MITIGATION AND CONSERVATION BANKING IN THE US-

A MODEL TO CONSIDER

Presented at

Dialogos de Biodiversidad - Compensaciones Ambientales

Bogota, Colombia May 22,2014By

Wayne WhitePresident, National Mitigation Banking Association

Wildlands

Purpose for today

o Mitigation Implementation

o Hierarchyo Avoido Minimizeo Mitigate unavoidable, residual impacts

o Compensatory Mitigationo Permittee responsible mitigationo In lieu fee programo Banks

In 2001 the National Research Council released a comprehensive evaluation of

the effectiveness of wetlands compensatory mitigation required by

Clean Water Act.

o The experience and scientific expertise of the NRC study panel’s most important finding was that the market-driven, incentive-based wetland mitigation banking program had outperformed both in-lieu fee mitigation and permittee-responsible mitigation

o No Equivalency Standard

Overview

o What is a mitigation/conservation bank?

o Regulations require mitigation/offsets

o Evolution of US banking

o Benefits of banks-

o Agency requirements for bank approval

o Service area and credits

o Offsets around the world

o Key messages

o Principles of mitigation and recommendations

What is a conservation (habitat)bank?

“A site or suite of sites containing natural resource values that are conserved and managed in perpetuity for specified listed or other at-risk species and used to offset impacts occurring elsewhere to the same type of resource.”

o Pre-approved Net Conservation Benefit

Offset Unavoidable Impacts

Review

Team

Land-owner

Agency

CE Holder

$ Holder

Land Mgr

Market-based 3rd party System

BrokerBan

k

Agency

Banker Buyer

Bank

Agency

Buyer

Banker

Bank

Bank Sponso

rBuyer

Agency

Tribes

Local Gov’t

AgencyAgency

Scientific Communit

y

Regulatory Driven Market

Federal Government

o Clean Water Act- Sec 404 o (No-net loss: Mitigation banks)

o Endangered Species Act- Sec 7 o (BO’s: Conservation banks)

o Natural Resource Damage Assessment (Restoration to offset impacts)

State and local Governments

o Varies- water, protected species and natural resources

History of Banking

Restore and maintain the chemical, physical, and biological integrity of the

Nation’s waters.

No Net Loss Policy (1989)

Permit from USACE or StateAvoid, Minimize, Compensate impacts

Compensatory Mitigation:Bank over In-Lieu fee over PRM

Clear policy regulation over time

Creation/Restoration over Preservation

…provide a means whereby the ecosystems upon which endangered and threatened

species depend may be conserved…

Unlawful to “take”

Permit from FWS or NMFSAvoid, Minimize, Mitigate impacts

Compensatory Mitigation:No clear mitigation type preference

No overall mitigation policyDepends on species needs

Clean Water Act1972

Endangered Species Act1973

Evolution of Mitigation

1972Clean Water Act and Endangered Species Act

Required permit to fill wetlands1973

Endangered Species ActProhibited take of listed species

Both Acts require offsets but

no directive or cookbook on how toNO MITIGATION POLICY

Evolution continued

10 years laterFWS memo recognizing mitigation banking

12 years later First wetland mitigation bank approved

17 years laterNo net loss policy but no guidance

19 years later First conservation bank established

Evolution continued

23 years laterFederal Guidance on Establishment Mitigation Banks

30 years later FWS Guidance (Policy) for Conservation Banks

36 years later “New” Wetland Mitigation Rule

41 years laterFWS Developing mitigation policy for all authorities

Slow Evolution Problems

o Biodiversity further reduced- low quality offsets not meeting ecology goals

o More endangered species- further loss of habitat

o Greater conflict between project and biodiversity over time

o More polarization and activist groups o Project planning lack guidance for designing

offsets; increasing permitting timeo Increasing costs

Why do Banking?As opposed to permittee responsible mitigation…

Biological Benefits Aid in recovery

(outcome-based & traceable)

Preserve ecosystems Avoid piecemeal

mitigation & temporal habitat losses

Contributes to conservation strategies; science

Business Benefits Streamlined

permit/mitigation process

Transfer of liability Provides assurances

(mgmt, financial) Reduce agency time

monitoring mitigation sites

Reduce need for enforcement

For-profit conservation

Vernal Pool Tadpole Shrimp

Economies of Scale

Key Benefit

o Private sector investment to conserve habitat not consume habitat- For profit investment to conservation biodiversity!

o Provides potential new economic engine for private landowner who want to maintain ownership

o Assist implementation of regional conservation planning efforts and recovery of endangered species

o Severance of liability

Banks Require Assurances

Financial mechanism sufficient to fund long-term management, monitoring and reporting (non-wasting endowment preferred)

Perpetual Conservation Easement (or alternative for public lands)

Long-term Management Plan with Performance Standards, Monitoring, etc.

