Habitat Exchange: How Does it Work?

The Lesser Prairie-Chicken Habitat Exchange and its associated quantification tool were developed by a group of stakeholders that include agriculture associations, energy companies and conservation organizations including Environmental Defense Fund [Read the Lesser Prairie-Chicken Habitat Exchange Agreement and habitat quantification tool]. These stakeholders have worked for over a year to develop the processes and standards by which the habitat exchange would operate if approved by the U.S. Fish and Wildlife Service (Service). The habitat exchange proposal, including all the associated documentation, was submitted to the Service for approval earlier this year (2014).

The need for the habitat exchange is triggered by the need on the part of energy companies and other entities impacting habitat for the lesser prairie-chicken to obtain incidental take permits (ITPs), should the species be listed as threatened or endangered. The Service is required to make a listing determination on March 31, 2014. If the species is listed, energy companies and others operating within the range of the species, in order to comply with federal law, will be required to obtain an ITP in order to operate. ITPs require that unavoidable impacts to habitat for listed species be compensated for by improving habitat elsewhere. This process is called compensatory mitigation. The exchange is an efficient, transparent and high quality way for industry to obtain the credits that they need to meet compensatory mitigation requirements.

A group of energy companies and agriculture organizations is currently seeking approval for a Habitat Conservation Plan (HCP) [Read the industry HCP]. An HCP is one mechanism whereby industry can obtain ITPs. EDF is not an applicant for the HCP because it is not impacting habitat. The Lesser Prairie-Chicken Habitat Exchange is, however, noted as a compensatory mitigation alternative within the HCP and, therefore, the Service is reviewing the habitat exchange as part of their review of the HCP.

The HCP and the habitat exchange will be administered by separate entities. This chart (PPT) shows the relationships between the two entities and the regulatory authority, the U.S. Fish and Wildlife Service. The habitat exchange will be administered by an exchange administrator. The stakeholders that developed the habitat exchange will soon launch a search for an independent non-profit organization to act as the exchange administrator. The most important function of the habitat exchange is to accurately quantify the value of credits that are generated by farmers and ranchers, and to carefully track the individual credits and their ultimate use so that any permitted impacts are compensated for. These transactions will be independently audited by third party auditors.

Impacts to habitat by industry and credits generated by participants in the exchange (e.g. farmers and ranchers, conservation banks) are assigned a value through use of the habitat quantification tool (HQT). The HQT is applied to the impact site (e.g., a gas well, pipeline, wind farm) to measure the decline in habitat quality associated with that project. The same HQT is applied to credit sites to measure the increase in habitat quality.