President Obama recently released a Presidential Memorandum supporting private investment in natural resource conservation and restoration. Mitigation and conservation banking, in particular, were lauded as the environmentally superior and preferred approach to natural resource impact mitigation. Current studies suggest that private sector investment in compensatory mitigation is currently $1.3 – $4 billion dollars with 40% of the mitigation coming from mitigation banks. With the support from this memo, these numbers are sure to increase in the near future. This memo continues a trend of increasing support for market-based approaches to environmental problem-solving, echoing other federal policies such as the US Army Corps of Engineers 2008 Final Rule. Beyond the expressed preference for mitigation and conservation banks, other highlights included an emphasis on consistent and compatible mitigation policies across federal agencies; net benefit, or at minimum, no net loss goals for all natural resources; increased large-scale land use planning; and resiliency of mitigation to future environmental changes.
Consistent and Compatible Mitigation Policies across Federal Agencies
In an effort to support mitigation banking and other private investment in conservation, the memo compels federal agencies to develop transparent, consistent, and compatible policies that support advanced compensatory mitigation approaches, including mitigation banking. According to the U.S. Army Corps of Engineers, permits for projects requiring mitigation were processed significantly faster when mitigation bank credits were used (average of 120 days) as opposed to onsite or off-site permittee responsible mitigation (averages of 177 days and 243 days, respectively). Developing mitigation or conservation banks, however, can often drag on for years trying to coordinate the interests and policies of several federal agencies. This memo set specific requirements and timelines for all natural resource management agencies, including U.S. Fish and Wildlife Service, Bureau of Land Management, and the U.S. Forest Service, to develop transparent and consistent polices regarding conservation and mitigation. These changes will likely lead to a reduction in the overall real and perceived risk of investment, as well as an increased use and expanded development of mitigation and conservation banks across the U.S. to new markets and new geographies. This will create larger companies that are more efficient and have more expertise. In turn, these likely outcomes should allow the industry to benefit from an increase in the amount of cheaper capital. The memo also promotes innovative sources of capital that could be used to finance projects such as pay-for-success bonds.
Net Benefit or No Net Loss Goals for all Natural Resources
The “No Net Loss” policy for wetlands has driven extensive restoration of wetlands across the U.S. and created an active market for wetland mitigation credits. Other natural resource laws, such as the Endangered Species Act, have no such clauses. This has led to inconsistencies amongst sensitive species and habitat mitigation. The memo seeks to unify natural resource mitigation goals across agencies by encouraging the adoption of a no net loss, or ideally, a net benefit goal for all natural resources. This could lead to significant changes in approaches to sensitive species and habitat mitigation, and also potentially unveil new categories of natural resources in need of mitigation.
Large-scale Land Use Planning
Large-scale land use planning is encouraged for both siting future development, as well as, identifying priority areas for restoration/conservation within communities and watersheds. County-wide habitat conservation plans and, watershed plans, and city master plans are increasingly being utilized to lower long-term environmental risks, maximize environmental benefits, and reduce project timelines within a given region. Mitigation and conservation banking already incorporates some elements of large-scale land use planning in the selection of bank sites. This memo may compel even greater siting considerations for banks, such as ecosystem services provisioning.
Resiliency of Mitigation to Future Environmental Changes
An overarching theme of the memo is advanced planning and conservation and as part of this, agencies are encouraged to consider the resiliency of mitigation measures to future environmental changes. This is a particularly salient point given the global concern for environmental issues such as climate change, sea level rise, and drought. These anticipated environmental impacts have not been addressed consistently, or in some cases at all, in past restoration and conservation efforts. The memo could be a catalyst for natural resource management agencies requiring the use of resilient restoration designs and long-term management practices.
With the issuance of this presidential memo, the future of natural resource management in the U.S. appears to be centered on mitigation and conservation banking. With the inclusion of a greater breadth of natural resources and the issuance of net benefit/no net loss policies, mitigation and conservation banking will likely see significant changes across the U.S. in the upcoming years. These changes, however, offer increased opportunity for investment, innovation, and efficiency in protecting our nation’s environmental assets. Conversely, if future policy developments lead to a no net loss policy for other natural resources, such as the Endangered Species Act, this may significantly increase mitigation costs and timelines for permitees, especially in states other than California.
Click on the following links for related material:
- Presidential Memorandum
- PERC Report: Conservation Banking Success at Ridge Top Ranch
- Species Translocation Optimizes Conservation Bank Value at Ridge Top
- WRA Provides Conservation Finance Expertise at CAFÉ Annual Meeting
- Mitigation Banks Gain Traction According to National Report Card
 BenDor T, Lester TW, Livengood A, Davis A, Yonavjak L (2015) Estimating the Size and Impact of the Ecological Restoration Economy. PLoS ONE 10(6): e0128339. doi:10.1371/journal.pone.0128339