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Economy Vs. Environment Doesn't Have To Be A Zero-Sum Game

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By Regina M. Buono

In modern American politics, the choice between economic growth and protecting the environment is frequently depicted as mutually exclusive. Though there are exceptions, industry actors and environmental organizations are often suspicious of one another, talking past each other as they oppose each other’s initiatives. These differences can lead to long and expensive litigation, with development decisions turning on political factors that can affect human livelihoods and environmental well-being in myriad ways. For reasons like those, it’s worth taking note when someone offers an alternative approach. Recent years have seen an increase in projects, largely spearheaded by private actors and NGOs, that are designed to provide mechanisms to mitigate environmental impact while allowing economic activity to continue and to incorporate conservation into business plans. It appears, however, that federal policy may be catching up: two recent initiatives[1] from the federal government appear poised to push these ideas forward and facilitate future activity in this area.

In November, the Obama administration issued a memo to the secretaries of Defense, Interior (DOI), and Agriculture, and the administrators of U.S. Environmental Protection Agency and the National Oceanic and Atmospheric Administration, calling for a goal of a net benefit (or, at a minimum, no net loss) of land, water, wildlife, and other ecological resources from federal actions or permitting. The memo orders the agencies to develop and implement additional guidance on mitigation, including under the Endangered Species Act, within set time periods. Relevant agencies are directed to “adopt a clear and consistent approach for avoidance and minimization of, and compensatory mitigation for, the impacts of their activities and the projects they approve” (emphasis added). The agencies are also urged to use landscape- or watershed-scale planning in their decisions to fully consider and understand the impacts of development for an ecosystem and to pick the best spots for mitigation or offsets. Another key component is a call for better transparency surrounding the mitigation policies and agency guidance, including for measurable performance standards. The end result is intended to be a regulatory context that will facilitate more effective systematic environmental analysis and protection, while streamlining permitting processes to authorize economic activity.

This month, Secretary of the Interior Sally Jewell announced that the DOI will establish the Natural Resource Investment Center “to spur partnerships with the private sector to develop creative financing opportunities that support economic development goals while advancing the Department’s resource stewardship mission.”  The Center, created under existing authority of the DOI, will use market-based tools and public-private partnerships to pursue three objectives: (1) increased investment in water resilience and conservation in the western United States; (2) increased investment via creative financing approaches to build new water infrastructure and replace existing ones; and (3) private investment and well-structured markets for the conservation for species, habitat, and other natural resources. In addition to promoting investment in critical water infrastructure, the Center will develop new financing approaches and identify places in which the private sector can fruitfully invest in habitat conservation programs for public and private lands.

The United States is composed of 2.27 billion acres of land, of which the federal government owns roughly 635-640 million acres, or about 28%. These lands are managed by federal agencies or the military for a variety of purposes, including conservation, recreation, and natural resource production. The remaining 70+% of the country is privately owned (or owned by the states), so conservation action on private lands is a crucial part of impacting the environment for the better. Developing ways to do so without harming economic growth and the resulting human well-being is essential. This is an area in which the two new policy initiatives may help cement the Obama administration’s environmental legacy: demonstrating that environmental stewardship and thriving economic activity are not mutually exclusive and facilitating implementation of this idea. By opening (or widening) the door for federal support of creative, often market-based, private conservation initiatives, the federal government is helping advance the understanding that a healthy environment is beneficial to both humans and business.

The presidential memorandum and the investment program also reinforce efforts toward expanding the analysis used in environmental management decisions, supporting and boosting conservation trends wherein innovative, market-based approaches have been implemented to protect the environment and achieve compliance with laws such as the Endangered Species Act. As noted above, recent years have seen new conservation approaches, often funded by environmental NGOs or industry actors seeking to comply with mitigation requirements through the purchase of permanent land easements or development of habitat exchanges or conservation banks. Examples of these activities include wetland restoration efforts in Minnesota or the habitat exchanges put in place across the west to aid the greater sage grouse. If implemented successfully, the new policies will help foster a streamlined regulatory context within which innovative mitigation and other conservation efforts may occur more easily and, potentially, profitably.

Administration officials and some NGOs are predicting that the policies will result in bigger markets for conservation actions due to increased regulatory certainty and incentives. According to Christy Goldfuss, Managing Director of the Council on Environmental Quality, an estimated 125,000 jobs and $9.5 billion in direct economic activity are currently tied to the restoration of natural resources in the United States. Goldfuss anticipates these numbers will grow under the new policy. These benefits are the heart of what makes the initiatives so interesting, and potentially so important: the policies unite our capitalistic focus on economic development with environment stewardship. In other words, companies (and society) are increasingly seeing a healthy environment as part of good business, and the biggest environmental legacy of the Obama administration may well be to put the weight of federal policy behind that change in attitude.

[1] These are not the first steps in this direction by the Obama administration. Earlier policy directives include the first order issued by Sally Jewell as Secretary of the Interior (Order 3330) and an April 2014 report from the Energy and Climate Change Task Force.

Regina M. Buono is the Baker Botts Fellow in Energy and Environmental Regulatory Affairs at the Center for Energy Studies, Rice University’s Baker Institute.