In my last post on conservation land development, I discussed a cost concept—negative externalities.[1]  In this post, I cover a benefit concept—ecosystem services.

Third Key Term: Ecosystem Services

The third conservation land development term a legal professional should master—ecosystem services—is a dual ecology and economic concept.

Ecosystems are defined as a dynamic complex of plant, animal, and microorganism communities and the nonliving environment, all interacting as a functional unit. Ecosystems generate a variety of services that deliver economic value to both producers and consumers of residential land development projects. These beneficial values, in the form of ecosystem services, in increasing order of “tangibility” value to humans, are best categorized as follows:

(1)    Passive use benefits such as mere existence value;

(2)    Ecological services such as clean water, nutrient cycling, pollination, watershed protection, and carbon storage;

(3)    Off-site benefits, such as scenic backdrops and other geographical-area “viewsheds” for residences (seasonal and full-time), universities, recreational facilities, and lodging, which in turn directly enhance property values and tax revenues;

(4)    Community benefits, such as attracting and retaining non-recreation businesses and retirees and providing dependent recreation jobs; and

(5)    Direct use benefits, such as on-site recreation, on-site hunting and fishing, and holistic use benefits.[2]

The Rise of the Ecosystem Services Concept

Following a half-century history of growing ecological awareness and associated science-based environmental policy development efforts, the term “ecosystem services” arose to reflect the bridging of natural science and social science fields.[3] The result is a functional linkage between science and policy practices.

In 1997 Gretchen Daily, the founder and faculty director of Stanford University’s Natural Capital Project, put forth a seminal definition for ecosystem services. Daily defined ecosystem services as those “conditions and processes through which natural ecosystems, and the species that make them up, sustain and fulfill human.”[4] A few years later, a succinct definition has been put forth by the Millennium Ecosystem Assessment: ecosystem services are “the benefits people derive from ecosystems.” The Millennium Ecosystem Assessment is a United Nations initiative that commenced in 2001 to assess the consequences of ecosystem change for human well-being and the scientific basis for action needed to enhance the conservation and sustainable use of those systems.

In more scientific terms, what ecosystem services specifically do for humans is “maintain biodiversity and the production of ecosystem goods, such as seafood, forage timber, biomass fuels, natural fiber, and many pharmaceuticals, industrial products, and their precursors.”[5] In addition to provisioning services or goods like food, wood, and other raw materials, ecosystems’ plants, animals, fungi, and microorganisms provide essential natural regulating services such as pollination of crops, prevention of soil erosion and water purification, and a vast array of cultural services, like recreation and a sense of place.[6]

The Importance of the Ecosystem Services Concept for Legal Professionals

As residential land development continues to creep further into the exurban fringe, more and more natural land and the ecosystems they contain are altered. Such ecosystem alterations directly impact the natural land’s ecosystems and the provisioning of ecosystem services by such ecosystems. The importance of such impacts renders the memorization of the term’s definition insufficient for land use legal practitioners. Due to the increasing importance of ecosystem protection in the residential land use arena, legal practitioners will best serve clients by going beyond merely memorizing the term’s definition. Instead, legal practitioners need to see the bigger picture of how to apply the concepts that the term implicates in the residential real estate development process. That application—namely how enhanced protection of ecosystem services as part of a conservation development project can more than pay for itself— will be discussed in-depth in my next post.


[1] Negative externalities reflect unaccounted for costs that residential land development imposes on society due to the impacts caused by alterations to the ecosystems upon which residential land development is built.

[2] Morton, supra note 4, at 1-4, fig. 1 (setting forth a conceptual list of ecosystem benefits).  The total economic benefits generated by the ecosystems framework set forth by Morton on figure 1 is based in large part on the research of Beverly L. Driver et al., Wilderness Benefits: A State-of-Knowledge Review, U.S.D.A. FOREST SERVICE, INT.-220, 294 (1987), and others, as noted by Morton on page 2). See also Trista M. Patterson, The Economic Value of Ecosystem Services from and for Wilderness, 13(1) Int’l. J. Wilderness 27 (2007).

[3] Leon C. Bratt & Rudolf de Groot, The Ecosystem Services Agenda: Bridging the Worlds of Natural Science and Economics, Conservation, and Development, and Public and Private Policy, 1(1) Ecosystem Services 4 (2012).

[4] Gretchen C. Daily, Nature’s Services, 3 (3rd ed. 1997).

