Time to invest in the multibillion-dollar ecosystem marketplace

Two recent policy directives from the Obama administration hold the potential to unlock significant new investment in conservation and opportunities for farmers and ranchers to get paid for providing environmental benefits. 

First, President Obama issued a memorandum on mitigation providing guidance to agencies to achieve a no net loss standard when issuing federal permits for projects impacting protected resources. Then, Interior Secretary Sally JewellSally JewellInterior chief reprimands employees on ethics, sexual harassment A way out of Alaska's fiscal hole Obama to take victory lap on conservation MORE announced a new Natural Resource Investment Center, which complements the president’s memo and creates a powerful new role for the Department of Interior in catalyzing investment in natural resource conservation. 

Heightened political will

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In issuing his no net loss standard, Obama sent a clear signal that economic growth is only sustainable if we are protecting our core natural resources and ecosystems.   

The recent announcement by Secretary Jewell echoed this principle, calling specifically for investments in landscape-scale approaches and market-based solutions that are both more efficient and effective.

“As a former CEO, I am confident the private sector can play a meaningful role in working with us to advance the goals of smart development alongside thoughtful conservation,” Jewell said. “The Natural Resource Investment Center will facilitate this effort by building on current activity to incent private investments in the infrastructure and conservation of water, species, habitat, and other natural resources.”

Mitigation markets as a driver 

Achieving no net loss requires accurate quantification of impacts to natural resources and strong, transparent and accountable mechanisms for offsetting those impacts.                                             

Currently, the bulk of mitigation occurs through in lieu fee programs and permittee responsible offset projects. While many of these programs deliver environmental benefits, uneven quantification of impacts and lack of public transparency mask any sort of conclusion that a no net loss standard has been achieved to date.   

Mitigation banks have made strong inroads in recent years, particularly in the area of wetland mitigation. But other solutions are emerging that hold the potential to deliver more conservation benefits and more accountability to ensure that impacts are fully mitigated as required by law.  

Advanced tools that achieve net benefit 

At EDF, we’ve been working with partners in agriculture, industry and academia to develop one such solution for at-risk species, to help states and industries comply with the Endangered Species Act and potentially avoid costly listing decisions.  

Our solution – habitat exchanges – creates incentives for landowners such as farmers and ranchers to create, maintain and improve wildlife habitat on their property and earn credits for their efforts. Landowners sell these credits to industry to compensate for development, such as roads, transmission lines and wind turbines, that impact species and habitat. With an advanced habitat accounting tool, the exchange surpasses the president’s standard for no net loss, and goes so far as to create net benefit so that every credit sale makes species and habitat better off. 

By offering a new revenue stream for landowners, and a faster and more standardized process for industry to move projects forward, habitat exchanges are creating a win for people, wildlife and the economy. 

So what comes next?

Obama and Jewell have set the bar high through their recent policy directives.  This stimulus provides the opportunity for agencies like the U.S. Fish and Wildlife Service and the Bureau of Land Management to embrace these emerging tools that bring the efficiency of markets to the practice of conservation.

I am more hopeful than ever that with more advanced tools and more attractive investment opportunities, this nation will begin to drive more dollars into the ecosystem marketplace, generating returns that benefit us all.

Holst is associate vice president of working lands at the Environmental Defense Fund.

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