Legal/Real Estate Financial Biological

the legal document for the establishment, operation and use of a conservation

bank

CBA

Process procedurestimelines

Bank Service Areas

Mitigation/Service Area = the geographic area within which offsets can occur o Defined by the Agencieso Based on the conservation needs of the

species:

Conservationstrategy

Hectares/ Meters

Individuals

Weighted Function

Salmon Credit (Sc) Equation

5.0*** LpbSLnbS fpfpSc

Credits = Surrogate Measures for Recovery

1000 hectare

s habitat

1 credi

t=

1 pair

1 credi

t=

1 credi

t=

oror

Time-Based?

Simplify Credits

Offset Examples Worldwide

o Australia- 1) NSW Biobanking in 1995 law. Mixed results; 450 hectares conserved so far; 2) Victoria BushBroker. Uses Habitat Hectare metric, market place for developers and landowners; mostly successful

o UK- Biodiversity Offsetting in England 9/13o Germany- ILF to local jurisdictions may lack in-

kind offsets plus true cost to mitigate questionableo India- Some legislative policy but lacks clarity and

guidance; not successful o Chile- Legislation requiring offsets; developing

processes and policies

International Activities

o Habitat Banking in Latin America and Caribbean- A Feasibility Assessment- specific discussion of potential market in Colombia

o Business and Biodiversity Offset Program- providing mitigation hierarchy with an emphasis on biodiversity offset guidance and standards consideration for corporations and governments

Messages Key

o Species Conservation Strategyo Compensatory mitigation should be based on a larger

landscape conservation strategy for the species and lead towards a net conservation benefit.

o Must develop Compensatory Mitigation policyo Have one standard for compensatory mitigation and

implement it consistently for all forms of mitigation. Use mitigation plans and programmatic agreements when possible.

o Distance from Impact Site and Credit Methodologieso Careful selection of distance from impact site (or service

areas for banks) and simple credit methodologies based on balance between needs of species and mitigation program.

o Program Process/Timelineso Policy or guidance on how the compensatory mitigation will

operate, education of personnel, legal review, templates, tracking, etc.

Key Principles of Mitigation

o Assure appropriate offsets are implemented that benefit the conservation of species and habitat

o Provide a strong biological, financial and legal framework for offsets to persist for the length of the impact consistently

o Landscape scale implementation o Communicate to all stakeholders the

basic provisions expected of them in any situation where mitigation is required.

Principle 1- Strong Assurances

o Mitigation projects must contain strong performance assurances that restoration, enhancement, creation or preservation activities will be completed as required in perpetuity. This would include a mix of legal and economic assurances including support for the premise that mitigation done in advance of impacts is preferable to mitigation done after the fact.

Principle 2- Uniformity

o Standards and metrics should be used consistently for permits involving mitigation. These standards and metrics should apply for permanent or temporary impacts . Metrics should provide meaningful information about particular species and habitat characteristics. Standards must also insure measurable and lasting benefit using the same ecological criteria and metric that are used to measure impacts.

Principle 3- Landscape scale

o Offset proposals should take into account large scale conservation strategies. High priority habitats should be protected using the mitigation hierarchy- avoid, minimize then mitigate residue, unavoidable impacts. Low priority habitat less avoidance. Like-for-like offsets or trading up when fully justified.

Recommendations for Establishing a Compensatory Mitigation Program

o Review existing regulatory frameworko Establish policy and regulatory foundation with

clearly defined processes (scientific, legal and financial) and timelines

o Integrating with existing permitting processeso Build capacity to implement mitigation policyo Equivalency for types of mitigation – banks, in

lieu fee. permittee responsible o Strive for high standardso Preference for banks over in lieu fee or

permittee responsible mitigation supported by US studies

o Minimize the number of agencies

Ministry Manual

Legalo Offsetting measures will guarantee the

effective conservation or ecological restoration of an equivalent ecological area, where it is possible to generate a new management category, a permanent conservation strategy or where the biodiversity conditions are improved in areas that have been negatively transformed or subject to transformation processes.

Ministry Manual

Scientifico To qualify must address three

fundamental aspects:o a) How much to offset in terms of area o b) Where the offset should be carried out o c) How to offset and what type of action

to perform

Ministry Manual

Financialo Establish a financial management framework (trust

fund or other), that guarantees the design, implementation and control of the management plan, in accordance with the mechanisms provided by law.

o Enter into an agreement with the user and an established fund for the management and execution of the funds.

o Direct execution of the funds with the possibility of establishing a contract or agreement for a non-governmental organization or consulting firm to execute the funds.