector has provided data and relationship support to interested parties, but their market remains stuck in bi-lateral agreements.

The corporate sector’s attempts such as BlackRock’s ESG and IEG’s Natural Asset Companies brought their heft to the market, but both seem to have fizzled, or even blown up.

There is a tendency to think that thousands of centralized systems will eventually morph into a decentralized system.

It won’t. Out of chaos, does not always come order.

If I wanted to seek out the “market signals” to decide which ecosystem services to bring to market, I would have to engage with each and every demander and their accounting and transaction model. The market players today, accept that, even though, the number one complaint from farmers, agronomists, demanders, etc. is just that. It is a data mine field.

We haven’t realized it yet, but that model is as ridiculous and efficient as having a global grain market based on unique measurement and accounting systems of every entity buying grain.

Supply-Side Leadership

The photo above is the layout of our grazing operation. By applying a rotational grazing system, it produces a good mix of provisional, regulating, supporting, and cultural ecosystem services.

If I accounted for those ecosystem services by the field or paddock, it would benefit the logic of my production system, but that accounting model would contribute to the “smart and chaotic” aspect of the market.

Both supply-side and demand-side leadership attempts to solve their problem, not the problem. We end up with a million solutions that don’t solve the problem.

Marketplace Leadership

The adoption of the bushel as the arbitrary and standardized unit began with King Henry VII’s 1495 decree. While decrees are powerful, they still have to follow some logic and utility for them to endure. What were the characteristics of the bushel that enabled it to endure? I assume the practicality of the volume relative to weight and usage. Others, too?

Perhaps its best characteristic is that it was useful for both supplier and demanders of provisional ecosystem services relative to production, use, and transaction of the commodity.

The emerging ecosystem service markets lack a natural capital accounting system that is useful for both supplier and demander of the less tangible ecosystem services that can be integrated with the existing tangible ecosystem services.

Landscape Logic

The logic of the landscape is that provisional (e.g., corn) and regulating (e.g., carbon) ecosystem services are produced in the same field, using the same data, and under the same management strategy that are impacted by the same climate and weather regime.

There are reasons we have created different accounting systems for these very related or nearly identical processes, but they are no longer logical reasons.

The landscape logic is to adopt a NCU as the cyber-physical, geospatial bushel basket for 21st century ecosystem service markets. Of course, decrees are even less popular or probable, I assume, today than in King Henry VII time.

The efficiencies of a decentralized, farmer-centric natural capital accounting system has to be a magnitude or more greater that the current market following Carlson’s Law. The NCU accounting system is the missing link between “orderly and dumb: and “smart and chaotic”.

Timothy Gieseke’ career path has traversed through government, private business, and non-government sectors while focusing on the common issue of landscape sustainability from ecological and economic perspectives. This led him to explore the transcendence nature of solving complex, socially wicked issues.

He authored three books that outline the environmental, socio-economics, and governance of EcoCommerce for the purpose of addressing economic externalities. His third book Collaborative Environmental Governance Frameworks: A Practical Guide (2019) describes how shared governance can be used to organize socioeconomic efforts. His second book, Shared Governance for Sustainable Working Landscapes (2016) introduces the NCU (natural capital unit) that functions as a landscape accounting unit, a shared governance catalyst, and the source of a currency. His first book, EcoCommerce 101: Adding an ecological dimension to the economy (2011) describes the intimate relationship natural capital, the environment, and the economic have relative to the welfare of society and nature.