SACRAMENTO -- In a formal policy initiative, the Wilson
Administration is actively encouraging the creation of regional
"conservation banks" to improve habitat restoration and protection across
California, Douglas P. Wheeler, Secretary for Resources, and James M.
Strock, Secretary for the California Environmental Protection Agency
(Cal/EPA), announced today.
The new State policy, which is administered by the California Resources Agency and Cal/EPA, was unveiled concurrent with the announcement in San Diego County by the Wilson Administration, Bank of America, The Nature Conservancy, and the U.S. Department of the Interior of the first conservation bank created under the policy. (See Bank of America press release on the 180-acre Carlsbad Highlands conservation bank.)
A conservation bank is a parcel, or series of parcels, of habitat owned by a private party or public agency and managed for its natural resource values. Habitat restoration credits in a conservation bank are sold to other individuals, firms, or agencies that are required under law to compensate the adverse environmental impacts of a development or other activity.
Thus, a conservation bank serves to consolidate these environmental mitigation requirements and apply them at high-priority habitat sites for maximum regional environmental benefit.
"Through the use of the unique conservation bank in San Diego and the creation of other such banks across California, we will harness market forces to significantly improve the ways by which we protect and restore wildlife habitat," stated Wheeler. "Conservation banking represents an important step toward effective regional habitat conservation in California and is further evidence of Governor Wilson's strong commitment to innovative integration of environmental and economic pursuits."
Strock said: "Our experience has been that neither long-term habitat conservation nor economic growth are best served by policies that require traditional, project-by-project mitigation. The result has too often been piecemeal, marginally successful conservation that is slow and expensive for all involved.
"We are offering incentives to developers and local governments to bundle and direct mitigation work to those areas of highest regional conservation priority," Strock stated. "This is similar to the system of trading air quality credits that Governor Wilson has pioneered for California. We have found that this market-based approach provides greater environmental protection at a lower total cost."
Steve Johnson, Director of Conservation Science for The Nature Conservancy, stated: "The establishment of a conservation banking policy by the State and the creation of the Carlsbad Highlands conservation bank are very good news for the environment. While mitigation banking is sometimes viewed as facilitating development, it can equally be viewed as facilitating sound and effective conservation.
"A very powerful new tool for conservation has been forged here, a tool that needs to be used wisely. It is a tool that is desperately needed if we are to succeed with large scale regional, cooperative conservation efforts like the NCCP program. We applaud the leadership shown by the State and Bank of America for making this happen," said Johnson.
Wheeler and Strock emphasized that the new policy - formally a series of guidelines to all agencies under their combined jurisdiction - is designed to encourage those agencies to facilitate the establishment of conservation banks in the regions of California where such banks can best serve as effective tools for habitat protection. The new Carlsbad Highlands conservation bank, for instance, is closely coordinated with Governor Wilson's Natural Communities Conservation Planning (NCCP) program in Southern California.
The environmental benefits of conservation banking are numerous. It provides for the conservation of important habitats and/or habitat linkages by offering an environmentally beneficial alternative to the current practice of fragmented mitigation for individual project impacts. Conservation banks make it possible for mitigation requirements from development projects across a region - not necessarily near or at the same site as the conservation bank - to be bundled and applied at a single, high-priority site.
In addition, this approach allows for the type of habitat restored to be determined in accordance with regional priorities. For instance, wetlands lost can be mitigated through protection of woodlands or coastal habitat if these are deemed to be of greater regional importance.
Mitigation that is incorporated into larger, regional conservation strategies, thus, is ecologically preferable to individual mitigation projects, which are often located on separate parcels of land with little connection to surrounding ecosystems.
Conservation banking also has substantial economic advantages. Project-by-project mitigation often involves lengthy regulatory processes and significant costs for private landowners seeking project approvals. Conservation banks can greatly ease these burdens, reducing mitigation compliance to a single transaction and giving project proponents the certainty of having complied with mandated mitigation requirements. Further, the existence of a conservation bank - specifically the availability of conservation credits - effectively makes the protection of habitat an economic asset that is bought and sold.
