Green is red hot, but is this less than transparent green practice going to burn us?

By
Real Estate Agent with Mainstreet Brokers

What’s red hot in Green, Well, Environmental credit banking is something that is heating up to red-hot. And some might say “we” are going to get burned by it in the long run.

Not classically greenwashing, environmental credit banking is a huge and growing industry feeding on both our communal desire to save perceived habitat or delicate land, and the desire to develop sensitive land that would for whatever reason have too high a mitigation cost to build on without the credits.

Let me paint an admittedly simplified picture of how this works, and what I think is wrong with it.

 A developer wants to build a housing tract “on the edge” of a natural wetlands area. The owner of the land, who for the sake of this little story we will say grew up on, and inherited this property would like to see the natural beauty, and value as habitat, protected of course, but is tempted by the offer (of way more money than she ever thought that the land would sell for, because she knows that the area is recognized as a sensitive environmental area). In fact, she has gone to many rather dry land use meetings about local growth and knows already that the property right next to hers was not able to be built on because of the possible impact to habitat. The developer explains that he is willing to take the risk and promises to take good care of the land; weather or not he is ever able to build on it.

Now, the temptation and the promise outweigh the owner’s fears and she sells.

Plans are drawn, surveys are done, testing happens and the local, regional, state, and national regulating bodies each have their say about mitigation and impact. It looks bad for our poor developer. His investment in the land was high for land that looks like it cannot reasonably be built on due to how much impact mitigation would cost. It looks great for the old seller who made a great profit from what she thought was monetarily low value land, and to feel even better about it, she took some of that money and donated it to a land conservation group that buys large sensitive acreage and deeds it as permanent protected land.

All warm and fuzzy! Right?

What she might not know is that the group that she donated to, a “not for profit” group that, is run by some very well paid people who are actually running an Environmental Credit Bank.

A what? But they can’t be developing the land that they buy up to protect. That would be fraud. Explain!

Ok, They are protecting the land that they buy, or often even have donated. They clean it up, do inventories of endangered species, spend time and money (both often volunteered, or donated) documenting the environmental value of this land that because of their efforts is now “environmentally even better” than before, they file the documents to forever protect that land, and they play up the great thing that they have done. By the way, getting even more donations from all of the great publicity.

What they don’t publicize is that what they have also done, through the documentation process, is been granted “Environmental Credits” for protecting the sensitive land. They then take those credits and simply sell them to developers that need to offset the impact that the developers want to make on other projects.

 That is right, in many situations developers can quite literally buy their way out of cleaning up or adversely impacting an otherwise sensitive area.

This is not by any means the case in every project, nor is it the only business model that land preservation groups or developers use, but it is a dirty little secret that people don’t see.

Our seller who moved out of the area with her windfall, came back to visit old friends a couple years later. She was shocked at the unexpected growth on what she had though would always be open land (due to the sensitivity) that some over eager developer gave her, what she thought of as too much money for. “Dang, that was a great place to see birds before, I better give some more money to that group so they can protect more land in the future.”

Everyone made money in this example, some land was even protected, but honestly, what is the endgame on this practice? Does this look like the direction things should be going in to you? This is a tough one, as with the right people and the right projects this is a great tool and will do great things. The skeptic in me sees the opportunity for unscrupulous people to do permanent damage to areas that can never be repaired, all for a quick buck.

This same idea is used for clean water/watershed issues, “dirty energy”/”clean energy” species habitat preservation, and other related issues. Some of these deals are permanent some are binding for only a few years. How about the idea of buying partially cleared forest land, getting volunteers to donate time and effort to replant the land, then selling carbon credits, gained from holding the forest for twenty years, then at the end of the end of the credit period harvesting the forest for lumber. Boy it flips back and forth so much and is done over such a long time frame that the people don’t realize what is going on. On the other hand, if we are going to be using lumber we certainly should be replanting. It’s just that the less than transparent way this gets done, smacks of dishonesty. And the credits can be sold to a company that wants to use the credits to clear-cut today, or keep from making their power plant run cleaner at a higher cost to the shareholders.

Lots to think about. How do you feel about it?



