Wetlands disappear quickly.  The private sector can help save them.

Wetlands disappear quickly. The private sector can help save them.

Wetlands disappear quickly.  The private sector can help save them.

Wetlands are not the most attractive ecosystems. These include swamps, marshes, bogs and other places where the ground is covered with water most of the time. But they perform a wide range of valuable services, from absorbing floodwaters to filtering pollutants and providing habitat for thousands of species of mammals, fish, reptiles, insects and birds.

In a landmark 2023 ruling, Sackett v. Environmental Protection Agency, the US Supreme Court greatly limited the federal power to protect wetlands. According to one estimate, this ruling reduced federal protection of up to 90 million acres of US wetlands.

Today, the US is losing wetlands, primarily to development and agriculture, at an accelerating rate. With Congress polarized and deadlocked, new federal wetlands protection laws are unlikely to pass in the next few years.

Some states have stepped up to fill the gap, but others have instead chosen to roll back their existing protections. This comes despite the fact that, even before the Sackett ruling, the people of the US strongly favored more protection for wetlands.

We are environmental law researchers who recently conducted a study (to be published in the Minnesota Law Review) that explores how private environmental governance can protect wetlands. This approach uses private agreements., certifications and other practices such as monitoring and dispute resolution to promote sustainability.

Private action is not a substitute for regulation, but it can act as a hindrance while other legislative and regulatory efforts are developed and complement new laws and regulations once these measures are in place.

The role of business, NGOs, banks and investors

Corporations and non-governmental organizations, NGOs, have a variety of ways to encourage wetland protection.

First, certification bodies can develop standards for wetland-friendly goods, as can fair trade labels for products that promote safe working conditions, environmental protection and living wages. Greater use of these standards can allow customers, investors and lenders to vote with their wallets. An example might be a label that identifies products made from ingredients grown on farms that preserve wetlands.

For construction, there is already a gold standard for environmental certification of buildings: Leadership in Energy and Environmental Design, or LEED certification. LEED already incorporates some protections for wetlands, and its requirements may be strengthened to ensure protection of wetlands exposed since the Sackett ruling.

Further, corporate pressure can use supply chain contracting to influence the sectors most likely to fill wetlands: agriculture, construction and forestry. Corporations could require suppliers to agree not to damage wetlands exposed by the Sackett decision, in the same way that companies already use contracts to address other environmental issues.

For example, Whole Foods Market requires suppliers to follow a code of conduct that includes minimizing their impact on the environment, avoiding deforestation, and seeking opportunities to conserve water. Similarly, Albertsons, the fourth-largest US grocery chain, requires suppliers to make efforts to reduce the destruction of natural resources and water contamination.

Large institutional investors and lenders can also play a role. Those with sustainability policies can insist that developers seeking funds respect pre-Sackett wetland protections.

Major banks have already demonstrated varying degrees of commitment to sustainability. In 2003, 10 major banks in seven countries adopted the Equator Principles, designed to “serve as a common basis and risk management framework for financial institutions to identify, assess and manage environmental and social risks when financing projects”.

This includes carrying out environmental risk assessments of projects applying for funding, taking measures to minimize and mitigate risks and, as a last resort, compensating for unavoidable effects. This list should be expanded to include wetland loss risk assessment in project financing.

Several banks have recently withdrawn from adhering to these principles, but have generally committed to continuing to follow them. NGOs can help protect wetlands by pursuing funding for proposed developments in vulnerable areas.

Reducing flood risks

Insurance companies can also help fill the gap. Because wetlands are valuable flood buffers, property insurers have a vested interest in reducing wetland losses.

Many insurance companies in California, facing rising costs due to climate change, have stopped issuing new policies. Similar decisions are taking place in other disaster-prone states such as Louisiana and Florida.

Without access to insurance, businesses will be less likely to invest in these states. Reducing flood risks due to wetland destruction could help reduce risk for insurance companies.

Private insurers could deny coverage to properties that significantly degrade wetlands that are no longer protected under Sackett or condition coverage on binding commitments not to degrade wetlands. Conservation groups could work with private insurers to develop climate-focused coverage for particularly sensitive wetlands left uncovered after Sackett.

In one example of this approach, The Nature Conservancy, an environmental nonprofit, purchased insurance in 2022 to fund the restoration of Hawaii’s coral reefs if they are damaged by hurricanes or tropical storms.

Retail customers, employees, community members, and nonprofit groups can exert economic pressure on companies to include such protections in their operations. This type of private pressure has already led companies to commit to reducing greenhouse gas emissions. Until states and Congress pass new laws to prevent wetland destruction, we see business and NGO action as the most promising substitute.

Steph Tai is Professor of Law and Associate Dean, Nelson Institute for Environmental Studies, University of Wisconsin-Madison. Michael Vandenbergh is Professor of Law and Co-Director, Energy, Environment and Land Use Program, Vanderbilt University.

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