The State's new policy on conservation banking is possible, and necessary, because of various State and Federal laws that mandate mitigation of environmentally-adverse projects or activities. Under these statutes, any individual, firm, or public agency that undertakes activities that destroy, degrade, or adversely alter the environment may be required to set aside and/or restore habitat in order to offset the adverse impacts of the proposed activity. For each acre impacted, a project proponent may be required to set aside or restore one acre or more.
Environmental mitigation is required under several State laws. For instance, under the California Environmental Quality Act, if a proposed project will "substantially diminish habitat for fish, wildlife or plants," mitigation is required. Compensatory mitigation is also required as a condition to "take" a species under the California Endangered Species Act. In addition, the California Coastal Act requires a project applicant to demonstrate that all feasible mitigation measures have been provided in order to minimize any adverse environmental effects of a project that is proposed along the California coast.
Environmental mitigation is also required under Federal statutes. For instance, under the Federal Endangered Species Act, a habitat conservation plan that is designed to protect and "recover" a threatened or endangered species can require that a landowner "minimize or mitigate" for activities that are damaging to the species. Also, the Federal Clean Water Act requires mitigation for activities that alter or harm existing wetlands.
What are the problems with traditional mitigation measures undertaken pursuant to such State and Federal laws?
Mitigation measures, which are designed to produce environmental benefits, have often had insufficient impact because they are undertaken at the same site as the development or project itself, require in-kind compensation (necessarily replacing wetlands with other wetlands, for instance), and do not address broader conservation objectives of the project's region.
For instance, a typical property owner who seeks to develop or alter their land may take the steps necessary to satisfy the mitigation requirements by doing so on a portion of the land to be developed. On a parcel of 10 acres, two or three acres might be set aside as protected open space in order to mitigate for the proposed development.
While such a set-aside might satisfy applicable requirements, it may not substantially advance regional environmental objectives (such as those under the NCCP program for San Diego County) because the set-aside or restored land may not itself be of high ecological importance or may not be connected to other protected open space with priority habitat value. Indeed, over the long term, the set-aside land may be nothing more than a two- or three-acre vacant lot.
Similarly, when mandated on a project-by-project basis, environmental mitigation is often burdensome and costly to landowners. Determining what State and Federal laws, and what specific mitigation requirements, apply to a project can be very difficult. The accumulative total of mitigation requirements may be extremely expensive. Further, the process of designing new mitigation projects for each development project can be time-consuming and costly.
What is the genesis of conservation banking? What is mitigation banking?
There have been limited efforts by the State to prevent the inadequate, fragmented habitat conservation that too often results from project-specific mitigation. This has been done through utilization of "mitigation banks."
In recent years, the Department of Fish and Game has sought to consolidate mitigation required for wetlands alteration under the State Fish and Game Code and the Clean Water Act. In 1993, Governor Wilson signed into law SB 936, which directed the Department to establish wetland mitigation bank sites in the Central Valley and authorize credits at these sites for wetlands lost in urban areas. In addition, wetlands mitigation banking was made a specific priority of Governor Wilson's comprehensive State wetlands conservation policy, which was also announced in 1993.
As a result, in addition to NCCP-related banking efforts in Southern California, mitigation banking has occurred elsewhere in California, including:
What are the environmental benefits of conservation banking?
First and foremost, conservation banks provide for the protection of important habitats and linkages between key habitats. In addition, they offer an environmentally beneficial alternative to the current practice of requiring piecemeal mitigation for individual project impacts. Isolated mitigation projects that have little connection with their surrounding ecosystem are often more prone to failure than a mitigation project that is incorporated into a larger, ecosystem-based conservation bank or regional conservation plan.
Conservation banks can take advantage of economies of scale that are often not available to individualized mitigation projects. Further, conservation banks provide significant incentives for private landowner participation and represent one of the best examples of private/public partnerships in an era of substantial fiscal constraints at all levels of government.
