Ecological Market-Commons

* White Paper: Regen Network Economics Technical Paper. An Ecological Market-Commons, Secured by Proof-of-Stake. G. Landua, K. Birchard, W. Szal. Regen Network, Version 0.2, February 16, 2021

URL = https://regen-network.gitlab.io/whitepaper/Economics.pdf?

"A ... framework for overcoming the coordination challenges that are currently undermining market and non-market attempts to manage the common resource base of ecosystems as a public good. ... We will argue that a commons-based framework is optimal for understanding both the design and operation of a blockchain as well as the management of ecosystems."

Abstract

This paper will outline the use case of our token, starting from the context of ecological markets and agriculture. We will explore why blockchain is an appropriate solution, and why our Proof-of-Stake architecture and token design provide a suitable framework for overcoming the coordination challenges that are currently undermining market and non-market attempts to manage the common resource base of ecosystems as a public good. After this introduction we will detail our current token design, as well as list important topics for research and development for our project and the space more generally. We will argue that a commons-based framework is optimal for understanding both the design and operation of a blockchain as well as the management of ecosystems. We will review pilots that catalog the different actors and how they interact with our blockchain and token, and illustrate our token economy in a formal economic model. We intend for this paper to clearly illustrate the role of bringing together a group of potentially adversarial stakeholders to generate the public goods of verified information about ecological state, and the regeneration of agro-ecosystems to revitalize the carbon cycle and increase land steward profitability. This paper focuses exclusively on the protocol Proof-of-Stake token mechanics—not the smart contract enabled tokenization layer that will be built to represent, steward and exchange ecological value."

Contextual Quotes

The argument for Ecological Market-Commons

G. Landua et al. :

"We posit for the sake of argument, that we can view functioning markets—with their standards of engagement, goods, and participants—are one variety of commons. Regen Network supersedes the tragedy narrative—bringing to bear the best that both market thinking and commons governance have to offer.

Regen Network effectively creates an ecological data commons in which the common pool resource of high quality data and trusted attestation about ecological state can be used by different stakeholders to form public or private agreements.

We refer to our approach as a market-commons approach in which the market mechanisms are designed and maintained nested within the health imperatives of a clear group of stakeholders which govern the system. This is not to be confused with social democracy or other state-led efforts because this is a voluntary network of actors determining the optimal governance for market mechanisms to generate two key layers of public goods: near-perfect information about ecological health for all, and ecological regeneration outcomes for all." (https://regen-network.gitlab.io/whitepaper/Economics.pdf?)

Using Public Ledgers for Direct Payment of Regenerative Work

W. Szal et al. :

"Rather than viewing farmers simply as food producers, we would like to elevate their societal status to that of land stewards. Agricultural use is the primary way (by land area) that humans interact with land, representing 37% of land globally [wor19]. Currently, the vast majority of this activity is degenerative, but it doesn‘t need to be this way. We do this through two fundamental instruments: Ecological State Protocols (ESPs) and Ecological Agreements. ESPs are algorithms that, primarily utilizing remote-sensing data, determine the change in state of a specific facet of ecological health. An example of this would be a soil carbon ESP, which would track the change in soil carbon in a given piece of land over a given period of time. Ecological Agreements are smart contracts tied to the outcomes of Ecological State Protocols. For example, a rancher has demonstrated via a soil carbon ESP that they‘ve sequestered one hundred tons of CO2 over the past year in their ranch land. A carbon market, utilizing an Ecological Agreement, could pay them automatically when this carbon sequestration is verified." (https://regen-network.gitlab.io/whitepaper/Economics.pdf?)

Excerpts

The Regen Network

W. Szal et al. :

"The aim of Regen Network is to imbue the economy with ecological sentience.