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Rainmaker
388,619
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana
I am not possessed with this green thing.  I do drive a four cylinder and use the florescent lights.  Mainly to save money.
Mar 10, 2008 02:32 PM #1
Rainer
104,652
Michael I. Pulskamp
Mainstreet Brokers - Jackson, CA
REALTOR, EcoBroker, GREEN Desingnee

John,

  • Uh, Great?...
I don't like sushi, and ice cream doesn't have bones.

Think how much more money you could save if you were "possessed". And to the point of the post, do you think anything about the transparency of marketing environmental credits? or anything else?

Mar 11, 2008 02:09 AM #2
Rainmaker
201,816
Stephanie Edwards-Musa
thredUP.com - The Woodlands, TX
knitwit at thred UP

Hi Michael,  LOL at these comments.  Greenwashing is definitely running rampid right now.  What also bothers me is what happens when people buy a 'green' products to find out that it wasn't really green, it is extremely unhealthy, not of good quality.....and then the Media takes over...blows it out of control and then what?  People decide not to go green?

Unintended consequences....but, what to do?  Is there a way to say something is REALLY green?  Should it be a term used by definition from what a governing body says?  (probably not.  :) 

Scary stuff going on out there..

Mar 12, 2008 05:39 AM #3
Rainer
104,652
Michael I. Pulskamp
Mainstreet Brokers - Jackson, CA
REALTOR, EcoBroker, GREEN Desingnee
  • Stephanie, All you can do is all you can do, but knowledge is power, if we all try to pay attention to the fine print, and point out the glitches to each other without being knee jerk fools about these things, we little people can make real changes in the world. One "could you just give me the burrito in one napkin as opposed to the bag with the box and four or five napkins*" at a time.
*I have to say this at the local drive through because if I don't, I get the foil rapper, a cardboard box a stack of napkins and a big paper bag. FOR ONE STINKING BURRITO! Yeah, I know, but sometimes I get hungry and am in too much of a hurry. BTW I shut off my car motor in the drive through, if you will be sitting for more than ten seconds it saves gas. AND MONEY (John)
Mar 12, 2008 10:09 AM #4
Rainmaker
273,520
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI
I was aware of some of these issues, but not to the depth you have explained Michael. Thanks.
Mar 12, 2008 11:18 AM #5
Rainmaker
340,012
Ann Cummings
RE/MAX Shoreline - NH and Maine - Portsmouth, NH
Portsmouth NH Real Estate Preferrable Agent

Hi Michael - hmmm, I'm going to have to re-read this to fully understand what you wrote.  At first glance, it would seem to me that that previous owner, when she came back to town, might have been a bit miffed at the development. 

Ann

Mar 12, 2008 01:20 PM #6
Rainer
104,652
Michael I. Pulskamp
Mainstreet Brokers - Jackson, CA
REALTOR, EcoBroker, GREEN Desingnee
  • Ann, Shocked more like it. Although my story is just a hypothetical, I know people out there have sold land that they, for whatever reason, thought was not able to be developed, only to find out later that someone has been able to jump through whatever hoops needed to be jumped and gone ahead and built. The really interesting thing about "environmental credit banking" is that the people who donate time and money to secure delicate land don't realize that sometimes they are actually enabling development in some other area that would otherwise be undeveloped.
Mar 12, 2008 01:42 PM #7
Ambassador
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What's Most Important to YOU? Call(828)-776-0779

Michael~ 

Very complicated "chess game" of the sort that gives me the sick-green feeling. Any idea about how to make more folks aware of this?

Mar 15, 2008 02:27 AM #8
Rainer
84,210
Mary McGraw
GLREA - Rockford, MI
2015: Solar Energy Is Still A Simple Machine!

Michael ~ You have done a great job and given a good example of what can and does happen. Now I understand it! 

"It’s just that the less than transparent way this gets done, smacks of dishonesty. "

I did not realize the depth of this and appreciate your honest evaluation and explanation of the situation. Thanks! 

Mar 17, 2008 10:53 PM #9
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Michael I. Pulskamp

REALTOR, EcoBroker, GREEN Desingnee
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