Streams of Revenue: The Restoration Economy and the Ecosystems It Creates

Streams of Revenue

Streams of Revenue

The Restoration Economy and the Ecosystems It Creates

Rebecca Lave and Martin Doyle

The MIT Press

Cambridge, Massachusetts

London, England

© 2020 Massachusetts Institute of Technology

All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher.

This book was set in ITC Stone Serif Std and ITC Stone Sans Std by New Best-set Typesetters Ltd.

Library of Congress Cataloging-in-Publication Data.

Names: Lave, Rebecca, 1970- author. | Doyle, Martin, 1973- author.

Title: Streams of revenue : the restoration economy and the ecosystems it creates / Rebecca Lave and Martin Doyle.

Description: Cambridge, Massachusetts : The MIT Press, [2020] | Includes bibliographical references and index.

Identifiers: LCCN 2019047639 | ISBN 9780262539197 (paperback)

Subjects: LCSH: United States. Federal Water Pollution Control Act Amendments of 1972. | Wetland mitigation banking—United States. | Stream restoration—Economic aspects—United States. | Restoration ecology—Economic aspects—United States. | Ecosystem services—United States. | Environmental policy—Economic aspects—United States.

Classification: LCC HD1683.U5 L38 2020 | DDC 363.739/47—dc23

LC record available at https://lccn.loc.gov/2019047639

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Contents

Preface

Acknowledgments

1 Introduction

2 Market-Based Approaches to Conservation

3 How Stream Restoration Was Born, and What Came of It

4 How Markets, and Mitigation, Came to Be Accepted Forms of Environmental Regulation

5 The Actors in Stream Mitigation Banking

6 How Mitigation Banks Work, and the Biography of a Bank

7 The Streams That Mitigation Banking Creates

8 Conclusion: Can Markets for Ecosystem Services Fix Conservation?

Notes

References

Index

Preface

One of the most influential, and perhaps surprising, developments in environmental policy in recent decades is the idea that we can protect the environment from the negative impacts of economic development by making environmental protection itself more economic. The goal is to reduce environmental harm not by preventing it, but by pricing it. Want to build a housing development on a piece of land threaded with streams? With an environmental market in place, you can do that as long as you pay to offset the damage through restoration of comparable streams elsewhere. Or, in an example that may be more familiar, want to keep emitting greenhouse gases? Fine. You just have to buy carbon credits produced by reducing emissions at another site. Starting in the early 1990s, U.S. environmental policy has supplemented command-and-control regulation (thou shalt not) with market-based approaches (thou shalt pay for your harm) in an attempt to improve conservation outcomes. There are now many environmental markets in the United States (and internationally) that are intended to improve conservation outcomes for everything from prairies and streams to woodpeckers and flowering shrubs.

Even in the United States, where capitalism has long been something close to a national religion, this shift toward market-based environmental management raised some eyebrows. There have been heated debates about economic theory, ecological value, and the details of policy. But at this point in time, environmental markets in the United States are more than two decades old and are firmly established. Haphazard, deliberately vague, and patchy policies have been smoothed out and (at least to some extent) standardized. What is not at all clear is whether these markets have actually improved environmental well-being. This book is the first sustained attempt to find out. Using stream mitigation banking (the market for rivers and streams under Section 404 of the Clean Water Act) as a case, we explain where market-based approaches came from, how they work in practice, and what they do on the ground.

Rivers and streams in the United States could use some help, as they have taken quite a pounding since European settlers arrived. They have been straightened, shortened, and put in pipes underground. They have been dammed, diverted, and cut off from their floodplains. They have been dredged, buried in sediment, and dredged again, and they have been polluted to the point of biological death. Almost anytime there was a choice between the well-being of a stream and human ease, the stream lost.

Efforts to prevent or at least undo harm to streams began in the late 1800s, but only grew legislative teeth in late 1960s and early 1970s. The Clean Water Act, in particular, was spectacularly successful in many ways. As one example, it is now possible to swim in most rivers and streams in the United States without having to take a heavy course of antibiotics afterward. The question is how to get us the rest of the way: how do we prevent further harms to rivers and streams, and even improve their ecological, chemical, and physical character and function? Can a market for streams do what command-and-control legislation has (thus far at least) failed to do?

