Environmental Banking is Pay for Performance

When bank credits are purchased, environmental values are transferred from an unprotected site to a permanently protected site. Conservation easements with self-perpetuating endowment funds are provided by bankers. Long term management is established from the outset. These protected sites are continuously expanding as the banking program proliferates.

Bank sites are generally much larger than the individual projects they offset; thus, many banks exceed the environmental values of the smaller projects they offset. Larger sites can withstand fluctuations in weather that might otherwise destroy smaller projects over time. A diversity of wildlife and many other values increase exponentially with larger sites.

An approved bank credit represents measurable, transparent success. If performance standards are not met, credits are not made available, and the environment does not absorb the deficit.

Thus, success rates are nearly 100%. No other option produces this level of success. Banks have built-in safeguards to deal with shortfalls with their own resources.

Mitigation costs are known from the beginning. This opens the way for responsible project financial planning. Further funding for ILF programs is vulnerable to political shifts at the state-level.

Temporal loss mitigation ratios are not needed, since the restoration has been done in advance. This is a significant cost saving to developers.

Long term liability is transferred to the bank. Developers are free to proceed with their projects without the added burden of years of mitigation issues.

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