The Fly in the Ointment

Before delving too deeply into these issues, however, a story: There is a small town nes tled in the sand dunes east of Los Angeles— Colton, California—that provides some idea of the new world that may be emerging as a result of regulated markets for biodiversity off

Banking on Biodiversity SPECIAL SECTION: PAYING FOR NATURE'S SERVICES

sets. Colton is smack in the economic center of San Bernadino county, one of the fastest-growing counties in the United States.

But there is a fly in Colton's ointment of future economic growth. The city is currently involved in a series of legal battles over how much it should be prepared to pay to save an endangered fly: the Delhi Sands Flower-loving Fly, a rather pretty insect that, like a butterfly, hovers and sips nectar from local flowers. This tiny creature has the distinction of being the first fly—and only the seventeenth insect—to be declared an endangered species in the United States.2

According to the U.S. Endangered Species Act (ESA), no individual or entity, public or private, can harm an endangered species—not even a fly—without a permit from the government. Thus shortly after this fly was listed as an endangered species, construction of a hospital in San Bernadino county ground to a halt. The hospital had planned to pave over seven acres of occupied fly habitat, but that all of sudden became illegal. The hospital then had to spend $4 million redrawing its plans, moving its parking lot 250 feet, and making a few other minor changes. All so it wouldn't harm a fly.3

How much is a fly worth? Do you judge by what the fly does? With this fly, scientists do not know the answer to that question. They know that pollinators, such as this fly, tend to have important and symbiotic relationships with the plants they feed on. In some cases, without the pollinator the plant cannot reproduce. Perhaps the flower-loving fly plays that role. Or it could be a cornerstone species, without which an entire ecosystem could collapse. Or maybe protecting this fly will protect dozens of other species, some of which may not even have been discovered yet. Or maybe not.

E. O. Wilson has written: "I will argue that every scrap of biological diversity is price less, to be learned and cherished, and never to be surrendered without a struggle." The state of California, in contrast, has a more moderated view. Having determined that the fly should be protected, it decided to let the market decide what it costs to conserve it. And the market determined that the going rate in California for Delhi-sands fly habitat is currently somewhere between $100,000 and $150,000 an acre.4

This story is interesting not so much because it is hard to believe that people are buying fly habitat—let alone paying $150,000 for it—but rather because it forces society to answer that crass and materialistic question: How much is nature really worth? Some would argue that the question should not even be asked. And yet society answers this question "by default" every day. Every time people buy soybeans, for example, they are putting a value on the Amazonian rainforests that were cleared to grow them. At least in the case of the fly, the price tag is clear, evident, and visible. If a developer wants to pave over fly habitat, it will cost the company (in today's market) as much as $150,000 an acre.

If that were all there was to this story, the concept of putting a price on endangered species would be quite troubling. It implies that someone could pay the price set by the marketplace and then go ahead and destroy the last surviving population of a species. But that is not what is happening. The $150,000 paid to pave over the fly's habitat is actually being used to protect or create habitat for that same fly somewhere else. It is, in other words, an "offset"—not unlike the carbon offsets people are buying to counteract their greenhouse gas emissions. (See Chapter 7.)

As the money goes into legally and financially protecting the flies forever (at least in theory), in a way it is a market, or at least a market-like mechanism. It puts a value on

SPECIAL SECTION: PAYING FOR NATURE'S SERVICES Banking on Biodiversity endangered species and habitat, turning them into marketable assets. It puts a cost on the fly for those who would harm it, and at the same time it creates a value for those who would conserve it. It is this marvelous alchemy—turning cost into value, liability into asset—that may ultimately allow society to preserve biodiversity. But does it work? And, if so, how does it work?

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