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Why the big mitigation bankers are embracing ecological restoration

Mitigation banking is in the spotlight as a new group emerges and a leading trade association renames itself.

Ask 12 people what mitigation banking is, and you’ll probably get 12 different answers  few if any of which would identify it as a key segment of the $25-billion ecological restoration economy that funnels money into the restoration of streams, wetlands and habitats while supporting over 200,000 jobs.

"Mitigation banking is confusing," said Sara Johnson, an attorney at Hirschler Fleischer law firm. "Your name is your biggest external communication and you don’t want to immediately explain a technical concept when advocating on Capitol Hill."

Don Ross, founder of a restoration company in Florida called EarthBalance, agreed, saying it isn’t easy to begin a presentation by saying, "We’re not really a bank."

In an effort to encourage engagement with stakeholders and ultimately raise the profile of mitigation banking, several practitioners decided to give the industry’s most prominent organization a makeover. In early March, the National Mitigation Banking Association officially rebranded to become the Ecological Restoration Business Association (ERBA), of which Johnson is executive director.

"We ultimately came to the Ecological Restoration Business Association after a lot of conversation around a need to move to reflecting the broader sector that mitigation banking is a component of," Johnson explained. "Ecological restoration is the public benefit that our private sector industry is providing, so that’s what we immediately want to message in our name."

It isn’t easy to begin a presentation by saying, 'We’re not really a bank.'
"The association will now represent the interests of broader industry segments, such as consultants, engineers, landowners, contractors, corporations, nurseries, NGOs and resource agencies," said George Kelly, chief markets officer at Resource Environmental Solutions, a huge company in the restoration space.

Not everyone is happy with this new image. Smaller bankers and some past NMBA presidents and officers felt the rebranding sidelined their key interests, so they collaborated to form another industry group called the National Environmental Banking Association (NEBA).

"ERBA has a broader focus on the bigger restoration industry," said Donna Collier, founder of Valencia Wetland Trust and a past secretary at NMBA and now chairwoman of NEBA. "They took 'banking' out of their name, and we have a lot of bankers that felt threatened. We felt like we needed to maintain our support of the banking industry, so that’s what we do."

Power by association

Many sectors agree that addressing shared challenges as one collective voice can go a long way towards driving change or influencing policy, which is why so many of them use associations. Mitigation bankers embraced this thinking on a grand scale nearly 20 years ago when several actors in the space formed the NMBA in 1998.

The NMBA’s focus always has been policy, because rules and legislation underpin this entire industry. Federal legislation such as the Clean Water Act and Endangered Species Act support the mitigation banking industry by mandating developers compensate for the ecological harm they do through their infrastructure projects or other forms of development.

Private conservation businesses generate credits for restored and enhanced streams and wetlands or for protected habitats. Entities buy these credits to offset their environmental impact and meet state and federal requirements. It’s a form of advanced compensatory mitigation as bankers generate credits in advance of adverse impacts on ecosystems.

Mitigation banking has a really complicated and long learning curve and there’s a big shortage of people who know how to do it.
The NMBA’s chief goal is to drive smart regulatory policies that encourage advance compensatory mitigation and private investment in ecological restoration, and Johnson said that remains the association’s primary objective under the name-change to ERBA.

The division

Collier contends banking’s three big players  RES, Westervelt and Ecosystem Investment Partners (EIP)  essentially took control of the association and restructured it to focus on their interests shifting the group’s advocacy work to focus on the needs of larger companies.

Johnson disagreed, noting that while RES, Westervelt and EIP are represented on ERBA’s Board of Directors, consultants and small bankers also comprise the association’s leadership and voted unanimously on ERBA’s 2017 policy platform.

"ERBA remains committed to representing the full industry, both large and small banks and consultants, at the federal level," Johnson said.

Playing the business angle

ERBA’s new title clearly defines the sector it seeks to represent. Its leaders added "business" to distinguish themselves from science-driven groups, and to reflect the organization’s entrepreneurial purpose.

"We are mitigation bankers and we develop banks all over the country but the fundamental thing is we’re restoration people," said Ross, a former president of NMBA. "Mitigation banking is just one form of a restoration vehicle and we wanted to pick up the entire restoration community but in a business context."

