CO HABITAT EXCHANGE – EXECUTIVE SUMMARY
COLORADO HABITAT EXCHANGE EXECUTIVE SUMMARY
The Colorado Habitat Exchange (Exchange) is a pro-active, collaborative solution that ensures net benefit
for the greater sage-grouse, while enabling activities to continue that are vital to the Colorado economy
and culture, such as energy development and agriculture. The Exchange creates new incentives for
private landowners and public land managers and development companies to reduce impact, as well as
conserve, enhance, and restore critical habitat for the species. The Exchange is a market-based
mechanism that quantifies conservation outcomes (credits) and impacts from human activities (debits),
defines standards for market transactions, and reports the overall progress from implementation of
conservation actions throughout the greater sage-grouse range in Colorado. The Exchange establishes the
market infrastructure and tools necessary to facilitate effective and efficient conservation for the species,
which include the habitat quantification tool (HQT) and protocols (i.e. processes and rules) to ensure
conservation benefits are measurable and repeatable. The Exchange is intended to provide regulatory
certainty for industries by addressing compensatory mitigation needs whether or not the species is listed
under the Endangered Species Act.
GU ID I NG P RI N CI P L ES
The Exchange enables the conservation, enhancement, and restoration of sagebrush ecosystem(s) in a
credible, rigorous and cost-effective way. The Exchange abides by the following guiding principles:
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Produce high quality conservation where it makes the greatest ecological difference.
Enable sound decision-making based on the best available science.
Create an efficient marketplace, where every transaction will result in a net benefit for the
greater sage-grouse.
Foster transparency, accountability, and credibility.
Improve the effectiveness and efficiency through programmatic management of the Exchange.
S C OP E
The Exchange will covers the entire occupied range for greater sage-grouse in Colorado, as mapped by
the Bureau of Land Management (BLM) as part of the National Planning Strategy for greater sage-grouse.
Credits are generated by projects that create benefits for greater sage-grouse habitat, and debits are
accrued from impacts to habitat. The Exchange scope can be expanded to support additional conservation
needs and to correspond with revisions to habitat and management maps in the future. For example, the
Exchange will also include Mule Deer habitat in the future.
OR G A NI ZAT IO N AL S TR U CT U R E & ROL ES
The development of the Exchange is currently led by a diverse Working Group that includes
representatives from Environmental Defense Fund, Colorado Department of Natural Resources,
Colorado Cattlemen’s Association, Colorado Parks & Wildlife, Partners for Western Conservation, and
Colorado Oil & Gas Association. The Exchange is transitioning into pilot testing and ongoing operations,
where the organizational structure will consist of the following entities:
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The Oversight Committee includes representation from participants, federal and state regulatory
agencies, and environmental interests who oversee operations and approve changes.
Through authorization from the federal and state regulatory agencies, the Exchange Administrator
manages the Exchange’s day-to-day operations and ongoing program improvements, facilitates
transactions, and reports programmatic results.
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CO HABITAT EXCHANGE – EXECUTIVE SUMMARY
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The Science Advisory Committee makes technical recommendations to the Exchange to ensure
operations are consistent with the best available science.
The Exchange will also create opportunities for trained and certified third-party Verifiers that will be
required assess the accuracy of credit and debit calculations.
OP E RA TI ON AL O VE R VI E W & M AN AG E ME NT S YS T E M
The steps for generating and transacting credits are depicted in Figure 2 and described in further detail in
the Colorado Habitat Exchange Manual, which is anticipated to be released externally in April 2014.
Figure 2: Overview of the process steps to generate and purchase credits
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Blue chevrons signify the steps undertaken to generate credits, which include 1) Select & Validate
Site; 2) Implement project & Calculate Credit
Ensuring Net Benefit
using the HQT; 3) Verify conditions to ensure
credits match on-the-ground conditions; and
In addition to outlining the steps to generate and
4) Register and Issue, using a unique serial
transact credits, the Exchange Manual describes a
number to transparently track credits.
series of operational design rules that ensure net
benefit for the species. Key operational features
 Green chevrons represent the steps to
include the following:
purchase credits, which include 1) Indicate
 Mitigation Ratios make the total functional
Initial Interest; 2) Determine Credit Need,
acres of credit greater than the functional acres
including the duration and amount of credit
of debit.
needed according to the applicable regulatory
 Outcome-Based Quantification &
instrument and HQT; and 3) Acquire Credits,
Performance-Based Credit Release links the
agreeing to price, terms and conditions for
release of credits to on-the-ground functional
credits with Buyers.
habitat that is known to support populations.
 Orange Track and Transfer connector
 Verification with Performance & Financial
Assurances creates strong incentives for Credit
represents the role of the Exchange
Developers to generate functional habitat that
Administrator who provides the platform for
is durable.
transactions to occur.
 Reserve Account creates an insurance pool of
In addition to the operational steps outlined
credits that can be used in cases where projects
unexpectedly cease to produce functional
above, the Exchange Administrator manages the
habitat, so that the program overall ensures
Exchange under a transparent and inclusive
sufficient credits are available to offset debits
process that is designed to improve the efficiency
and effectiveness of the Exchange over time. This
process includes an annual cycle of reporting on Exchange performance, executing strategic monitoring
and evaluation, and systematically improving Exchange tools and operations.
HA B ITA T Q UA NT IF I CA TI ON T O OL ( H QT ) O VE R VI E W
The Exchange’s HQT is the method for quantifying habitat function in functional acres and determining
debits and credits. The HQT uses a set of metrics, applied at multiple spatial scales, to evaluate vegetation
and environmental conditions related to greater sage-grouse habitat quality and quantity. The HQT
enables the Exchange to create incentives to generate credits on the most beneficial locations for the
greater sage-grouse, and to minimize impacts to existing high quality habitat. The HQT is used to
calculate scores for each type of seasonal habitat, including summer, winter, and breeding habitat. The
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CO HABITAT EXCHANGE – EXECUTIVE SUMMARY
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metrics are applied at four spatial scales derived from the Habitat Assessment Framework 1. To calculate
credits or debits, pre and post-project conditions are measured at the site to determine functional acre
scores. The debit/credit score is adjusted to account for indirect effects of the local area surrounding the
site. Mitigation ratios are applied to ensure that the functional acres of credit acquired are greater than the
functional acres of debit. Actual conditions at the site are verified using the HQT, and credits are released
according to the habitat quality achieved.
C U R RE NT S T AT US
The Working Group is in the process of finalizing the Exchange Manual and HQT for external release in
April 2014. Additionally, the Working Group is drafting an Exchange Agreement that will authorize the
use of the Exchange for greater sage-grouse mitigation upon USFWS approval. The Exchange intends to
execute pilot transactions in summer 2014 to further test and improve the draft HQT and protocols.
1
Stiver, S.J., E.T Rinkes, and D.E. Naugle. 2010. Sage-grouse Habitat Assessment Framework. U.S. Bureau of Land Management.
Unpublished Report. U.S. Bureau of Land Management, Idaho State Office, Boise, Idaho.
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