April 2006  
Conservation Banking Tests New Waters
by Cameron Walker

Nestled in California's Central Valley between Sacramento and Stockton, California's Delta gathers up five rivers, forming a network of approximately 1,000 miles of waterways flowing into the Pacific Ocean. The Delta's rivers, streams and marshes host diverse fish species, from the three-inch-long delta smelt to the green sturgeon, which can span more than seven feet.

Spanish explorers who spotted the Delta in 1772 described it as "a labyrinth of lakes." These days, deep-water shipping channels run to the inland ports of Sacramento and Stockton, and recreational users drop fishing lines off docks or navigate the waters in everything from powerboats to inner tubes. Pollution enters the river from urban and agricultural areas; water pumps from the Delta to Central Valley crops and Southern California's suburbs. An extensive levee system protects valuable farmlands, neighborhoods, and even downtown Sacramento from flooding.

While much of this transformation has helped California's economy become the seventh largest in the world, the changes have not helped the Delta's resident fish. Twelve of 29 original indigenous fish species in the Delta have vanished or are threatened with extinction.

The tiny delta smelt, with its steely blue sheen and surprising cucumber smell, was once one of the Delta's most abundant pelagic fishes. But populations have plummeted; in 2005, the delta smelt's abundance was less than three percent of what it was in 1993.

To help bring back the delta smelt (and turn a profit), Wildlands, Inc. developed the country's first fish conservation bank in 1997. Conservation banks, which first emerged in California in 1995, are organizations that restore habitat for threatened and endangered species in exchange for government-approved credits to sell to projects impacting habitat elsewhere.

While most conservation banks focus on terrestrial species, fish banking is now garnering attention at the federal level: agencies such as NOAA's National Marine Fisheries Service and the U.S. Army Corps of Engineers are currently considering fish-specific banks for protecting threatened and endangered species.

In particular, NOAA Fisheries has been exploring conservation banking to protect several of the Delta's species – including the threatened Central Valley steelhead and Central Valley spring-run Chinook salmon, and the endangered Sacramento River winter-run Chinook salmon. Using a species-specific bank could create, preserve, and restore habitat for these species, says Howard Brown, a Sacramento-based NOAA Fisheries biologist.

Wildlands' delta smelt project may be the first in a string of efforts to push the boundaries of conservation banking into watery terrain.

Opportunity Knocks

Salt is an important factor in smelt survival. Many fish can pump water in and out of their bodies to balance their salinity levels. Smelt don't have this natural balancing system, so they have to swim in water with the right salinity.

On the shores of Kimball Island, which sits in the heart of the Delta, brackish water rises from Suisun Bay; an inland tidal marsh ebbs and flows with saltwater. While studying the island in the early 1990s, Wildlands' workers realized this salt influx could provide prime habitat for delta smelt. Not long after, the bank began selling credits for delta smelt, planting thousands of cottonwoods, willows, and brush to restore shoreline habitat. The bank quickly ran through two miles of shoreline credits, and then opened up 100 acres of tidal marsh for delta smelt credits as well.

Tidal and freshwater marshes can also host juvenile salmon, which linger there for two weeks to two months before heading out to sea. Accordingly, Wildlands is working with NOAA Fisheries to create banks for ocean-bound fish. NOAA Fisheries' interest in conservation banking originally emerged through the agency's work with the U.S. Army Corps' Sacramento River Bank Protection Project, a long-term program to protect the Sacramento River's levees.

Natural river functions—including processes that create and maintain habitat for migratory fish—can be hit hard by bank protection and levee construction, Brown says. In working with Wildlands, Brown and others realized that fish conservation banking could help mitigate other projects impacting Delta habitat as well.

Tom Cannon, an ecologist who manages Wildlands' aquatic programs, says they're investigating 30 potential banking sites within the Delta. "Anybody that's going to impact an endangered fish species could compensate for their takes by buying into the conservation bank," he says. Likely candidates could be anyone from the state highway agency, CalTrans, to a Delta fisherman constructing a dock for a new boat.

Fish conservation isn't limited to the Delta. "In any place that you have growth nearby, you have opportunities for fish banking," says Craig Denisoff, president of the National Mitigation Banking Association.

For fish conservation banks to capitalize on these opportunities, regulatory agencies must first require mitigation for impacts on threatened and endangered species. The U.S. Fish and Wildlife Service, along with state agencies, regulates inland species like the threatened delta smelt. NOAA Fisheries is the federal agency governing salmon species, steelhead, and the newly-listed green sturgeon, all species that migrate from fresh-water breeding grounds to the ocean.