The answer to the latter question is no, or at least not yet. The idea of allowing much-needed development to harm ecosystems as long as we restore comparable ecosystems elsewhere turns out to be quite hard to operationalize. It is very difficult to ensure equivalence between ecosystems that are harmed and those that are restored. Further, we are not yet able to reliably restore most (perhaps all) ecosystem types; natural systems are highly complex, and we are far from understanding the full scope of that complexity, much less being able to reproduce it. Finally, in addition to being complex, ecosystems are messy, dynamic, and highly interconnected; standardizing them into simple, tradeable commodities in order to create robust markets is certainly doable, but it raises unsettling questions about what, if anything, such simplified versions of ecosystems actually achieve. We thus argue that ecosystem service markets, very much including stream mitigation banking, have not delivered on the conservation goals of their advocates and should be radically reconfigured.

We have written this book with a strong emphasis on clarity and accessibility. We hope it will reach multiple audiences, from those of you studying to become environmental managers in the public, private, or nonprofit sector to those of you who already do such work. At some point in your careers, it is very likely that you will be asked to help set up an environmental market, to keep an existing one running, or to manage a project that is part of a market. This book has much of what you need to know about where these markets come from and how they work in practice. You will not find heavy theory or science in here, but suggested readings in the endnotes provide entrance points if you want to dive in. We also hope this book will be of interest to river scientists trying to figure out what is going on at their field sites, to ecological and environmental economists who have been central to conceptualizing and critiquing market-based approaches, and to advocacy groups evaluating whether or not to support pricing environmental harms.

The stakes here are high. We humans damage the world around us in many ways. Regulations are intended to limit that damage: to provide a ceiling beyond which environmental degradation should not rise. If market-based approaches cannot build and secure that ceiling, we need to change them.

Acknowledgments

This book was a long time in the making. Our first conversation about mitigation banking (in fact, our first conversation ever) took place by phone in 2006 when Rebecca was a graduate student at UC Berkeley and Martin was an assistant professor at the University of North Carolina.¹ In the thirteen years since, we submitted, resubmitted, resubmitted again, and finally won a grant from the National Science Foundation to fund this work (BCS 1213827), conducted research throughout the United States, wrote multiple articles, gave dozens of talks on environmental markets, switched institutions, and during all of that time were physically in the same room fewer than half a dozen times. Nevertheless, there has been a consistency in idea-sharing that has been unusually productive and delightful, and allowed us to sustain the project over time and space.

Throughout this process, we collaborated with Morgan Robertson, a political ecologist at the University of Wisconsin and one of the most knowledgeable people on the planet on wetland mitigation banking. Though he did not help to write this book, many of the ideas we present here are a product of more than a decade of collaboration and discussion in which he was an integral part.

The social science component of this project was entirely dependent on people’s willingness to talk with us. Our human subjects protocol does not allow us to list you by name, but there is no way we could have done this work without you, and we are immensely grateful. Thank you!

We are also grateful to colleagues both inside and outside academia who helped to frame this project and hone its results. At Indiana University (where Rebecca is now), Ilana Gershon, Tom Gieryn, and Eden Medina listened to and reflected on multiple iterations of this work. At the University of North Carolina and at Duke University, Todd BenDor and Emily Bernhardt were thought partners throughout much of the work. Frank Magilligan and Margaret Palmer have helped us wrangle this sprawling subject into coherence over the years. Although we never formally interviewed them as part of this research, Palmer Hough and Eric Somerville at the EPA provided very useful historical context on the development of mitigation banking, as did Dave Owen. Doug Thompson has been a wealth of information and understanding about the historical roots of restoration in the early twentieth century; we drew heavily on his painstaking and excellent work. David Lansing helped us come to grips with the literature on carbon credits. Most recently, as we were developing the argument in the last section of the conclusion to this book, timely critical feedback from colleagues at the University of Cambridge revealed some important holes in our thinking.

A number of graduate students helped with aspects of this research. Julia Ferguson and David Gordon were part of the initial nationwide survey of stream mitigation banking that helped us pick the states where we focused our work. Curtis Pomilia helped with transcription and Susan Powell tracked down the roots of mitigation in environmental policy. Jai Singh collected much of the geomorphic data in North Carolina and Eric Nost was involved throughout, most particularly with our research in Oregon.

