Author: Adam Davis

Mitigation banking is one of the least understood weapons in the US environmental policy arsenal, but a recent book on Florida's mitigation banking sector seems more intent on sensationalizing failure than on promoting a true understanding of this promising tool, says Adam Davis in this review of

Paving Paradise: Florida's Vanishing Wetlands and the Failure of No Net Loss.

Paving Paradise: Florida's Vanishing Wetlands and the Failure of No Net Loss
Craig Pittman and Matthew Waite
2009, University Press of Florida

6 June 2009 | The US government policy of 'no net loss' for wetlands is one of the most significant parts of the Clean Water Act, and so one of the key elements of our environmental law. Done right, it protects and restores some of the nation's most valuable ecosystems; done wrong, it can provide "green wash" cover to the decline of these same ecosystems. For these and other reasons, it's about time someone provided non-specialists with a detailed but jargon-free examination of this exciting field's successes and failures. Unfortunately, this isn't the agenda of Paving Paradise: Florida's Vanishing Wetlands and the Failure of No Net Loss.

Authors Craig Pittman and Matthew Waite show us a world of uncaring incompetence, malicious greed and the tragic results that inevitably follow from bad policy implemented by corrupt bureaucrats. But it's a world so full of name-calling and so utterly devoid of successes or even good faith efforts that it can't help but call into question whether they are looking for the truth or just a sensational story.

'No net loss of wetlands' means that, under some circumstances, highway projects, commercial developers, or other projects can disrupt existing wetlands if they mitigate their damage by paying for the restoration of wetlands in the same watershed. In the opening pages, the authors offer their thesis statement on this policy: "It's a huge scam". Or, as they later put it another, more delicate, way: "The result is a taxpayer funded program that creates the illusion of environmental protection while doing little to stem the destruction of precious natural resources."

To their credit, the authors have meticulously researched every weakness, mistake and problem in the development and implementation of the wetlands-related regulations under the Clean Water Act. But they have also willfully disregarded the genuinely significant improvements that have been made to the system of regulations under the Act. Worse, they don't seem to comprehend at all the alignment of incentives with environmental benefits that 'no net loss' of wetlands, and in particular the practice of mitigation banking, creates.

Let's take, for example, their coverage of the US Army Corps of Engineers' role in regulating mitigation banks. We can agree straight away that the Corps does not have an unblemished record in the environmental arena, and even set aside the question of whether it is the right branch of government to be regulating aquatic impacts. There are still thousands of cases where the Corps has enforced the complex rules well, where impacts were 'avoided and minimized' and both economy and ecology were well-served – none of which are presented in this book.

Instead, Pittman and Waite describe a history of the Corps and wetlands regulation dating back to 1899 that reads like the plot of a BBC mystery. Nefarious developers bribe slow-witted officials; "toothless" regulators hatch "phony" mitigation banks in "backroom" deals; and so on. But the more commonplace reality of public servants integrating science and public policy as they make the countless ordinary decisions about the regulation of 'fill' placed in 'waters of the United States' as the country grew over the last fifty years doesn't rate any coverage.

In the interest of full disclosure, I'm in the mitigation banking business myself, as a partner in a firm that buys land, restores wetlands to a standard set by the rules of the Corps and the EPA, and sells 'outsourced compliance' credits to developers, transportation departments, and others.

This means that I'm immediately in for the cartoon treatment by Pittman and Waite as a rapacious and money-grubbing exploiter of loopholes, but it also means I've spent hours poring over the public notices put out by the Corps – including the Jacksonville District which is responsible for Florida in particular. These notices are up on the web for anyone to see, and include detailed analysis of the work proposed and the potential impact – down to 1/100 of an acre – for every single project that anyone wants to build.

The Corps must review, provide permits for and require mitigation of projects that include everything from major four-lane highways to the extension of private boat docks. Tens of thousands of individual regulatory actions are required of the Corps every year, and they get some things wrong. It's even possible that there are some truly incompetent or malevolent individuals working there, or that they don't have sufficient funding to do their job as well as they would like. But Pittman and Waite have no tolerance in any event.

"We began to think of the Corps as a convoy of truckers driving across country with no map or compass," they write. "They had no clue where they were going or where they had been. But they would never stop for directions. That might slow them down."

The worst flaw of Paving Paradise, however, is not the obviously biased and one-dimensional approach that only finds what it looks for. It is the willful disregarding of genuinely significant improvements that have been made to the system of regulations under the Clean Water Act.

