Cross-Border, Nature Based Market Solutions to Protect Blue Carbon Coastal Ecosystems in the Californias

March 2022

that impact priority habitats and identified flora and fauna species in California pursuant to various provisions of California law. Those mitigation obligations (collectively, the “CDFW Mitigation Obligations”), may arise from three different bodies of law:

III. What legal and policy considerations must be taken into account to pursue cross-border nature-based solutions? While a compelling case can be made to promote nature-based solution strategies to protect migratory bird species of importance to California through expanded cross-border collaboration with the Mexican states of Baja California and Baja California Sur, the question remains whether there is a legal basis for pursuing trans-boundary blue carbon-focused conservation projects of this nature. To this end, this report examines four potential funding sources currently available in the State of California under California law and regulations: a) the California regulatory regime for protection of specified habitat and threatened, endangered, or other special status species (“Habitat and Species Protection”); b) the California Cap-and-Trade System (“CCTS”); c) the California Environmental Quality Act (“CEQA”) with respect to mitigation of greenhouse gas (“GHG”) emissions; and d) International voluntary offset trading mechanisms (which will be addressed in a different section in this paper). CALIFORNIA

• Mitigation for take or other adverse impacts of activities authorized pursuant to the California Endangered Species Act (CESA), Cal. Fish and Game Code § 2050 et seq. • Mitigation of adverse impacts on existing fish or wildlife resources from lake or streambed alteration activities authorized pursuant to Cal. Fish and Game Code 1600 et seq.. • Mitigation of significant effects on the environment as to plant or animal species, particularly endangered, rare or threatened species, and related habitats pursuant to CEQA, Cal. Public Resources Code § 21000 et seq., and its implementing regulations, Cal. Code of Regulations, title 14, ch. 6, § 15000 et seq. Under the California Fish and Game Code, there are specific provisions for conservation banks and mitigation banks that can “provide viable consolidated mitigation for adverse impacts Flock of Marbled Godwit (Limosa fedoa) in Guerrero Negro wetland, Baja California Sur. Up to 50% of the population of this species winters in this wetland. Photo of Victor Ayala-Perez

POTENTIAL CROSS-BORDER MECHANISMS FOR HABITAT MITIGATION

The California Department of Fish and Wildlife (“CDFW”) can require developers to undertake mitigation obligations as to development projects

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