The model of production of ecological knowledge—what and how we know about what is happening in a given ecosystem—is the foundation for achieving this aim. Therefore, a community dedicated to maintaining a decentralized open ledger of ecological health information to serve as the basis for conditional agreements between parties is an essential building block for a new phase of the global economy that accounts for ecological health and invests in ecological regeneration as the cornerstone of healthy business and governance. This paper outlines the economics and governance of the community that will maintain this open ecological ledger. On top of this ledger, a new economy of ecological value will be built. We will explore the economics of this application layer in subsequent papers. The “Regen“ in Regen Network is short for regeneration. But what does this mean? When we use the term, we‘re drawing on the work of business development consultant and educator Carol Sanford. We refer to regeneration as actions that increase the capacity, viability, and vitality of both the agent and system being acted within or upon. As these concepts can be elusive, it may be useful to ground our working definition in the sphere of regenerative agriculture. As defined by our sister enterprise, Terra Genesis International, regenerative agriculture is a system of farming principles and practices that enhance ecological health [Ter19]. This could be contrasted with conventional agriculture, which degrades ecological health. Public good outcomes of Regenerative Agriculture include carbon sequestration, clean water and biodiversity. Private good outcomes include increased economic prosperity for land stewards and other network participants.

Financial capital is often created by liquidating ecological and social capital (for more on this subject see [Sza19a]). For example, the vast majority of palm oil plantations are sited on clearcut rainforest. Timber is often harvested using clearcuts, and fisheries extract so many fish that the populations crash.

All this is driven by short-term profit. While it is clear that these processes create some form of value (especially financial capital), it is also clear that there is something important that has been lost along the way, and that the true wealth of the system is undermined. As these losses keep adding up, we find ourselves in a state of both societal and ecosystems collapse. If we want to address ecological degradation systemically, we need to intervene somewhere in the economic process. Regen Network aims to reinvent the economics of agriculture, and land use more broadly by bringing ecological state information to agreements and contracts to ensure rational choice and more efficiently price externalities. Beyond rational choice and pricing externalities, ubiquitous access to high quality ecological information will have an enormous impact on the quality of the relationship between the human economy and the greater than human living world.

Near real-time access to high-fidelity ecological state information is now possible. This capacity has not been a common part of the human experience since the poorly-understood and nearly-forgotten evolutionary arc of small bands of hunter-gatherer Homo sapiens. Early humans and intact cultural traditions maintained (and sometimes still maintain) intimate individual and cultural connections to landscapes and ecosystems. We can now regenerate that missing capacity to attune our human economy with the health of the ecosystems that support us. Regen Network is making this leap possible.

How can we ground these grand aims in a tooling that brings these ethics into an actionable sphere? Recent developments in blockchain architecture—such as Byzantine-Fault-Tolerant Proof-of-Stake consensus algorithms—have enabled a new form of decentralized governance in a data commons. To build on this foundation, we introduce a community staking model to even further decentralize decision making and align it more deeply with the community of users. Built on the Cosmos SDK, Regen Network is one of the first of a third generation of blockchains that leverages the governance mechanisms and data provisions for real world commons management."

Carbon Offset Markets

G. Landua et al. :

"Current ecosystem service markets such as carbon offset markets (voluntary and compliance), are deeply flawed. We feel strongly that the foundation upon which ecosystem service markets—as well as non-market agreements between stakeholders to govern ecological commons in a sustainable, and if possible, regenerative way—will depend on in infrastructure of trust that we refer to as an ecological knowledge commons.

The layers of technology that generate security, durability and integrity around data, compute functions and algorithms are the foundation for a trusted monitoring and verification system of ecological state. This trusted monitoring and verification system in turn is the foundation of any agreement between parties about ecological state. Agreements about ecological state are the foundation for the inclusion of ecological health into our financial system—an important aim of Regen Network.

Currently, ecological health is not held on the balance sheet of any entity, private or governmental. This means that financial decisions are blind to their ecological impacts." (https://regen-network.gitlab.io/whitepaper/Economics.pdf?)

Global Ecological Services Market

K. Birchard et al. :

"Currently, ecological health is not held on the balance sheet of any entity, private or governmental. This means that financial decisions are blind to their ecological impacts. This is starting to change in small ways; there is a global payments for ecological services market. A conservative estimate puts the global market size in 2016 at $36 billion annually [SBC+18]. One example of this would be the Natural Resource Conservation Service (a branch of the United States Department of Agriculture) paying farmers to plant riparian buffers around streams that pass through their farms to improve the health of their waters." (https://regen-network.gitlab.io/whitepaper/Economics.pdf?)