Environmental Banc & Exchange

Opinion

Profitable Wetlands
by Adam Davis

The new draft regulations governing impacts on wetlands and streams released jointly by the EPA and the Army Corps of Engineers for comment this past Tuesday are worth paying attention to. The real story here is not, however, the familiar refrain we've heard about the Bush administration trying to roll back environmental standards. In fact, the new regulations are far more likely to actually achieve the 'no net loss of wetlands' goal of the Clean Water Act than the current ones.

Did the Bush administration suddenly go green? Are they trying to win back some approval from the environmentalists in the electorate? Probably not; but the new standards do reflect the influence of a new private industry that has invested substantial capital in restoring wetlands and streams on private land. This new industry, known as mitigation banking, is offsetting environmental impacts that can't be avoided and reduced through the planning process by providing a way for transportation departments and developers to 'outsource' required restoration to companies whose only business is restoration.

Up until now, projects that damaged wetlands and streams could get a permit by restoring similar aquatic resources on their own sites. These 'permittee responsible' projects, however, were not held to nearly the same high standards as mitigation banks. Even worse, permits were issued in return for 'in lieu' payments – which might have been used for something good, or maybe not, but no one was really keeping track. In plain English, 'in lieu' means 'instead of' as in "paying a fee instead of actually achieving no net loss of wetlands".

Remember, the context for this whole part of the Clean Water Act is that about half of all the original wetlands in the United States were drained for agriculture and building until we realized that healthy wetlands are actually essential. It turns out it really isn't nice to fool with Mother Nature on this scale, and we are paying a big and growing price for draining millions of acres of land that absorbed flood waters, purified runoff and provided a place for ducks and other wildlife to live.

In fact, mitigation banking is part of a much larger global movement that is recognizing the financial value of protecting and restoring ecosystems. While we can continue to insist on regulation to avoid and minimize environmental impacts of all kinds, the fact of the matter is that being a modern citizen – living in a house, driving to work, using materials and energy of all kinds – has serious environmental ramifications. By creating a price signal for each unit of improvement, mitigation banking regulations reward investment, innovation and job creation in the service of the environment.

This is where it really gets fun: because the private mitigation banks were investing serious money in restoration projects in order to generate returns for their investors, this business community has been arguing for higher and more consistent standards and requirements. The entire well-worn storyline of the 'good environmentalists' against the 'bad business interests' is turned on its head when the business actually makes profit from providing environmental solutions.

For the last 40 years or so, critical environmental legislation like the Clean Water Act, the Clean Air Act, and the Endangered Species Act have protected us by protecting the ecosystems on which life depends. These laws all share one key flaw however, which is that they only tell us what not to do. They have told us, in ever more detail, not to do this or that, here or there, now or ever, but they don't describe what we do want to do. How on earth, literally, are we supposed to live our lives as we go about our daily business of producing and consuming?

The seemingly humble wetland and stream regulations issued this week offer a clue. By requiring impacts that can't be avoided to be offset, an acre restored for an acre drained, and by enabling private investment in the restoration, we're seeing the true value of the ecosystem in financial terms. It used to be free to impact and damage ecosystems, because they seemed infinite in relation to human needs and human numbers. Now that there are 296 million of us here in the U.S., not to mention 6.4 billion of us here in the world, ecosystems are increasingly scarce and therefore increasingly valuable.

An entire marketplace has developed to recognize and capture this growing value; check out www.ecosystemmarketplace.com if you doubt it. Businesses are innovating and real people are getting paid real money for taking CO2 out of the atmosphere and fighting global warming, for reducing smog and water pollution, and yes, for restoring wetlands. It's completely ironic, of course, but the real environmental story of the Bush years may be that the scarcity caused by the damage we've caused actually contains the seed of a solution.