In recent years, however, we have seen a sea change. Transportation agencies have started to consider money spent on mitigation — actions taken to offset environmental impacts — as an investment, rather than just an added cost. They have begun incorporating funds for environmental stewardship into transportation programs, using an approach called “advance mitigation.” Environmentalists have responded by gradually starting to see transportation agencies as potential allies rather than enemies.
Conflicts between environmental advocates and transportation agencies often arise when proposed highway, runway, or rail construction threatens to destroy or fragment critical habitat, such as a wetland, and when the damage cannot be avoided or mitigated at that site. It is often possible, however, to preserve some land away from the project to compensate for its environmental damage. This mitigation might involve protecting part of another existing wetland or patch of forest from future development, restoring a wetland that has become degraded, or even creating a new wetland or meadow.
Environmental mitigation is not new, but transportation agencies often addressed it late in the design and planning stages of a project, after already making critical decisions and commitments. Mitigation was piecemeal, and often resulted in transportation agencies setting aside individual and frequently isolated parcels of land to protect particular plants or animals. Preserving land here and there was useful but not ideal. Neither agencies nor environmentalists were happy with the result. Agencies did not like challenges and costs that arose late in a project’s development when they had to pay a premium to buy or restore land. Advocates worried that piecemeal mitigation did not address the larger problem of habitat loss affecting many species across wider areas. Animals often need large expanses of land to migrate, feed and reproduce, so complex ecologies require large protected spaces. Mitigation, to use a familiar metaphor, was preserving a few trees while ignoring the forest.
Advance Mitigation Proves its Worth
As a solution to these concerns, transportation agencies now employ advanced mitigation to address environmental damage even before they’ve begun the project proposal process. Like many good ideas, this one was started by a single insightful and creative act. Decades ago, the California Department of Transportation (Caltrans) acquired a large tract of environmentally sensitive land near Beach Lake, in the Sacramento River Valley. Caltrans bought the land intending to build on it, but by the 1990s plans had changed and the agency decided the land was no longer needed. Caltrans intended to sell the land as surplus, but a staff member urged the agency to consider a different use: keep the land and use it for environmental mitigation. A large piece of sensitive land, after all, could offset damage from multiple future transportation projects at other locations. The agency agreed to what was an unusual move at the time. The gamble paid off handsomely, as over time the land fulfilled the mitigation requirements for 49 separate road projects in 14 counties, saving Caltrans more than $25 million. Since then Caltrans and many local transportation agencies have accepted advance mitigation having discovered that it improves their road and transit programs while promoting preservation of the natural environment. It also converts many environmental interest groups from opponents to project partners.
Advance mitigation preserves larger and thus more environmentally valuable tracts of land, and does so at a lower cost. It saves project sponsors the money and time spent fighting environmental opposition, and the money and time spent redesigning projects in response to challenges. Consequently, advance mitigation has become an increasingly attractive strategy for both transportation planners and environmental advocates, and has built trust between the two groups. Advance mitigation has allowed transportation agencies to strategically use their revenue to achieve environmental ends.
The Conservation-Transportation Finance Conundrum
The legal basis for collaboration between agencies that build infrastructure and those that protect fragile environments is Section 10 of the federal Endangered Species Act. The act prohibits the “taking” (killing or endangering) of listed endangered plant and animal species through direct harm or habitat destruction, but authorizes the Secretary of the Interior to issue permits for the “incidental take” of endangered and threatened species if the damage is mitigated through a Habitat Conservation Plan, or HCP. Incidental take permits thus allow otherwise lawful activity, like building infrastructure, to proceed as long as there is a plan in place to mitigate the damage done to affected species and their habitats. The Endangered Species Act requires, among other things, that infrastructure projects conserve more acres of land than they develop or take.
Quite a bit of money is needed to support this process: agencies must plan ahead, and then buy and manage habitat. Management is expensive: the agency must maintain the land into the future, and continue the conservation program. Because funding is so important, the Endangered Species Act requires an HCP to demonstrate a “reasonably secure” funding source, and show that projected revenues can cover projected costs over decades to come. If an agency cannot demonstrate this financial stability, its take permit may be denied.
Many local governments raise revenue through exactions on land development. These are fees charged as a condition for issuing permits to build new homes and businesses. New development destroys habitat so some communities devote a portion of the revenue from their exactions to the funding of local habitat conservation plans. For many HCPs, exactions are a major source of revenue, providing money to buy land and restore it to pristine condition. Unfortunately, money produced by exactions typically does not arrive until well into a project’s life. Relying on exactions to fund an HCP means waiting for the transportation project to be completed and development to begin, typically years and sometimes more than a decade after initial project planning. But mitigation is best started much earlier. Thus, HCPs face a persistent “catch 22” when they rely on revenue from exactions. Land costs are usually lowest before development occurs. By the time exactions arrive, development has already driven up land prices, making mitigation more expensive. During economic downturns, land prices fall but, because development also slows down, revenue from exactions falls just when it would be most valuable. Revenue for land acquisition is necessarily lowest when the cost of land is lowest, and revenue is always highest when land is most expensive.
New development often directly follows the building of new highways so local habitat conservation agencies long sought additional funding from state and local highway agencies. Fuel taxes and transportation sales taxes provide stable revenue streams compared to more volatile development revenues. More importantly, their revenue is available well before any particular project has begun. An HCP cannot buy a large swath of land years in advance using fees exacted from development on that land that has not started or even been proposed. But the agency can purchase land using fuel tax or sales tax revenue if a transportation agency makes that money available. These revenue streams can thus get the mitigation started. Once the development begins, exactions can be used to help finance its continuation. Transportation agencies at first refused to contribute to habitat conservation but gradually learned that doing so meant that they could claim they had already mitigated the environmental damage caused by their new projects. This reduced their costs and sped up transportation project approvals.