The individuals who work at the Corps and the EPA are obviously aware of the shortcomings of the past approaches to wetland regulation in Florida and elsewhere, whether those efforts were made in good faith or not. That's why they launched an exhaustive multi-year process to re-write the rules for 'compensatory mitigation'.

This process drew on detailed responses to over 12,000 public comments, but Pittman and Waite somehow manage to make even this excellent example of rule-making in public policy seem corrupt. In any case, the new rule – issued in May of 2008 – reflects state-of-the-art knowledge of hydrology, hydrogeology, biology and watershed planning in what is arguably one of the most comprehensive and progressive environmental rules in existence.

Specifically, the new rule squarely addresses two of the biggest flaws in the structure of previous regulation of wetlands: the time lag between the date a permit is issued and the date when a mitigation project is finished (called 'temporal loss'), and reliance on too many small and isolated mitigation projects that met technical requirements, but failed to provide results that created enough ecological benefit within the watershed.

The original rules for mitigation emphasized 'on-site' mitigation projects because the EPA and the Corps wanted mitigation to occur as close to projects as possible. Over time, however, it became clear that the result of this policy was a series of small mitigation parcels that often found themselves surrounded by urban growth. The new rule gives clear priority to larger regional mitigation banks with greater ecological significance over these small 'permitee responsible' mitigation sites. Mitigation banks also address the temporal loss issue, because they have to achieve clear ecological success criteria - like well-established plantings of wetland species that can only thrive if the flow of water is sufficient – before they are allowed to provide mitigation to others. It seems obvious, and it really is: if you can go and see that a bank has achieved specific success criteria with your own eyes, then you know that the mitigation it provides is legitimate.

Ironically, the new rule incorporates many of the suggestions Pittman and Waite make at the end of their 283-page diatribe. They call for better accounting rules, an emphasis on restoration over preservation, a 'pay as you go' system, and timelines for specific Corps actions during the permitting process, all of which are fundamental to the way the rule is written. But they also call for an end to the approach of 'no net loss' of wetlands altogether with their fundamental suggestion being that we shouldn't require any mitigation because we just shouldn't allow any impacts to occur.

This is the heart of the problem, of course. Mitigation is certainly less preferable than preserving the natural world in a pristine state, but as the United States population increases from its current level of 300 million to 400 million just thirty or so years from now, we will in fact build more roads, schools and houses, and every one of these things will have some impact on the environment.

And the impacts don't result just from building, of course, nor are they confined to wetlands. The entire scale and scope of the human economy has impacts on air quality, habitat for endangered species, and simply open space. But the 'just say no' answer that Pittman and Waite propose is really no answer at all.

Mitigation provides the basis of the successful programs that have reduced smog and acid rain, and the basis for allowing infill development to support greenbelts and watersheds in surrounding lands.

It's also the way that we're going to fund environmental improvements beyond the amounts that can be supplied by taxes, bond measures, and philanthropy. Hundreds of millions of dollars of private capital have been invested in meaningful conservation and restoration efforts, and this – despite what Paving Paradise would have you believe – is a very good thing. In order for more to be invested, there will need to be continued work on programs that provide incentives based on environmental performance, and to the extent we align incentives with the outcomes desired by public policy, we'll get where we want to go much faster.

In a way, the criticisms that Pittman and Waite level at the world of wetlands regulation are obvious, and obviously correct. Good science, and ever better science, is needed to ensure that the ecological success criteria for mitigation are sufficient. Mitigation should occur in the same watershed as the impact. To the maximum extent possible, impacts should be mitigated with improvements to the same type of ecological system. Monitoring and maintenance are needed over time to ensure that projects supplying mitigation continue to work.

In the final analysis though, Paving Paradise won't create change, because it amounts to a litany of problems and worst cases rather than a helpful or balanced look at an ongoing effort. The book's dismissal of mitigation as "a myth" is presented in a righteous manner, but it does little service in a world where the real illusion is the idea that we can simply regulate our way out of impacts altogether. Here on earth, people build and make things, and there are impacts that result. We can eliminate the most egregious impacts, but we should mitigate any that remain, and we need robust regulatory systems to help us do so.

It's too bad the considerable effort and skill put into this project by Pittman and Waite aren't part of the solution.





Adam Davis is a Partner in Ecosystem Investment Partners (EIP), a private equity fund manager that acquires and manages high priority conservation properties across the United States. He also serves as the President of Solano Partners, Inc., a consulting firm focused on environmental investment and conservation finance issues, and is a Co-Founder and previous Editor-in-Chief of Ecosystem Marketplace. The views expressed here are his own.

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