Conservation banks also can serve as a major funding component for the creation of an ecosystem preserve under a regional conservation plan. Finally, conservation banks simplify the regulatory compliance process while achieving greater conservation results.
What are the economic benefits of conservation banking?
A primary advantage of conservation banking is that it allows landowners to recoup a higher value for their land, which would otherwise be constrained due to environmental considerations. The Carlsbad Highlands property, for instance, had a very low value as a potential development property because of environmental restrictions, including mitigation requirements. As a conservation bank, it attains a higher value and benefits its owner, Bank of America.
Conservation banks reward private parties for being partners in the development and implementation of solutions to complex conservation issues. Conservation banks provide incentives for conservation and development interests, as well as public agencies, to participate in long-term conservation.
What is the connection between conservation banking and the NCCP Program?
The NCCP program is the type of regional habitat conservation strategy that conservation banking is specifically designed to benefit.
A State program designed to conserve multiple species and their habitat while also providing for the utilization of private land, NCCP was initiated and announced by Governor Wilson in 1991. It is the most advanced effort to reconcile the demands of resource conservation and economic development through "ecosystem management" in the nation. The goal of the program is to conserve - in reserves large enough to ensure their existence in perpetuity - plants and animals native to California and, importantly, the terrestrial and aquatic habitats which they depend. This allows for compatible economic development and certainty in planning for developers and conservationists alike.
The first application of the program has been in the 6,000-square-mile Coastal Sage Scrub habitat of Southern California, including large portions of Orange, San Diego, and Riverside counties. This is the home of the California Gnatcatcher and more than 90 other potentially threatened or endangered species.
As evidenced by the establishment of the conservation bank in the Carlsbad Highlands, conservation banking represents an important tool to help implement the overall land-use strategies being designed under the NCCP program. Several other conservation banks are being established in the range of the Coastal Sage Scrub habitat and in conjunction with the NCCP program.
Who will create conservation banks under this new State policy?
Any individual or entity - public or private - can establish a conservation bank. The bank must possess land that is determined by an authorized wildlife agency (such as the U.S. Fish and Wildlife Service, a Regional Water Quality Control Board, or a county wildlife agency) to have substantial regional habitat value, be in need of preservation and/or restoration, and be worthy of permanent protection.
Where might conservation banks be created?
Under the guidelines, the stated priority for creation of conservation banks are those areas in California that are formally engaged in programs to provide for the long-term conservation of habitat and species. The primary example of such planning is the NCCP program. In addition, areas with approved habitat conservation plans under State and Federal law or those involved in bioregional planning are priorities for the establishment and use of conservation banks.
There is no minimum or maximum size of a conservation bank, and it may be divided into clearly defined sections. However, the bank and/or each of its sections must be large enough to be ecologically self-sustaining or to be part of a larger regional conservation plan.
How will a conservation bank operate?
A conservation bank may be established pursuant to regulatory permit or contract between the landowner and the appropriate regulatory agency or agencies. An acceptable bank proposal must include: a manager, specific geographical boundaries of the bank and the region that it will serve, property protection measures and regulations, and provisions requiring an annual report by the manager to be submitted to the regulatory agency. In addition, prior to the sale of credits, a resource management plan must be approved by the appropriate regulatory agency.
Upon sale of the first credit in a conservation bank, the land in the bank must be permanently protected through fee title or conservation easement. The land-use restrictions must run with the land and be recorded in the appropriate county of jurisdiction.
Credits for a number of types of resource management activities can be purchased from a bank, including preservation of specific resources, enhancement of a degraded resource, restoration of a resource to its historical condition, or the creation of a specified resource condition where none existed before.
Andy McLeod
Deputy Secretary for Resources
State of California
1416 Ninth Street, Suite 1311
Sacramento CA 95814
916-653-5792
916-653-8102 FAX
Use "CERES" at: http://ceres.ca.gov