When 1,500 acres of ecologically rich habitat was donated to the Boys and Girls Clubs of East County 22 years ago, no one dreamed that the most profitable thing to do with the property was nothing at all.

After years of struggling to develop San Vicente Ranch into a residential subdivision, a golf course or even a water park, the organization concluded that the best way to turn a dollar was to preserve it as open space.

In an unusual marriage of environmental and economic interests, the property six miles north of Lakeside recently became one of about 40 conservation banks in California.

The banks sell "credits" to developers, who, in turn, use them as mitigation for environmental damage they cause elsewhere. In the case of the Boys and Girls Clubs, steep land that was too expensive to develop ultimately could bring in millions of dollars in revenue, officials say.

"That land was a wonderful gift, but they were at a loss as to how to use it," said Andy McLeod, a deputy state secretary for resources. "This way it becomes a moneymaker. They get a revenue stream and it remains wild, open space."

Jerry Fazio, chief executive officer of the Boys and Girls Clubs of East County Foundation, shares McLeod's optimism. He hopes the bank will provide a legacy to support the nonprofit organization's programs for children well into the next century.

"We don't know what the market will bear," Fazio said. "Certainly it's going to be in the millions. We've sold credits for seven acres so far ... This all boils down to ensuring a brighter future for our kids."

Nowhere is the habitat banking concept catching on more quickly than in San Diego County, where 20 banks are operating, or are in the process of winning approval from wildlife agencies.

"That is a demonstration that the idea has caught hold," said state Resources Secretary Douglas P. Wheeler. "It helps us strategically."

With the greatest number of threatened and endangered species in the continental United States, the San Diego region has become the focus of the state's Natural Community Conservation Planning program, Wheeler said.

The best of what's left

The program's goal is to save the best remaining habitats within a 6,000-square-mile area encompassing Los Angeles, San Bernardino, Orange, Riverside and San Diego counties.

Wheeler acknowledges that funding is the conservation program's key weakness. State officials say it ultimately could cost in excess of $1 billion to obtain the private land needed to maintain the ecosystem.

Federal planners and local agencies say it can be done for far less by entering into cooperative land management agreements with willing property owners. Wheeler is counting on conservation banking to bring large tracts of land into the program.

Dominated by coastal sage scrub and mixed chaparral, the San Vicente site will be marketed in two phases. The first, which covers 320 acres, will be managed by The Environmental Trust, a nonprofit group that manages about 2,500 acres of open space in Southern California.

The state's conservation program seeks to protect coastal sage scrub and 27 related habitats. Nearly 100 threatened, endangered or rare plants and animals are associated with coastal sage scrub, a blend of low-growing shrubs and grasses that once stretched from northern Mexico to Santa Barbara County. It now covers less than 15 percent of its original range.

Encompassing land valued at more than $40 million, California's 40 conservation banks are spread over 12 counties. Seventeen of the banks are still awaiting final approval.

A new concept

Although several conservation banks were created in California in the mid-1970s, "it wasn't until the 1990s that there was any legislation officially recognizing the concept," said Ron Rempel, manager of the state's sweeping habitat conservation program.

While habitat banking is supervised by state and federal wildlife agencies, the price of credits and the financial arrangements surrounding their sale are determined by bankers and buyers.

The agencies' role is to determine how many credits can be sold at any given bank, how those credits may be used as mitigation, and how much money must be set aside for long-term land management. Credits are deemed "spent" when the damage they were purchased to mitigate takes place.

Arrangements have been made to deed parcels of the San Vicente bank to The Environmental Trust over time, as credits are sold.

U.S. Interior Secretary Bruce Babbitt embraced California's conservation banking concept last year, when he called it a national model for balancing economic and environmental interests. Not everyone has climbed aboard the bandwagon so readily, however.

A useful tool

According to Frank Ohrmund, a San Diego real estate broker who specializes in marketing sensitive habitat, such banks are having the greatest success where development pressures are greatest.

With relatively little development pressure in the East County area, it may be harder to sell credits at San Vicente than people anticipate, he said.

There is an element of risk in habitat banking, he added.

Such banks may become an important tool for piecing together wildlife corridors, but only time will tell, said Dan Silver of the Endangered Habitats League.