This afternoon at a Goldman Sachs conference on Environmental Finance in New York, the Obama administration released a Presidential Memorandum (PM) on the subject of ‘Mitigating Impacts on Natural Resources from Development and Encouraging Related Private Investment.’ This PM represents a major moment in American environmental policy because it establishes goals and mandates for all of the federal agencies that regulate impacts to US land and water as well as the agencies that manage federal lands – essentially taking the model that has led to successful private investment under Section 404 of the Clean Water Act and broadening it to address a range of natural resources.
The PM includes government-wide goal of no net loss – and in some instances an actual ‘net gain’ goal – for a wide range of environmental features on land and water. Previously, only the Clean Water Act had explicit requirements for no net loss of aquatic resources. It also establishes, across the government, a clear preference for restoration completed in advance of permitted impacts over plans or promises to do restoration in the future. Importantly, it also mandates that mitigation policies work similarly across all federal agencies, and that federal agencies hold all compensatory mitigation mechanisms to equivalent standards.
While EIP has been investing in the wetland and stream restoration, this PM broadens and makes more consistent the ‘no net loss’ requirement across other federal agencies dealing with a variety of environmental issues, which is likely to result in more opportunities for private capital to invest in ecological restoration in the future. Importantly, this document provides unequivocal support for private investment in restoration both for compensatory mitigation as well as performance-based contracting that can achieve public natural resource restoration goals.
An additional positive development related to this announcement involves the simultaneous release of a Department of Interior (DOI) policy entitled, ‘Implementing Mitigation at the Landscape-scale.’
While the full effect of this new policy direction by the Obama administration across regional offices and into particular investment decisions will take time, the overall effect of the PM is highly positive for the broad notion of private investment in environmental restoration. The mitigation approach outlined is clearly designed to enable private investmen to meet public objectives including timely permitting of infrastructure, energy and other development while maintaining or even improving environmental standards.
As implementation of this policy moves ahead, we at EIP hope and expect to see a wider set of opportunities that can allow us to meet our investment objectives while we address large scale environmental problems in a meaningful way.
A link to the announcement of the PM can be found here.