Slightly over a week removed from the Mitigation Banking Conference, I’ve finally found time to reflect on the lessons I learned at this event. The top 5, in no particular order, are as follows:
1. Highly fragmented and localized markets. Wetland mitigation banking success in Florida doesn’t lead to mitigation banking success in California. Similar to the water market, ecosystem service markets vary from basin to basin, state to state, and regulatory office to regulatory office.
2. Face time matters. I sponsored last year’s event and strategically followed up with likely clients. An email and phone call will never replace interpersonal communication–at least for me.
3. Regulations drive mitigation markets. It became obvious the majority of buyers for wetlands, streambank, and species credits, don’t do it because they like the product ( think iPhone or Car). They buy them because they have to. Similarly, simple supply and demand will eventually determine water allocations–and already does in certain markets– but regulatory closures are expediting many of the water quantity markets.
4. Regulators are also a target market. In most traditional markets, you direct your marketing efforts to the buyer. This is where mitigation markets differ. Because regulators are forcing the purchase, they play a critical role in the transaction. In some instances, they drive every deal.
5. I love water. I really enjoyed the conference and have tremendous respect for these markets and their players. I also greatly appreciate my water work within these mitigation markets. Although, time and time again, I was thankful for working in water markets. As cumbersome and inefficient as they be, water rights are assets that have survived the test of time.