Banking on Endangered Species: How Assigning Property Rights to Protected Species Turned a Landfill into a Conservation Bank
Not far from the city of Benicia in Solano County, California, sits an old hazardous waste dump. The site was once owned by the IT Corporation, whose primary business was the disposal of industrial waste. But today, part of the site is known as Ridge Top Ranch, and it’s home to an innovative conservation project to preserve endangered species. The landfill was capped in 2002, and the state banned development around the facility to protect public health. When the IT Corporation entered into bankruptcy, the LandBank Group obtained ownership of a majority of the ranch. The property was devoid of development potential because the ranch is part of a buffer zone established around the hazardous waste site. LandBank decided to turn a liability into an asset by creating a conservation bank.
Under Section 7 of the Endangered Species Act, when a development project impacts a listed species, developers are often required to offset those impacts. Historically, this was done by enhancing and conserving nearby habitat for the endangered species. More recently, a new type of entrepreneur came up with another approach: Create a for-profit conservation bank. The idea is to take over the liability of species and habitat mitigation from developers. Conservation bankers purchase land that can be preserved and managed for the benefit of protected species. Long-term management is ensured through a conservation easement and an endowment fund to pay for habitat maintenance and monitoring.
Ridge Top Ranch demonstrates how conservation bankers are able to transform a property from a liability into an asset. If the LandBank Group had turned the property over to a land trust they would have received a tax write off but no additional revenue. Instead, for enhancing habitat, the mitigation banker received 739 frog and butterfly credits worth more than $20,000 each, based on current market values.