Ecosystem Credit and Payment Stacking: Overview

Abstract

Environmental credit markets have been established as a mechanism to offset wetland impacts in some jurisdictions with a well-developed regulatory program. In the USA, for example, wetland mitigation banking contemplates that a private entity may engage in a wetland restoration project, thereby producing wetland credits; these credits can then be sold to a developer, which will use them to satisfy its legal obligations to provide offsets. Similar environmental markets or offset regimes have been implemented or are in development with respect to endangered species habitat, water quality, and carbon sequestration. Accordingly, a single restoration project may have the potential to produce multiple types of environmental credits. These credits, arising from a spatially overlapping area, are often referred to as stacked credits. Although a properly designed credit stacking regime could induce greater investment in conservation actions, significant ecological concerns remain.