While the use of ecosystem services markets is increasingly discussed as a policy option to protect ecological functions that benefit society, there is limited publicly available information regarding the risks associated with investing in, operating in, and regulating, such markets. In this paper we outline the risks faced both by entrepreneurs who sponsor wetland mitigation banks-the most mature ecosystem services market in the US-and the regulators who oversee them. To identify these risks, as well as their potential mitigants or other strategies to navigate them, we rely upon existing literature and interviews conducted with industry participants, including entrepreneurs, regulators, and consultants. This paper seeks to provide a consolidated list of risks that may help to inform investors due diligence processes and their understanding of wetland mitigation banking as a real asset, and may serve as a reference for entrepreneurs and regulators who are new to wetland mitigation banking or other more nascent ecosystem services markets featuring similar risks.
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