An Umbrella Bank

One of the likely candidates for the first salmon and steelhead bank may be Fremont Landing, an old floodplain terrace at the confluence of the Feather River, Butte Creek, and the Sacramento River. Once a forested floodplain, the area spent nearly a century as farmland. Now when it floods, fish swim over what looks like a dirt field, Brown says.

A conservation bank could change that. Replanting riparian areas could provide shoreline habitat for fish from all three flows. And strategically placing downed trees and other woody material toward the center of the flow could also boost protected spots, as fish can move up and down in the water column, ducking behind logs and other debris to hide from predators.

Habitat repair in this biologically-significant spot could help fish from multiple rivers, Brown says.

NOAA Fisheries wants to create an umbrella bank for its species-banking program; individual sites, like the one proposed at Fremont Landing, would function under the larger banking system, with each site tailoring restoration to the intended species.

Brown anticipates that fish conservation banks would mitigate smaller projects, such as docks or boat ramps. In many cases, NOAA Fisheries instructs people to avoid in-river construction during the summer, when fish are most likely to be affected, and to replace vegetation. Conservation banks would increase mitigation options. "In a lot of places, where we wouldn't recommend much else, we could have something for them to do," Brown says.

The Corps, too, has its eye on fish conservation banking. The Delta's complex flooding system requires constant maintenance. Ideally, according to the Corps' Mike Dietl, there would be multiple banks up and down the river. This combination of private and public agencies, partnerships, and mitigation options would possibly reduce regulatory hurdles for projects that require mitigation.

"There's a definite market need out there," he says. How much demand, and how soon, will be determined by how much repair the levees need, and how much the Corps receives in federal funding for those repairs. If the money comes through, the Corps intends to develop on- or off-site mitigation responses, which could take the form of a mitigation bank.

With a bank up and running, the Corps could start purchasing credits as early as this year. "If we knew where we were going to do the mitigation up front, it would be a lot easier to attain regulatory approval," Dietl says.

No Field of Dreams

Despite enthusiasm for fish banking, some basic ecological hurdles remain before the strategy can, or should, be deployed on a widespread scale.

More specifically, the problem with fish conservation banks is that no one has direct evidence for the Field of Dreams-style promise: if they build it, fish will come. Fish suffer from a range of impacts—from dams blocking migratory paths to stream-clogging erosion—and it's not clear that improving habitat can tip the balance in favor of fish.

When fish populations are already low, even less is known about their needs. "There has never been a delta smelt egg found live in the wild," Cannon says. "There's not a lot known about these species because they're so rare." The smelt have never been spotted in the inland tidal marsh areas that Wildlands sells for delta smelt impacts, even though the habitat is thought to be suited for the species.

Salmon, both in California and up north, present similar challenges. "Salmon are just so difficult," says Ecotrust's Bettina von Hagen, who has conducted studies on the feasibility of salmon banking in the Columbia River system. There's very little scientific evidence that shows the relationship between habitat quality and salmon abundance, she says.

Clearly, the information gap concerning habitat quality and the population dynamics of different fish needs to be filled before fish banking becomes a 'go-to' strategy for every situation. Toward this end, however, von Hagen observes that conservation banks create incentives to jumpstart more extensive monitoring.

Poised for Growth

In fact, conservation bankers are considering focusing on fish in the Pacific Northwest. In Puget Sound, says Sky Miller, Wildlands' Pacific Northwest regional manager, "we've got properties that we're developing under the wetlands model that would be perfect for threatened Chinook salmon."

Based on Wildlands' work in wetland mitigation, it could take several years before a salmon bank was up and running, Miller says. But setting up a conservation bank could be quicker than putting wetland mitigation banks in place, he says, with fewer agencies supervising the review team for individual species compared to those on a wetland bank review.

NOAA Fisheries has been looking at the draft plan for salmon and steelhead banking since October, and the U.S. Fish and Wildlife Service is reviewing Wildlands' plans for more delta smelt banks. It's possible that a delta smelt bank could be approved in the next yaear, Cannon says.

Until then, Kimball Island keeps plugging along. Wildlands has sold 80 percent of the bank's credits for delta smelt. "As soon as it sells out," Cannon says, "we'll hopefully have another bank ready."