Governing law and entities:
US Conservation banking is enabled by the legal requirements of the United States Endangered Species Act (ESA). Specifically, section 7 requires federal agencies to consult with the US Fish and Wildlife Service (USFWS) regarding potential impact to threatened and endangered species, and section 10 requires "incidental take permits" and Habitat Conservation Plans (HPC) for those impacts. The USFWS is the principal agency that administers the ESA with respect to terrestrial and freshwater species, while the National Marine Fisheries Service is the lead agency with respect to marine and anadromous species.
On May 2003, the USFWS released the official federal guidance for the establishment, use, and operation of conservation banks. This guidance was closely modeled after the State of California's guidance for conservation banks, which has been in place since 1995. California is a leader in conservation banking, and uses its state Endangered Species Act to facilitate conservation banking with The California Department of Fish & Game (DFG) as the enforcing agency. While a "Conservation Banking Agreement" is the most standardized mechanism for creating bankable endangered species credits, other legal agreements have been used in the past, such as: wetland banking agreements, safe harbor agreements, habitat conservation plans, and memorandums of agreement.
The unit traded is most often an acre of habitat. Occasionally, due to specifics of an organism's ecology the unit may be a breeding pair or combination of habitat and the actual species, or in the case of fish and aquatic species the unit may be a liner foot of riparian habitat.
Under a "Conservation Banking Agreement", the sale of these units, or credits, is based on species conservation outcome rather than simply management action. This is to say, that a bank must demonstrate that the species are being conserved, not just that they are performing the habitat management thought be necessary. This is not necessarily the case for conservation banks established under the other agreements mentioned above.
A conservation bank's service area is based on biological criteria of the species involved and often a recovery plan. The US Fish and Wildlife Service must approve service area determination.
Conservation banks are usually created to provide endangered species mitigation credits for one of three uses: internal mitigation, sales to others, or a combination of the two. This means that buyers and sellers of bank credits are, in some cases, one in the same. Bank credit buyers can include government agencies such as a State's department of transportation, or private firms such as a real estate developer. Bank owners (or credit sellers) are correspondingly often those private firms or government agencies needing to mitigate, but increasingly private landowners and companies specializing in mitigation bank creation are becoming involved in the market. In addition to buyers and sellers, there are a number of intermediaries that assist in the conservation bank creation and operation phases. Among these are: non-profit environmental or land conservation groups, private consulting firms, and government agencies.
Market Activity and Value:
The Ecosystem Marketplace is making the first attempt to track all conservation banking transactions on a national scale. At this time, detailed transaction information on the number of units traded is still incomplete; as a result market activity not currently calculable.
To demonstrate the amount of money being spent in this market we use State and Federal Agency's "in lieu" price or a bank's "asking price" to generate an estimated transaction value. While the actual cost of transactions and credits remain publicly unavailable, these proxies will serve as rough and incomplete substitutes. It is important to note that credit prices of even the same species vary widely from bank to bank according to: ambient land value, investment required to create habitat condition, current supply, and current demand for credits in services area.
Environmental performance requirements:
Under a "Conservation Banking Agreement", a bank owner must put the designated property into a permanent conservation easement with third party oversight, usually a non-profit or government agency. A "Conservation Banking Agreement" must include a science-based management plan for species and habitats, an operation and maintenance plan, as well as provisions for remedial action. These activities must be fully funded by the bank's endowment fund.
Bank owners are required to provide adequate funding for the perpetual operation of the bank. To achieve this, federal guidance recommends establishing a non-wasting endowment fund by depositing a fixed amount for every credit sold. In addition, the creation of a bank can require posting performance bonds for bank establishment and a maintenance period.
Land Area Protected or Restored:
The total amount of land under conservation easement as a result of endangered species credit trading (as established by a Conservation Banking Agreement or one of the other mentioned mechanisms) is currently estimated to be: 109,900.3 acres (as of 03/18/2005).
To calculate the land protected by species conservation banking, bank size in acres was summed for all the listed banks. For mitigation banks that sell both wetland and species conservation credits we included only 0.5 of the area, and the other half was tallied under the land protected by the US wetlands mitigation banking market. Sufficient transaction level data is not publicly available on these duel banks to determine the specific acreage sold for wetlands credits and those sold for species conservation credits.