Regulation, the hybrid market, and species conservation: The case of conservation banking in California

Conservation Banking in California is a long-established offset program. Banks are hybrid instruments that hover between market autonomy and regulatory oversight. Challenges that may affect outcomes of the program include aligning regulation with the scales and objectives of the hybrid market and conservation and interaction with other compensation instruments. I use an analytical framework combining social-ecological fit (does the regulation fit the spatial, functional, and temporal scales of the market or conservation?) and instrument interaction (are compensation instruments redundant, synergetic, etc.?) to analyze the institutional framework of the conservation banking program. Results show that the program fails to reflect the hybrid market or species conservation objectives, creating a social-ecological mismatch. The institutional framework disincentivizes banking, while its contribution in conserving species cannot be measured. Competing and redundant instruments can lead to weaker compensation. The program needs equal standards that reflect conservation objectives for all compensation instruments. Findings on fit can be useful for other banking programs, and considerations on instrument interaction could improve offsets anywhere.