Environmental markets have existed in various forms for over 15 years, with the earliest markets based on environmental targets set as far back at the 1970s.

More recently, with increased uptake by governments, companies and non-profit organizations, these markets are becoming a powerful mechanism to properly price environmental assets, the absence of which has held back investment and essential environmental outcomes.

Together with strong regulatory or voluntary drivers, environmental markets can help reward investments in environmentally beneficial projects, while also creating a new asset class which, based on the current scientific data, is likely to grow and fast.

Nowhere is this more prevalent than the global carbon markets which are growing at 200 to 700 percent per year. Carbon's surge is a dramatic start for the world markets' stage of environmental commodities.

Payment types

Environmental markets fall into three payment categories:

Compliance / regulated markets: driven by local or national laws or international treaties

Voluntary markets: driven by ethical and / or business needs (such as brand, leadership and 'pre-compliance' activity in anticipation of a regulated market)

Government mediated markets: programs funded by governments to incentivize private landowners for activities on their own property.

Commodity types

There are many types of environmental 'commodities' markets, some of which are related directly to ecosystems like forests, soil and wetlands, and others which are land-based but unrelated to such living environmental interaction e.g. renewable energy.

Some markets directly related to ecosystems also provide an ecological service to people such as freshwater, protection from natural hazards and erosion control. These are known as a ecosystem service markets and form a subset of ecosytem markets.

The diagram below offers an illustration of the types of environmental markets by commodity type.