Question:
What is mitigation banking?
Answer:
“Mitigation banking is a system of credits and debits devised to ensure that ecological loss, especially loss to wetlands and streams resulting from various development works, is compensated by the preservation and restoration of wetlands, natural habitats, and streams in other areas so that there is no net loss to the environment.
According to the Ecological Restoration Business Association (ERBA), “mitigation banks are highly regulated enterprises that have historically been proven to deliver the highest quality, most reliable offset to environmental impacts…and a private investment into ‘green infrastructure’ to help offset the impacts associated with economic growth.”
(Definition from Investopedia)
Question:
What are conservation banks?
Answer:
“Conservation banks are permanently protected lands that contain natural resource values. These lands are conserved and permanently managed for species that are endangered, threatened, candidates for listing as endangered or threatened, or are otherwise species-at-risk.
Conservation banks function to offset adverse impacts to these species that occurred elsewhere, sometimes referred to as off-site mitigation. In exchange for permanently protecting the land and managing it for these species, the U.S. Fish and Wildlife Service (FWS) approves a specified number of habitat or species credits that bank owners may sell.”
(Definition from the U.S Fish and Wildlife Service)
Question:
What is species banking?
Answer:
Creating land that can serve as habitat for a valuable species, and selling the credits associated with the creation of this land. Depending on the species, such land can fetch a very high price. For example, if an organization were to create land that could serve as habitat for Florida panthers (which are endangered) the credits associated with this land could likely be sold for a significantly higher price than the credits associated with the creation of land that didn’t serve as critical of an ecological function.
Question:
What is the size of the U.S mitigation bank market?
Answer:
It is estimated to be 10 billion dollars.
Question:
Which states have the largest mitigation credit markets?
Answer:
California has the most conservation banks of any kind. Florida has the most wetland conservation banks.
Question:
How long does it take to generate mitigation credits?
Answer:
It takes approximately 2 to 3 years to secure permits, 1 year to do the work on the land required to turn it into an approved conservation bank, and usually between 3 to 5 years for the credits to be released (but can take up to 10 years).
There are certain exceptions and caveats:
- If the credits are reliant on trees, the credits are generally released based on said trees’ growth rates.
- Habitat credits may require up to five years.
More info:
- Banks are generally thought of as having a 10 year supply of credit sales.
- In general, there is a 2 year capital deployment process and a 10 year return process.
Question
Can credits be stacked? I.e, could you make a piece of land that served as both panther habitat and habitat for another endangered species, and get paid the price of panther credits plus the price of credits associated with the creation of habitat for the other endangered species?
Answer:
Yes and no. You could not sum the total value of panther credits with the total sum of credits for the other endangered species, but you could get paid a higher overall price for protecting land that could serve as habitat for both.
Example:
- Government payments to an organization for protecting an acre of panther habitat: $1,000 per acre
- Government payments to an organization for protecting an acre of wood stork habitat: $700 per acre.
Question:
Can credits be permitted before purchasing the land whose restoration would lead to their generation?
Answer:
Yes.
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