At the MIT Press, Beth Clevenger provided thoughtful feedback and great enthusiasm (and if you’ve ever written a book, you know how precious the latter bit can be), and the manuscript review process has been simply fantastic.

Rebecca’s Acknowledgments

Hooray for my colleagues in the Geography Department at Indiana University for creating such a positive and respectful work environment, and for embracing the unfamiliar in accepting monographs as legit scholarly products. Indiana University, more broadly, has been an unusually supportive institution for me. My community here in Bloomington has been a consistent source of comradery and outrageously good food: Steph, Reynard, Sarah, Tessa, Charles, Sara, Mark, Kylie, Eric, Cristian, Eden, Ilana, David, Maria, and Edgar, among many others. I am so grateful to have landed here given the deep weirdness of the academic job market. I continue to be inspired by my kickass colleagues outside IU. Particular thanks to Julie Guthman, Becky Mansfield, Kendra McSweeney and Wendy Wolford for helping me navigate the gendered absurdities of academic life, and to Phil Mirowski and Sam Randalls, who were there in the early days of this project, helping me to think better, smarter, and more deeply about the political economy of environmental science.

Sam and Nell make everything better with dumb jokes, thoughtful company, and unfailing encouragement to channel Bone Claw Mother rather than Midwestern Nice Girl.

I am profoundly grateful that unlike my previous book, this one was not steeped in untimely losses, though Ruth Gibson Snyder (1917–2016) is still much missed.

Last thing: working with Martin for nearly fifteen years, particularly the process of cowriting this book, has been an entertaining, thought-provoking, and egalitarian collaboration. I will miss working with you, my friend!

Martin’s Acknowledgments

I began talking to regulators and mitigation bankers in North Carolina fifteen years ago, and over that time, their patience in educating me, willingness to take repetitive phone calls, and readiness to review all manner of my writing have been tremendous. Most notable are Adam Riggsbee, John Preyer, George Howard, George Kelly, Todd Tugwell, Steve Martin, and Dave Lekson, among many others. Mike Wicker (U.S. Fish & Wildlife Service) has played a consistent, behind-the-scenes role in steering mitigation banking toward positive results, and in encouraging academics to research the benefits and detriments of banking; streams, rivers, and wetlands in North Carolina have benefitted tremendously from his efforts. Two mitigation bankers deserve particular credit, or blame, for my interest in working on mitigation banking: Don Carr and Bud Needham. I regret that Don passed away before this book was finished; Bud and I lost a guide through the policy swamps of Washington, DC, and a great friend. The restored ecosystem at Timberlake is a fitting tribute to Don’s relentless vision of how mitigation banking can leave lasting benefits for ecosystems, and particularly for birds.

Finally, working on this project has required me to read books and think thoughts that are far beyond my normal intellectual universe. I would not have done so had it not been for Rebecca’s contagious intellectual enthusiasm.

1 Introduction

Martin Dairy Creek used to be a weed-lined, straight-as-an-arrow ditch, passing through pastures and farms in rural North Carolina. The channel itself was a few feet wide and a couple feet deep, and rarely carried more than an inch or two of water, situated as it was in the headwaters of the watershed. The channel had been straightened decades earlier and its banks had since begun to erode, creating mixtures of wide, raw banks along some reaches and large silty bars on the streambed in others. The constant erosion and deposition of sediment degraded the habitat and made life challenging for any fish or aquatic insects that tried to make a home in this typical rural American waterway.

Then in 2017, bulldozers arrived. Martin Dairy Creek’s banks were stripped bare of vegetation to make room for a platoon of big yellow machines that set to work remeandering the creek. The channel was reformed to be shallower and slightly wider, with near-perfectly regular meander bends. Small, adolescent trees were planted in carefully spaced sequences and patterns along the creek’s banks, each the same height and age. A series of nearly identical riffles were constructed, each with well-sorted, well-placed gravel and cobble. A mostly innocuous, occasionally rambunctious rural creek had been transformed into an elegant, symmetrical work of engineering. Like a road or a bridge, this creek was now very clearly designed and constructed (figure 1.1).

