Thank you for inviting me to testify on the feasibility of third party habitat banking in Canada. I am a researcher at Alberta Innovates and an adjunct professor at the University of Alberta, and I am speaking independently.
Today I would like to outline key components of a framework for third party banking, first by providing a high-level summary of the history and benefits of third party banking; second, by illustrating desirable elements of a framework through two case studies, and finally, by summarizing lessons from these and implications for third party banking under Bill C-68.
First, here is a brief history of banking, which arose 40 years ago out of the U.S. Endangered Species Act and the U.S. Clean Water Act.
Wetland banking under the Clean Water Act identifies three mechanisms for offsets: permittee-responsible mitigation, third party banking and in-lieu fee mitigation. Since 2008, these options have been prioritized, with third party banks being the most preferred option, followed by in-lieu fee mitigation. Third party mitigation is preferred because of improved oversight and ecological outcomes.
Both in-lieu fee and banks are third party mechanisms. The difference is that for in-lieu fees, developers pay a fee to an agent and the development takes place prior to restoration. Banking is associated with up-front restoration, and credits are sold to companies prior to development. In-lieu fees can be preferred when there are few potential buyers, but they have also been criticized because of lack of accountability.
Alberta's wetland compensation program, prior to 2013, was an example of a poorly administered in-lieu fee program whereby charges for wetlands compensation were directed to Ducks Unlimited, with limited accountability in linking the payments to wetland losses and gains. The program was criticized by the Alberta auditor general and has since evolved to become more transparent.
The first case study I wish to highlight is the New South Wales Biodiversity Offsets Scheme. Under this scheme, biodiversity impacts from development are offset through permanent private land agreements. Prior to 2016, the offset scheme was known as BioBanking. BioBanking was a voluntary program that ran in parallel with regulated offsets. The Biodiversity Offsets Scheme combined both regulated and voluntary programs to leverage dollars and provide standardization and accountability.
The critical elements of the Biodiversity Offsets Scheme are the Biodiversity Conservation Trust and the biodiversity offset management system. The conservation trust is a statutory not-for-profit body that administers the in-lieu fee program. Its role is to deliver offsets through landowner agreements. The biodiversity offset management system sets standardized roles for registering and exchanging credits and includes a science-based online assessment tool that is used by both landowners and developers to assess credit obligations prior to entering agreements.
A unique aspect of the fisheries offsets is that many of the activities that cause harm to fish take place on public lands and are temporary in nature. Third party offsets would require some sort of disposition on public lands and in waterways.
These issues are considered in the second example, the U.S. lesser prairie chicken offset program, which is a multi-state program to improve habitat through a combination of permanent and temporary offset agreements. These range from five to 10 years in length.
The emphasis on mobile sites explicitly recognizes the temporary nature of many development projects in habitat enhancement activities. Credits are established under an umbrella of the range-wide conservation plan, which explicitly accounts for the dynamics of temporary and permanent activities over the next 50 years.
I would like to summarize by highlighting two lessons from these case studies.
The first is the need to establish an agency with appropriate oversight and accountability for administering the offset system. This agency should be accountable to regulators, but be at arm's length to ensure that there is no conflict of interest.
Second, both programs illustrate the importance of standardized systems and metrics applicable to all offsets, whether they are proponent-led, third party banks or in-lieu fees.
In conclusion, third party frameworks have been implemented in other jurisdictions and are feasible in Canada.
One concern I have under Bill C-68 offsets is that they are evaluated on a case-by-case basis, with proponents using different methods. I would urge the committee to consider the need for standardized administrative systems and assessment protocols within an umbrella of a fisheries conservation plan.
Enabling third party offsets is a critical element of a successful offset program. Leaving this off Bill C-68 could hamper the development of the necessary administrative infrastructure for a credible and efficient offset program for several years.
Thank you.