Estimating the demand and supply of conservation banking markets in the United States

Abstract

This paper presents an econometric analysis of factors influencing the demand and supply of habitat conservation credit markets in the United States. Two-stage least squares is used. The results suggest that both the demand and supply for habitat conservation credits are inelastic. The results also suggest that the availability of habitat conservation credits (and new habitat bank formation) is likely to decrease with increases in land value. These results are only suggestive as the dataset used has some significant limitations. Data challenges point to the need for greater public availability of transaction-level data. The availability of such data can help improve the modelling efficiency of habitat conservation banking markets.