On the opposite side of the planet, in Australia, sits the terrestrial equivalent of this carefully rationalized aquatic system. This particular landscape had previously been a mixture of forest and farmland. Now, however, there are rows upon rows of trees, mainly eucalyptus, but also large uniform expanses of pine trees. Each tree is the same age, having all been planted simultaneously. Each tree is equidistant from its neighbors. This forest did not accumulate over time by natural process, or by piecemeal, uncoordinated decisions of various landowners; like the stream in North Carolina, this Australian forest was planned, designed, and constructed.¹

Figure 1.1

Aerial image of Martin Dairy Creek, North Carolina. The stream flows from top to bottom, with the portion upstream of the farm road being unrestored—and perfectly straight—while the downstream portion is restored into almost perfectly symmetrical sine wave meander bends.

There is something not quite natural about these ecosystems and their clean, symmetrical forms. There is no confusing the perfectly proportioned stream with its unruly, unmodified kin, nor the linear rows of trees with an old growth forest (though not all carbon forests are so obviously designed, there are no rules that encourage more natural planting plans). In each case, these ecosystems have been made visually coherent and biophysically distinct from their surroundings. They have pieces that are comparable to other systems—trees, riffles, meander bends—and individually make sense, but are startlingly artificial when combined. They are now strange ecosystems to behold.

Reconfiguring ecosystems to suit human desires is not new. What is newer is that each of these systems was modified under the banner of ecological restoration; they were restored. Humans intervened in an ecosystem they considered degraded in an attempt to return it to health. And what is really new, only a few decades old, is the rationale for restoring these disparate systems: the market. Like a rapidly growing number of ecosystems around the world, they were restored to create a novel type of commodity. The buyers of these odd ecosystems, however, were not interested in owning a wiggly creek or a linear forest; in most cases these individuals or organizations never set eyes on the ecosystems they purchased. The buyers of these ecosystems only did so because they were required to participate in a particular environmental market, making them participants in a broader, nascent restoration economy.

Buying and selling ecosystems through environmental markets has been the subject of volumes of research. Such markets have drawn advocates and critics, engaged in debate ranging from appropriate treatment of economic minutiae to whether markets and the burgeoning restoration economy can save us from the impending catastrophe of climate change.

But the debates have largely sidestepped the question of just what kind of landscapes these new markets might produce. Behind every environmental market transaction there is an ecosystem: an actual place whose biophysical conditions are changed when capital changes hands. These ecosystems are the manifestations of environmental markets. These ecosystems—with all their potential for artificiality and contrived nature—bear the fingerprints of the market’s invisible hand; they are the manifestation of the restoration economy.

Selling Nature in Order to Save It

The environmental movement has long worked to protect nature from the most destructive impulses of capitalism. Whether by setting aside protected areas like national parks to be preserved from human disturbance, moderating the use of timber or fisheries to produce sustainable yields, or restoring ecosystems to undo anthropogenic harm, the goal of environmental conservation often has been to force the invisible hand of the market to squeeze the natural world a little less tightly. Now, market forces—channeling capitalism, or bending it at least—are increasingly seen as the best, perhaps only way to save nature.

The idea that traditional forms of environmental regulation are insufficient, and that we should sell nature in order to save it, began gaining traction in the 1980s. It is now firmly, if surprisingly, established in environmental policy circles, promoted by presidential administrations as otherwise distinct as those of Obama and Trump. The notable early successes of the Clean Water Act in improving water quality in places like Cleveland, or of the Endangered Species Act in bringing iconic species such as bald eagles back from the brink of extinction are often dismissed as costly and inefficient. In their place, a broad range of market-based policy approaches have been proposed, from cap and trade to eco-labeling to impact investing. These quite different policy frameworks share a core claim that would have been anathema to most environmentalists even twenty years ago (and still is to many): the path forward is not to protect nature from capitalism, but to tie the two together as tightly as possible. The approaches of major environmental organizations are harbingers of this change: the World Wildlife Fund and The Nature Conservancy (TNC) have major programs now on corporate engagement, environmental markets, and impact investing, with TNC going so far as starting its own investment banking operation—NatureVest.

This is a momentous shift in thinking about the environment, and it has been hotly debated in the United States and internationally. Rather than refight those battles, this book is centered on a more pragmatic pair of questions:

What does it take to put