Financial Analysis of Habitat Conservation Banking in California

Habitat conservation banking is a policy instrument for conserving endangered species by providing financial incentives for the landowners in the United States. This policy instrument aims to protect habitat, but little or no thought has been given to its financial performance. A financial analysis...

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Autores principales:	Jagdish Poudel, Raju Pokharel
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	biodiversity offsets conservation easements conservation credits endangered species act financial analysis policy instrument Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
Acceso en línea:	https://doaj.org/article/d08ee4527a15465794af8443c3560ad4
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spelling	oai:doaj.org-article:d08ee4527a15465794af8443c3560ad42021-11-25T19:01:04ZFinancial Analysis of Habitat Conservation Banking in California10.3390/su1322124412071-1050https://doaj.org/article/d08ee4527a15465794af8443c3560ad42021-11-01T00:00:00Zhttps://www.mdpi.com/2071-1050/13/22/12441https://doaj.org/toc/2071-1050Habitat conservation banking is a policy instrument for conserving endangered species by providing financial incentives for the landowners in the United States. This policy instrument aims to protect habitat, but little or no thought has been given to its financial performance. A financial analysis of habitat conservation banks (HCB) informs policymakers and conservation biologists of the long-term success of this policy and the future of HCBs. This paper evaluates 26 habitat conservation banks (HCB) in California by calculating their Net Present Values (NPV). We do so by compiling the cost and revenue data for habitat conservation banks. The average annual cost of operating HCBs was $42.78/acre (median: $22.58/acre), and the average credit price or revenue from credit sale was $6014.72/acre (median: $553.65/acre). The average NPV for 26 HCBs was $4205.90/acre at a 4% rate of return, indicating an overall positive return from such an easement instrument. However, only 14 HCBs out of 26 produced a positive return. With the inclusion of land acquisition costs, three of eight HCBs performed financially well. On the brighter side, the number of HCBs has increased with time. But there is not enough evidence to ascertain financial certainty from their revenues. A right selection of space (land acquisition costs can make or break finances for HCB) and species could encourage landowners to establish HCBs. This could build confidence on those who may have been discouraged from lack of knowledge and fear of losing revenue due to regulatory compliance to conserve endangered species habitat in their land. The findings are helpful in identifying lands and prioritizing investments to generate conservation credits.Jagdish PoudelRaju PokharelMDPI AGarticlebiodiversity offsetsconservation easementsconservation creditsendangered species actfinancial analysispolicy instrumentEnvironmental effects of industries and plantsTD194-195Renewable energy sourcesTJ807-830Environmental sciencesGE1-350ENSustainability, Vol 13, Iss 12441, p 12441 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	biodiversity offsets conservation easements conservation credits endangered species act financial analysis policy instrument Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
spellingShingle	biodiversity offsets conservation easements conservation credits endangered species act financial analysis policy instrument Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350 Jagdish Poudel Raju Pokharel Financial Analysis of Habitat Conservation Banking in California
description	Habitat conservation banking is a policy instrument for conserving endangered species by providing financial incentives for the landowners in the United States. This policy instrument aims to protect habitat, but little or no thought has been given to its financial performance. A financial analysis of habitat conservation banks (HCB) informs policymakers and conservation biologists of the long-term success of this policy and the future of HCBs. This paper evaluates 26 habitat conservation banks (HCB) in California by calculating their Net Present Values (NPV). We do so by compiling the cost and revenue data for habitat conservation banks. The average annual cost of operating HCBs was $42.78/acre (median: $22.58/acre), and the average credit price or revenue from credit sale was $6014.72/acre (median: $553.65/acre). The average NPV for 26 HCBs was $4205.90/acre at a 4% rate of return, indicating an overall positive return from such an easement instrument. However, only 14 HCBs out of 26 produced a positive return. With the inclusion of land acquisition costs, three of eight HCBs performed financially well. On the brighter side, the number of HCBs has increased with time. But there is not enough evidence to ascertain financial certainty from their revenues. A right selection of space (land acquisition costs can make or break finances for HCB) and species could encourage landowners to establish HCBs. This could build confidence on those who may have been discouraged from lack of knowledge and fear of losing revenue due to regulatory compliance to conserve endangered species habitat in their land. The findings are helpful in identifying lands and prioritizing investments to generate conservation credits.
format	article
author	Jagdish Poudel Raju Pokharel
author_facet	Jagdish Poudel Raju Pokharel
author_sort	Jagdish Poudel
title	Financial Analysis of Habitat Conservation Banking in California
title_short	Financial Analysis of Habitat Conservation Banking in California
title_full	Financial Analysis of Habitat Conservation Banking in California
title_fullStr	Financial Analysis of Habitat Conservation Banking in California
title_full_unstemmed	Financial Analysis of Habitat Conservation Banking in California
title_sort	financial analysis of habitat conservation banking in california
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/d08ee4527a15465794af8443c3560ad4
work_keys_str_mv	AT jagdishpoudel financialanalysisofhabitatconservationbankingincalifornia AT rajupokharel financialanalysisofhabitatconservationbankingincalifornia
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Financial Analysis of Habitat Conservation Banking in California

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