On Sunday, September 7, 2008, the federal government took control of Fannie Mae and Freddie Mac, which was a dramatic moment in the financial crisis that originated in the housing market. Estimates of the cost to the government of this extraordinary action were around $25 billion. This event, and the broader financial crisis it was a part of, made longtime proponents of the markets that had just collapsed question the most basic assumptions underlying those institutions.

Three days after this takeover, a group of people gathered in Ellicott City, Maryland, a short drive from Washington, DC, to discuss the creation and expansion of a very different kind of market. The official title of the event was the “Market-Based Conservation Incentives Workshop,” but in the following years, this now annual gathering was renamed the “Ecosystem Markets Conference.” This first meeting brought together more than 100 participants from diverse groups, including environmental advocates from the Environmental Defense Fund and Defenders of Wildlife, government officials from the U.S. Department of Agriculture and the Fish and Wildlife Service, as well as private forestry managers and landowners. The description of the first session outlines the basic premise of the workshop: “Ecosystem services provided by working forests— such as clean water, species habitat, and carbon sequestration— have always been undervalued. Ecosystem markets are increasingly recognized as a way to capture the value of these benefits and address natural resource issues.” It is clear from the program and the informal reports of some of the participants that creating markets for ecosystem services was a broadly shared ambition. The goal of the workshop was neatly summarized by the title of the second day's sessions: “Moving Ecosystem Markets Forward.” Participants discussed successful examples of ecosystem markets, but mainly focused on efforts to expand them and create new markets.

This book is about efforts to develop ecosystem service markets (ESMs) in the United States, and more specifically about why it has proven very difficult to do so successfully. But before trying to understand the challenges associated with creating these markets, we have to address the basic question of why someone would even try.