Roosevelt Institute | Cornell University

Habitat exchanges and the problem of incentivizing conservation

By Abhinav VijayPublished October 5, 2015

The U.S. Fish and Wildlife Service recently decided against listing the greater sage-grouse under the Endangered Species Act despite clear evidence of a rapid decline in numbers. The service argued that widespread collaborative efforts to save the species were already underway and hence sage-grouse did not meet the requirements. Habitat exchanges, as one of these collaborative efforts, may end up vindicating the service.

By Abhinav Vijay, 10/5/15

There is a 6 billion dollar issue hanging over the U.S. Fish and Wildlife (FWS) Service reached a resolution when the decision not to list the greater sage-grouse was taken.  An iconic bird of the western rangeland, there were reportedly over 20 million birds at the start of the 20th century. Now there are about 400,000 left spread over 11 states in the West and that number is rapidly declining. A recent study by Pew Charitable Trusts estimates a 56% decline in breeding males from 2007 to 2013.

Taking into account the decline, it is a wonder that the FWS decided not to list the species.  However one of the reasons cited was that a collaboration of federal agencies, states, ranchers, industry and environmental groups has already begun to restore areas where it breeds which meant that the species did not meet required standards.  This decision has precedent though.  When the FWS made the decision in 2010 to suspend the listing decision for 5 years, many different stakeholders scrambled together to attempt to avoid an unpopular outcome. Ultimately, the goal was fulfilled and one of the products of this unprecedented collaboration was the development of habitat credit exchanges.

Habitat exchanges work on the basis that private landowners, such as farmers and ranchers, create, maintain, and improve habitat on their land to earn credits which can then be sold to industry or governmental agencies to compensate for habitat loss due to development elsewhere.  Habitat exchanges are a part of the greater adoption of biodiversity offsets which attempt to balance economic development with habitat conservation.  The demand for biodiversity offsets stems from language in the Endangered Species Act that forces development projects to submit habitat conservation plans detailing potential impacts to listed species and measures that the developer will take to mitigate these impacts. Habitat exchanges aim to economically quantify improvements in habitat quality, creating a method of including environmental costs into the development costs.  One recent study found that more than 80% of lands crucial to sage grouse summer habitat occurred on private lands showing how important private lands can be to save a species.  Currently there are three major habitat exchange programs in place- greater sage-grouse, lesser prairie chicken, and a multi species program in Central Valley. While conservation plans were meant for listed species, the greater sage-grouse case shows that as long as a conflict between economic development and conservation occur, habitat exchanges can be implemented.    

Habitat exchanges look to be an improvement to the current conservation banking system.  Conservation banks are parcels of land set aside for permanent protection and, through an initial assessment, are allocated a certain number of credits.  What happens when a bank runs out of credit you ask?  The owner of the bank then proceeds to maintain it indefinitely according to the conservation bank agreement in place.  Habitat exchanges however offer a much more dynamic method of credit exchange since landowners are incentivized to improve their habitat in order to earn more credit.  Habitat exchanges also based upon certain of metrics that determine the quality of habitat.  On the flipside,  developers could use the same metrics to assess their environmental impacts to calculate their level of debits which would lead to better and more transparent mitigation procedures, as opposed to the piecemeal conservation that occurs when projects impact projects are not equivalently offset by credit projects. With the dynamic nature of how credits, the Bureau of Land Management (BLM) has also added that they would require a net conservation gain for mitigation measures. 

Habitat exchanges have had their fair share of criticism, there has also been much support as well as success stories to come out of a program aimed at getting greater collaboration between private economic interests and greater conservation goals.  Colorado is in the process of getting approval for a habitat exchange program and many more such programs are expected to follow.  It is worth noting that habitat exchanges are very much still in their infancy and only time will tell whether they truly solve the issue of incentivizing conservation- however the early signs do look promising.