In terms of leadership, the name-change isn’t altering the management structure of officers and a new president every year. However, Johnson’s role as executive director means the association is working with professional management, and Ross credits this switch as the catalyst for the rebrand and for ERBA to host its first policy conference in March. During this event, directors discussed the makeover and received some positive feedback.

"As an environmental consultant serving the industry and former regulator, I am happy to see the switch to a more inclusive name that defines our industry by outcome and invites greater participation by other professions and industries in the growth of the fledgling and profoundly important ecological restoration industry," said Pamela Fetterman of EcoGenesis, a Sarasota-based restoration company.

Environmental consultants such as Fetterman are one of many groups ERBA is hoping to reach now that it’s branching out beyond banking. Johnson said it's launching a recruitment campaign that will showcase the new association’s more inclusive nature and a website which will focus on communicating ERBA’s mission to external parties.

The group also has plans to engage the administration of President Donald Trump on ecological restoration and the benefits it provides.

A banking focus

Like ERBA, NEBA is founded by past presidents and NMBA players but chooses to only focus on banking-specific problems such as enforcement of the 2008 rule, a policy in which the Army Corp of Engineers established a clear preference for advanced mitigation over other types.

Collier noted the association is in direct contact with several government agencies and has plans to partner with state and regional banking groups to address 2008 rule enforcement among other challenges.

Since the association’s launch in January along with an inaugural meeting at this year’s National Mitigation and Ecosystem Banking Conference in May, Collier said it's seen an explosion in membership, much of it coming from small bankers. She credits this in part to affordable membership fees and also the services and tools the new association is providing. For instance, NEBA provides the game-changing Mitigation Analyst, an online tool that helps bankers assess and interpret industry data, and something NMBA used to offer its members.

"NEBA is committed to assisting needs and addressing concerns of all members regardless of membership fee levels," said Tommy Cousins, a restoration ecologist and chief operating officer at the Palustrine Group, a restoration company operating in North and South Carolina.

Cousins said he researched both organizations and concluded NEBA was a better fit.

"There are still many small businesses with industry leaders and experts focused on producing high-quality projects at local and regional levels," he added. "Many of these same businesses have little or no aspirations of dominating the national banking markets as they favor quality above quantity. In that spirit, we feel NEBA is the type of mitigation banking organization that best represents our interests."

School of mitigation

Similar to ERBA, NEBA wants to raise awareness and the profile of this somewhat esoteric space. NEBA’s strategy, however, centers on education. Collier is an educator who lectures regularly at both university-level mitigation banking courses and in grammar and high schools showing videos of wildlife conservation while explaining the benefits that mitigation banking delivers.

We have government agencies piling into this market in direct competition with mitigation banks and it’s terrifying lots of people.
"It makes a huge difference," Collier said about her education efforts. "When people realize what it actually does, they say, 'Wow, I had no idea.'"

NEBA, meanwhile, has a student membership for enrolled pupils interested in mitigation banking while the website soon will include a jobs board to help new graduates find work in the sector. The association also has plans to teach landowners and business groups the ways of banking.

"Mitigation banking has a really complicated and long learning curve and there’s a big shortage of people who know how to do it," Collier explained. "Education is a big part of what we’re planning to do."

Good for business

While there may be some animosity between the two groups, Collier said they see collaboration in their future.

"We’ve talked about ways we might work together and we have some common interests so we’re willing to do that," Collier said. "We’re on good terms."

Ross and Collier both said, for instance, that competition from government-financed mitigation in the form of in-lieu fee funds among other mechanisms is among the biggest threats to the industry.

"We have government agencies piling into this market in direct competition with mitigation banks and it’s terrifying lots of people," Collier said. "They’re subsidized and they don’t have to meet the requirements that we do. It’s one area where I’m sure we can work together."

Ultimately, having two industry associations that represent mitigation banking to policymakers can be only a good thing, said Wayne White, a longtime mitigation banker and a past NMBA president involved with the ERBA rebrand. He argued ERBA didn’t abandon its original mission but just expanded it, which means both groups are basically pushing to achieve the same objectives.

"Instead of having one association making the argument, you now have two," he said. "The more numbers we put in front of them, the more they’re going to react. Neither group is a fly-by-night association."

Johnson agreed that two associations can aid in amplifying the industry’s voice in Washington, although she cautioned against divisiveness.

"Considering the unique, niche nature of our industry, it is critical we remain unified and consistent in our messaging on the Hill and with agencies," she said.

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