Ecological and economic conditions and associated institutional challenges for conservation banking in dynamic landscapes
Abstract
Protected areas are a cornerstone of current biodiversity policy. The continued loss of biodiversity, however, as well as the limited scope to extend protected area networks necessitates a conservation perspective that encompasses both protected areas and the wider landscape. This calls for policy instruments that can govern land use dynamics, simultaneously meeting demands for conservation (i.e. no net loss of biodiversity) and economic development. Conservation banking could be such an instrument, but only when certain criteria are met. Building on the theory of ecological networks, we combine ecological, economic and institutional perspectives on conservation banking to identify when and where conservation banking could be feasible. Economic prerequisites include sufficient market activity to match demand and supply. Adequate regulatory capacity is needed to design and enforce trading rules. From an ecological perspective, habitat turnover is least detrimental in large and well-connected networks. For many ecosystem types, those prerequisites will be rarely met in practice: sufficient market activity implies sufficient habitat turnover, but most ecological networks are not robust enough to buffer frequent habitat turnover. Therefore, banking is best limited to common and fast-regenerating ecosystem types (e.g. certain coastal systems, wetlands, nutrient-rich grasslands). Furthermore, conservation banking could be applied to a subset of the network only, i.e. the wider landscape, as a complementary instrument to protected area policy. With appropriate trading rules and institutional arrangements, the loss and gain of habitat could be governed to improve the spatial cohesion and size of ecological networks and the capacity of landscapes to support biodiversity.
What the paper shows and why it matters
(AI-generated)
Protected areas alone are not expected to stop biodiversity loss and are hard to extend, so conservation also has to work in landscapes used for other purposes. This calls for instruments that let development proceed while biodiversity overall is not reduced (“no net loss”). Conservation banking is one candidate: landowners restore habitat and earn tradable credits, which developers buy to compensate for habitat they destroy. The paper notes earlier suggestions that, with suitable trading rules, such a scheme can shift habitat around in space and time while keeping its ecological value, and banking has been regarded as a promising part of the policy mix. The problem the paper takes on is whether the ecological, economic and institutional conditions such a scheme requires can be met at the same time.
The paper argues that conservation banking can secure no net loss only where ecological, economic and institutional conditions hold together, and that for many ecosystems they conflict. Ecologically, a species persists in a network of habitat patches by recolonising patches after local extinctions, and habitat turnover (patches destroyed and re-created) makes this harder. Large, well-connected networks of fast-regenerating habitat tolerate turnover best; in a worked example (Fig. 2), longer regeneration or faster turnover demands more patches. Economically, a credit market needs enough buyers, sellers and trading, and development, and thus habitat turnover, is a main source of trading activity. Institutionally, authorities must design and enforce the trading rules, which takes expertise. Where regeneration is slow or uncertain, the ecological and economic perspectives are both unfavourable and strict protection is the only option that may avoid net loss. The conditions overlap mainly for common, fast-regenerating ecosystem types, such as certain coastal systems, nutrient-rich marshes and nutrient-rich grasslands.
The paper reads these results as limiting banking, not rejecting it. Endangered habitats rarely have large networks and short restoration times, so banking is no substitute for protecting them. In the wider landscape, for common ecosystem types, it can complement protected areas, provided trading rules reflect network size, connectivity and each patch’s contribution and governments supply the regulatory capacity. The paper cautions against loosening equivalence rules (the rules defining which restored habitat counts as equivalent) to raise offset supply, as was considered in the Netherlands for protected areas and species in unfavourable condition.