Biodiversity regulation exists largely in the US and Australia (with some local or regional programs in other countries) and operates on the concept of compensatory credits. This concept means that habitat impacts that cannot be avoided must be 'offset' by an equal amount of restoration and protection in an area that has substantially similar ecological value.

Regulatory regimes create the demand. On the supply side, land owners now have an opportunity to receive compensation (in the form of credits) to 'do the right thing', which is particularly important in harder economic times when reaping value from land is even more essential.

Burrowing Owl

The more robust the market structure is, the more chance it will be taken up by other jurisdictions.

With quality registry infrastructure in place, there are many opportunities to streamline regulatory processes, provide more accurate market information, encourage third party brokers into the market, and better facilitate transactions in both the regulatory market and the emerging voluntary market.

United States regulatory banking markets

In the United States, 'habitat banking' markets were established under the Clean Water Act and the Endangered Species Act, effectively capping habitat loss at the federal level.

While 35 years old, the endangered species habitat and wetland mitigation banking markets really only started to take shape in the mid 1990s (in California), and are starting to develop and gather momentum. At the same, more fish, wildlife and habitat are disappearing every year and now, more than ever, these markets need to be scaleable, efficient, transparent and replicable in other jurisdictions to complement other regulatory, voluntary and philanthropic measures.

The principles of 'avoid, reduce then mitigate' remain fundamental to these markets and while biodiversity banking and wetlands mitigation banking is just one tool to mitigate adverse impacts, these markets appear to be a powerful tool to engagmaking as to land use.

Click here for more on US markets.

Australian regulatory banking markets

New markets based on the U.S. models are now developing in New South Wales (Australia) and Europe. New South Wales officially launched its BioBanking scheme on 1 July 2008.

For more information see the resources page.

Other global regulatory banking frameworks

While less advanced than the U.S. and Australia in this area, governments in Europe have also experimented with market-based mechanisms for incentivizing biodiversity conservation and other countries are starting to see the importance of this market structure.

There are also smaller local schemes in other countries such as New Zealand where under the NZ Resource Management Act 1991, Environment Waikato (the regional council with regulatory authority) has capped the amount of nitrogen entering the lake. Each land use and hectare of land in the lake Taupo watershed will have a nitrogen discharge limit and togher with a trading program focusing on agricultural sources, aims to maintain water quality at 2001 levels.

For more information see the resources page.