functions—opening the door to wetland mitigation banking. Today, there are more than 400 wetland banks across the United States, where private landowners and companies protect and restore wetlands in order to sell credits to developers who need to offset their damages. In Colorado, the Middle South Platte River Wetlands Mitigation Bank opened for business in 1999. On about 90 acres situated in Boulder County near the town of Frederick, the bank’s owner, David Yardley, and his partners created three types of wetland habitat on former farmland. Clients have purchased credits to compensate for wetland losses from the construction of schools, roads, shopping centers and subdivisions. Yardley says the Middle South Platte bank isn’t exactly a cash cow, and he knows of only a couple of other wetland banks that have opened in Colorado. Nationally, however, economists estimate the market in wetland mitigation credits is now worth roughly $2.4 billion a year. Examples of markets aimed at biodiversity conservation and wildlife habitat in Colorado are limited, but successful efforts in other states provide a blueprint for how programs here could work. The world’s largest population of the golden-cheeked warbler occurs on the Fort Hood army base in Texas. The bird’s occupied habitat covers nearly a quarter of the military reservation, but since it landed on the federal endangered species list in 1992, the Army has had to mitigate any negative impacts to the bird’s population. In the mid2000s, as the Army was expanding training exercises on the base, the military teamed up with the Environmental Defense Fund and other governmental and supporting partners to create the Fort Hood Recovery Credit System. Through this market program, the Army compensates for harming the warbler’s turf by purchasing recovery credits from nearby private landowners, who agree to conserve and manage for appropriate habitat. The system steadily increases the net benefits to the warbler by setting aside 10 percent of available credits each year and conducting transactions where the credits ensure more acres are being protected than affected. A March 2010 independent evaluation concluded the three-year program has achieved habitat conservation, facilitated efficient interactions between market participants, and added flexibility to the Endangered Species Act (ESA). Closer to home, the Environmental Defense Fund is involved with another pilot
Kevin Moloney
ment, and genetic resources. Market initiatives to tie economics to the protection of three of those services have been the most prevalent, largely because they are the most globally regulated, but also because they are the most visible to key affected stakeholders: biodiversity conservation, watershed services and climate change mitigation. In the 1970s, the United States first began regulating the degradation and loss of environmental resources through a series of laws. The Clean Air Act, Clean Water Act and Endangered Species Act all take regulatory approaches to protecting and restoring natural resources. Government agencies set limits on pollution levels, loss of wetlands, species decline and habitat degradation. Constituents must then abide the restrictions through government-directed remedies, regardless of the impacts to their own livelihoods. Landowners have complained that the laws set up financial disincentives. To have endangered species habitat or wetlands on one’s property prohibits money-making land uses—grazing, construction, energy development—that may interfere with regulatory goals. Laws, such as the Endangered Specis Act, pit the recovery of a species against the economic well-being of private property owners. Policy analysts have criticized the laws because they promote regulated entities to take the minimum action necessary to meet legal standards, instead of investing in innovative practices that could actually exceed the laws’ goals. “What we’re living with right now is huge regulatory failure,” says Sally Collins, former director of the U.S. Department of Agriculture’s Office of Environmental Markets and past associate chief of the U.S. Forest Service. Collins, who recently left the government and now lives in Lyons and works as a private consultant, says she initially opposed the valuation of ecosystem services and paying to protect endangered species. Her conversion came with the realization that regulatory laws weren’t effectively recovering species or protecting wetlands. Among the first experiments with outside-the-box environmental markets was the one for wetland mitigation credits triggered by the Clean Water Act in the 1980s. The law requires developers wishing to fill or dredge wetlands to show they are attempting to avoid and minimize damages, and then to offset or mitigate any losses that cannot be curtailed. Mitigation means compensation—creating or enhancing an equal or greater amount of wetlands with similar
“There’s a disconnect,” says Josh Goldstein. The concept of ecosystem services “seems to clash with the moralistic views some people have of nature, but I’m not convinced.”
Headwaters | Winter 2011
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