[ed. If you want a good primer on the nuts and bolts of the Endangered Species Act this is an excellent place to start. That said, the concept of mitigation/conservation banking has been around for a long time, and the problems associated with its use are well known: complexity, uneven administration, subjective valuation, inconsistent application, political manipulation, etc. - along with a good dose of uncertainty:
vis-a-vis measuring actual threat to, and recovery of (or lack thereof), the species being targeted (all of which are described in this article). In my experience, these banks are frequently an option of first resort (pay money, extend credits, move on...) when other mitigation approaches might work better. That's because they don't constrain what a developer/landowner actually does with their property, and regulatory battles are defused. There are five approaches to mitigation: avoid, ameliorate, rehabilitate, restore and replace. Mitigation banking typically focuses on only the last - replacing what is lost rather than, say, avoiding an impact to begin with, or rehabitilitating habitat that has inadvertantly been injured. This new system, or crediting exchange, attempts to develop a standardized process for mitigation credits that incorporate all of those components. Should be interesting (academically, at least) to see how the metrics of such a system are developed.]
In 1990, a northern subspecies of the spotted owl was listed as threatened under the Endangered Species Act (ESA), restricting the modification of its habitat across large swathes of the northwestern United States. For the area’s logging communities the results were devastating. In just a few years, perhaps 30,000 logging jobs were lost as a direct result, with whole communities abandoned, mills shuttered, and a way of life gone extinct.
The decision caused a lot of pain and suffering for how much good it did, which turned out to be none at all. The northern spotted owl’s population continued dwindling because, as it turned out, the principal threat to its survival was apparently not habitat loss, but the spread of an invasive species: its cousin, the larger eastern barred owl. The U.S. Fish & Wildlife Service (USFWS) is now considering a plan to start killing the invader in order to protect the northern spotted owl from natural selection. Given the ESA’s own spotty history, one has to wonder whether the pain about to be inflicted on the barred owl is really such a good idea.
The Federal scheme for protecting endangered species suffers from a fatal deficit of good science. The ESA requires USFWS to use the “best available” science, not the best possiblescience—and the meager USFWS budget does not allow it to pursue qualitatively better science in the areas over which it has jurisdiction. As a result of this science deficit, the ESA’s sweeping “takings” of private property without just compensation produce few conservation benefits. Of the 2,000 or so species that have been listed as threatened or endangered over the past forty years, only 28 have been taken off the list as a result of “recovery”, and many of those 28 weren’t really endangered to begin with. The law also creates perverse incentives for landowners and other private parties to destroy high-quality habitat lest one of its species be listed as endangered or threatened and hence constrain uses of the land or cause it to be sequestered by the government. Thus, as in so many other areas, heavy-handed Federal regulation often achieves the very opposite of its intended purpose.
Among the ESA’s many stakeholders, a consensus is developing that the law cannot accomplish its goals of species conservation and economic development without greater reliance on markets. In Texas, a succession of three major species conservation plans over the past decade has shown the potential that a market-based approach could have for species conservation. The foundation of each of these conservation plans is a habitat “exchange” in which the impact to a listed species’ habitat is offset by mitigation measures in another part of its habitat. The logic is similar to that of emissions “credits,” such as the 1990s-era sulfur dioxide trading scheme, or to arrangements in which vertical space for urban construction is traded off among sites (though in the habitat exchange model there is not necessarily a “cap”). The correlation of impact and mitigation is accomplished through a “crediting” system based on a fuller scientific understanding of species requirements than is normally available to USFWS in its determinations, made possible because of greater investment in research by private participants.
For environmental stakeholders, the new approach helps solve several major problems of the current ESA. It removes the unfortunate incentive to hedge against ESA obligations that might arise in the future. It allows for unified conservation management at ecosystem-scale, rather than scattered across patches of habitat, thus increasing the possible conservation benefits. By giving the market a key role in gathering information about endangered species, it creates the prospect of listings and recovery/conservation plans based on much better science than is currently the case. And with “adaptive management” the science continues to improve during the conservation effort. For these reasons, the new approach has been supported by important environmental stakeholders, such as the Environmental Defense Fund.
For economic stakeholders, the new approach also solves major problems. For landowners, it helps turn a potentiality devastating liability into a source of profit that advances conservation goals. If offers the prospect of increased economic opportunities and greater protection for property rights within a more predictable regulatory framework. It allows mitigation efforts to be dynamically tailored to the impact they’re designed to offset, across a range of mitigation options, thereby laying the foundation for an economically rational balancing of costs and benefits.
Some of the ESA’s flaws—such as its heavy-handed impact on property rights—can only be addressed through legislation, and through a much-needed revision in the Supreme Court’s jurisprudence on regulatory takings. And given the complexity of factors that can threaten a species, it may be doubted in many cases whether any conservation scheme would have much effect. For these reasons and others, the ESA should be extensively revised. But in the meantime, habitat crediting exchanges offer a market-based approach that could significantly improve species conservation and economic development within the framework of the existing ESA—provided regulators can resist the temptation to manipulate the system and distort its delicate economics.
Image: Larry 1732 on Flickr