[5] Id.

[6] See Trista M. Patterson & Dana L. Coelho, Ecosystem Services: Foundations, Opportunities, and Challenges for the Forest Products Sector, 257.8 forest ecology & management 1637 (2009).

Residential land development provides many economic and social benefits to society. Most economic costs are factored into and paid by residential land developers (as the producer of the economic good) during the residential land development process. However, residential land development also comes with costs to the ecosystems on which it is built that are not included as a cost incurred and paid during the course of the development process. The occurrence of ecosystem impacts is especially common on land that was previously in its natural state.

Second Key Term: Negative Externalities

The second conservation land development term a legal professional should master is—like the first term I covered—an economic term: negative externalities. When the environmental costs to society (social costs) of a residential land developer’s economic actions are greater than the development costs incurred by the developer (private costs), the difference between the social costs and private costs is an external cost imposed on society. Generally speaking, negative environmental externalities are phenomena that otherwise bypass the marketplace decision-making process and, as a result, prevent free markets from maximizing social welfare. More specifically, a negative environmental externality reflects the external cost amount that land developers do not bear on account of environmental costs imposed on society by the development project’s landscape alternations and ecosystem impacts. The failure to consider such external costs as part of the land development transaction is a form of market failure.

A negative environmental externality is thus defined as:

  1. the harmful impact of a marketplace actor’s economic activity,
  2. that detrimentally impacts the economic well-being of third-parties (i.e., the external cost),
  3. without any transactional exchange occurring between the causing party and the affected third-parties that monetarily prices into the transaction those external costs.[1]

Air pollution is the classic example of a negative environmental externality because the producer’s private costs of production do not automatically capture the external costs of pollution passed onto society.

Effective Conservation Land Development Requires Land Use Laws that Address Negative Environmental Externalities

Economic theory tells attorneys that negative externalities can be internalized by obliging economic actors to absorb the external costs reflecting the harmful external impacts that result from their private economic activity. Conservation development theory tells attorneys that to capture the economic benefits of long-term ecological protection that conservation land development exposes requires commensurate land use laws that address the negative externalities and the market failures they represent.[2] Internalization of these costs can be achieved either through direct government intervention or private transactions.[3]

Land Use LawMakers Challenge: Correcting the Market to Capture Negative Environmental Externality Costs During the Development Process.

When dealing with negative environmental externalities in the conservation land development profession, a significant challenge for land use lawyers providing advice in that area involves effectively addressing the market failure that negative environmental externalities reflect. That is true whether advising private sector clients, local governments drafting conservation land development laws and regulations, or public land use planning agencies implementing such laws or regulations.

Due to the economic and legal complexities of correcting economic markets to internalize environmental externalities, attorneys advising clients need to direct party focus onto feasible solutions. Such a solution-oriented approach requires moving past an approach that attempts to prohibit otherwise socially beneficial economic activity that causes the negative environmental externalities to crafting and implementing land use laws that correct the market failure as part of the land development process transaction. In their simplest form, local land use laws need to ensure a properly functioning land development market by requiring the external costs of a development project’s landscape alternations and ecosystem impact to be internalized into the development process transaction pricing. By using a market failure correction approach, local government policymakers have the opportunity to successfully reduce negative environmental externalities that arise from residential land development projects. Such a reduction of negative environmental externalities can be accomplished without causing secondary effects that lessen the socially-beneficial economic mechanics that occur between land developers as producers and home purchasers as end-use consumers.

In summary, the internalization of land development projects’ environmental costs is the first step to the synthetization of private-sector marketplace behavior and environmental protection. Suppose the internalizing cost process can effectively quantify the external environmental costs. In that case, land use laws are the more socially-beneficial response to negative environmental externalities that arise from residential land development. By internalizing the costs, the actual, higher social cost will be accounted for.

As a final point, due to the external benefits of ecosystem protection, the internalization of such costs theoretically can lead to an even more efficient and socially beneficial method of allocating economic and environmental resources during the land development process to enhance the natural environment’s delivery of socially-beneficial ecosystem services. Ecosystem services will be covered in a future post.

[1] Jeroen C.J.M. Van den Bergh, Externality or Sustainability Economics?, 69 Ecological Econ. 2047 (2010) (discussing the “systems perspective” of externalities and the dynamic character of combined environmental and social optimization systems).

