Candidate Species Banking: Insights from a Pilot Initiative

Todd Gartner, Josh Donlan and James Mulligan

The US Department of the Interior is proposing rulemaking on incentives for voluntary wildlife conservation on private lands, including the creation of a new "Candidate Species Marketplace"  that focuses on at-risk – but not yet officially protected – species. A new pilot led by the World Resources Institute and Advanced Conservation Strategies explores the potential for candidate conservation banking.

The US Department of the Interior is proposing rulemaking on incentives for voluntary wildlife conservation on private lands, including the creation of a new “Candidate Species Marketplace”  that focuses on at-risk – but not yet officially protected – species. A new pilot led by the World Resources Institute and Advanced Conservation Strategies  explores the potential for candidate conservation banking.  

This article has been adapted from the World Resources Institute’s Insight Brief “Candidate Species” Marketplace Can Help Protect Gopher Tortoise Habitat.” You can read it in its entirety here.

20 March 2012 | Hundreds of imperiled wildlife species across the country are candidates for protection under the Endangered Species Act (ESA), yet landowners currently have very little financial incentive to protect them.

WRI’s new issue brief, Insights from the Field: Forests for Species and Habitat, released jointly with Advanced Conservation Strategies, details the insights from a pilot market-based initiative to conserve one such candidate species, the gopher tortoise, and the southern forests on which it relies. This pilot can serve as a model for conservation across the country, most notably for other ESA candidate species like the lesser prairie chicken and greater sage grouse (see box).
With 87 percent of southern forests currently in private ownership, protecting candidate species like the gopher tortoise and its habitat requires an innovative approach. However, these landowners often lack the necessary financial and technical resources to manage their land for declining wildlife. In addition, landowners are often concerned about potential land use constraints associated with these species being present on their properties.
A recent court settlement requires the U.S. Fish and Wildlife Service (USFWS) to make initial or final listing decisions on hundreds of candidate species by September 2016. As USFWS accelerates listing decisions in the next few years, landowners with candidate species on their land face considerable uncertainty in their land-use planning.
How does a candidate conservation marketplace work?

A candidate conservation marketplace is a scalable, voluntary, and science-based market mechanism to spur conservation for imperiled species prior to their listing under the ESA. This approach may allow federal and private project developers, such as solar, wind and natural gas developers, to manage their environmental risk by investing in conservation on private lands in return for regulatory certainty from the USFWS.
That’s why WRI, Advanced Conservation Strategies, the American Forest Foundation, the Longleaf Alliance, and other partners are developing the demand, supply, and transactional infrastructure for such a marketplace through a pilot initiative in the nonfederally listed range of the gopher tortoise in the southern forests of the United States.
Here is how the gopher tortoise candidate conservation marketplace is being designed and piloted:
  • An interested and eligible private landowner (the “seller”) receives a negotiated payment to conserve, sustainably manage, or restore longleaf pine forests capable of supporting healthy populations of gopher tortoises on his or her property. In so doing, the landowner generates gopher tortoise habitat credits.
  • The entity paying the landowner (the “buyer”) receives the habitat credits in return. The buyer may use the credits to offset the impact on gopher tortoise habitat elsewhere, in order to meet a voluntary net zero biodiversity impact commitment. Or, the buyer can save the credits for later use to meet offset requirements if and when the species is listed under the ESA. Other buyers may purchase credits simply to spur gopher tortoise conservation.
  • A gopher tortoise habitat credit is the currency that can be bought and sold. The number of credits on a parcel of land is determined via a science-based and peer-reviewed method, currently under development, to ensure a net conservation benefit for the tortoise when used as offsets for future impacts. The credit price includes funds to manage and monitor the habitat in perpetuity, along with a negotiated profit margin for the seller.
  • The USFWS approves the crediting methodology and maintains agreements with buyers and sellers. The agency may also provide federal-level assurances or certainty to both the buyer and seller. This regulatory certainty allows buyers to preemptively buy credits that can be used toward offsetting future impacts if the species were to be listed. The USFWS could also provide assurances to the seller against any future regulation for net conservation actions undertaken that go beyond the habitat credits sold.

Insights from the pilot initiative
WRI’s new issue brief focuses on an ongoing pilot initiative in Georgia and Alabama called the Gopher Tortoise Candidate Conservation Marketplace. Initial pilot transactions are intended to take place in 2012. Pilot partners are working with the U.S. Army, which is trying to proactively manage gopher tortoise habitats before federal listing under the ESA becomes necessary and potentially leads to a loss of training grounds.
The following are some of the lessons learned:

  • Regulatory certainty is crucial. Because purchase of candidate conservation credits will be voluntary, the primary incentive driving demand is regulatory certainty that those credits will satisfy mitigation requirements for future land use activities if the species is listed.
  • Early mitigation makes sense. Early pre-compliance action and mitigation saves time and money by identifying and implementing preapproved conservation measures and outcomes, identifying willing sellers, increasing flexibility in meeting conservation needs, and simplifying the regulatory compliance process and associated paperwork.
  • Focus on major buyers. Identifying potential buyers that anticipate reasonably large impacts to species and habitats over the foreseeable future is an important first step to lining up potential investors in candidate conservation credits.
  • Understand what landowners want. To meaningfully engage landowners, focus groups and survey research can help to ensure the marketplace is designed so that landowners perceive having candidate species on their property as an asset as opposed to a liability.
  • Invest in parcel prioritization and woodland owner education. Spatial prioritization analysis and targeted outreach and education to the landowner community are important for energizing the supply side of the candidate conservation market.
  • Up-front financing may be necessary. Private landowners may need initial financing to cover up-front costs associated with conservation efforts before credits are sold. This financing could be provided by revolving lines of credit, habitat performance bonds, program-related investments, and other structured transactions.
Transactional Infrastructure
  • Use a broker model. An independent market broker may create efficiencies and economies of scale by facilitating the buying and selling of credits, managing the financial transactions, providing liquidity in the market, verifying and monitoring credits, and managing the potential default of credits.
  • Balance precision with practicality. Crediting and debiting methods need to be designed to create a net conservation benefit that is scientifically sound and verifiable, while maintaining simplicity and scalability to ensure its adoption, timely implementation, and concurrent conservation benefits.
Concluding thoughts
The gopher tortoise candidate conservation marketplace is testing an innovative approach to provide financial incentives and technical assistance to private landowners who manage their woodlands for habitat and candidate species. Interest in similar programs, most notably focused on the lesser prairie chicken and greater sage grouse, is rapidly growing in the private, public, and nongovernmental organization sectors as changes in land use across the country spark new challenges in balancing ecosystem management with residential and commercial development, national security, energy infrastructure, and climate change issues. Although still in the development stage, insights from this pilot could inform the successful design and implementation of other candidate conservation incentive programs leading to healthier forests and ecosystems throughout the United States.

Todd Gartner is a Senior Associate for the World Resources Institute’s People and Ecosystems Program
Josh Donlan is Founder & Director of Advanced Conservation Strategies.
James Mulligan is a consultant with the World Resources Institute.

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