Banking on Wetlands

Abstract

Policy![Figure][1] CREDIT: LUSHPIX STOCK IMAGES/FOTOSEARCH A regulatory strategy adopted in many countries to promote ecosystem health (such as wetlands preservation) establishes markets in which permits issued to parties who damage ecosystems are traded for credits earned by parties whose projects mitigate damage in other ecosystems. In the United States, such mitigation efforts are undertaken by government agencies that use fees collected from permittees [in lieu fees (ILFs)]; by permittees themselves [permittee responsible mitigation (PRM)]; or by mitigation banks, private firms that conduct mitigation projects to earn credits that can be sold at market. In 2008, recognizing private banks as the lowest-risk option of these three approaches, the United States issued regulations intended to encourage banking growth. A survey of 156 mitigation professionals by BenDor and Riggsbee, however, shows that many perceived barriers persist. Although regulations were intended to streamline approval of projects, 44% of respondents reported no change in timelines. Only 48% of respondents felt that the regulations-established hierarchy of preferring banks over ILFs and PRM was actually applied. Moreover, 75% did not believe that financial risk had been reduced. The authors argue that many of these problems could be addressed by making regulatory policy-making more centralized. This could overcome what respondents perceive as excessive uncertainty resulting from fragmented regulation across several dozen jurisdictions. Environ. Sci. Policy 14 , 301 (2011). [1]: pending:yes