How the Endangered State Acts: Reverse regulatory threat and market-based conservation policy

Authors: Daniel Large*, Cornell University, Steven Wolf, Cornell University
Topics: Cultural and Political Ecology
Keywords: regulation, biodiversity offsetting, mitigation, market-based, environmental policy, sage-grouse, habitat exchanges, reverse regulatory threat
Session Type: Paper
Day: 4/5/2019
Start / End Time: 3:05 PM / 4:45 PM
Room: Delaware A, Marriott, Lobby Level
Presentation File: No File Uploaded


Environmental non-profits, private interests, and state actors continue investing in market-based environmental strategies despite uncertain payoffs and continued environmental losses. Proponents’ belief market-based approaches will produce (i) conservation benefits at least aggregate cost and (ii) more political support than regulation sustains this strategy. In this view, market mechanisms will eventually outperform traditional command-and-control regulation. To date, however, promises outweigh results. In the absence of regulatory mandates or credible threat of regulation, market-based approaches premised on voluntarism appear to be incapable of producing conservation at scale. In this paper, we analyze efforts to develop habitat Exchanges—platforms for trading biodiversity credits to offset habitat disturbance—to investigate this phenomenon. Through analyzing development of Exchanges for sage-grouse in Colorado and Nevada, we explore how reverse regulatory threat fueled emergence, development, and crisis of Exchanges. Reverse regulatory threat emphasizes a perversion of traditional models of governance in which credible public regulatory threats structure private actors’ investment and management decisions and put a floor under negotiations. We observe a situation in which state regulatory capacity itself has become an endangered resource within environmental policy. In analyzing construction and administration of Exchanges, we identify processes serving to maintain legitimacy of Exchanges and their sponsors as a coherent, attractive conservation strategy, despite lackluster record of achievement. Based on our findings, we argue for assessing market-based policy strategies such as Exchanges as environmental management platforms that require a muscular public regulatory mechanism. Without political will and capacity to regulate private economic actors, market-based schemes are likely hollow.

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