[2] Jeroen C.J.M. Van den Bergh, Ecological Economics: Themes, Approaches, and Differences with Environmental Economics, 2 Regional Ent’l Change 13 (2001) (discussing how the foundation of neoclassical environmental economics is the theory of negative externalities).

[3] Erik Gómez-Baggethun & Roldan Muradian, In Markets We Trust? Setting the Boundaries of Market-Based Instruments in Ecosystem Services Governance, 117 Ecological Econ. 217 (2015).

The first conservation land development term a legal professional should grasp is an economic one: market failure.

The Importance of Conservation Land Development Terminology

Fully grasping conservation land development terminology, such as market failure, starts with the context in which conservation land development principles are applied: the economy. The economic marketplace and government are society’s two primary mechanisms for coordinating economic activity. Conservation land development is one of the countless economic organizing principles that operate within society’s sphere of economic activity. The economic marketplace’s and the government’s operative mechanisms each play a determinative role in delivering to society both private goods and services (such as food production) and public goods and services (such as water quality).

Sometimes one mechanism is demonstrably more efficient in certain circumstances; other times, the other mechanism is demonstrably more efficient in different circumstances. In almost every instance in today’s economy, there is blended involvement by the marketplace and the government in delivering goods and services to society. In public policy making, most economic debate centers around the degree to which one mechanism is more economically efficient (or socially beneficial) for specific industries (such as green energy products) and, more generally, at the national economic level (free markets vs. large-scale government intervention).

First Key Term: Market Failure

The answer to the above-described debate centers on whether the economic marketplace’s operation—without government intervention—allocates economic goods and services in what is deemed to be the most socially beneficial level of output. That economic question leads to the first key conservation land development term: market failure. It is best to understand this term first because the existence of an environmental market failure provides the justification used by public policymakers for the corrective measures a government takes in the form of laws and regulations.

Market failure is an economic term used to describe a situation in which the allocation of goods and services by the operation of the marketplace’s actors, a sub-section of society, results in less than efficient economic outcomes from a society-at-large perspective. The economic marketplace is deemed economically efficient when resources used in an economy by producers and consumers are allocated to their most valuable uses in terms of economic output level and net-benefit to consumers, while waste and inefficiency are minimized. However, where actual economic output is different from the optimal amount for any reason, the market is said to experience market failure. Essentially, a market failure exists when the most socially beneficial level of economic output does not occur. Correcting a market failure brings about improved economic welfare for society.

Market failure is revealed through such economic concepts as negative environmental externalities and sub-optimal public good amenities. For instance, a public good market failure is where the marketplace fails to produce certain goods, despite such goods being needed or wanted. Public goods and externalities are key conservation land development terms that will be discussed in future posts.

For a more in-depth explanation of a market failure, I suggest starting with renowned MIT economist Francis Bator’s 1958 seminal article “The Anatomy of Market Failure.”[i]

The key takeaway, after gaining an understanding of the definition of market failure, is that the market failure concept provides the economic justification for public land use planning and regulation, as well as private land conservation.


[i] Francis Bator, The Anatomy of Market Failure, 72 Q. J. ECON. 351 (1958) (Bator explains that by market failure, “We mean the failure of a more or less idealized system of price-market institutions to sustain ‘desirable’ activities or to estop ‘undesirable’ activities.”)

As an interdisciplinary specialty, conservation land development requires integrating knowledge and methods from different disciplines and then harmonizing links between the disciplines into a coordinated and coherent whole.  Among those disciplines, ecology and economic principles unconsciously can be minimized during the crafting and implementation of conservation land development projects, in favor of an overemphasis on-site planning and landscape architecture.  That occurs because site planning and landscape architecture have historically been the focal point of land development.  As a result, typically, there is a pre-existing comfort by those in the legal profession with site planning and landscape architecture terminology.

Conversely, for those in the legal field, a weak-link often exists when it comes to ecology and economic principles—which is the foundation for crafting and implementing successful conservation land development projects.  The foundation of such principles involves terminology that is foreign to many land use and environmental attorneys’ common lexicon.

And so, a legal professional of use to its clients in the conversation development field is one that has mastered the necessary definitional and terminology framework of conservation land development.

The key economic conservation land development terms are:

  1. Market failure
  2. Externalities
  3. Public goods

The key ecology terms are:

  1. Biodiversity
  2. Ecosystem services
  3. Ecological integrity

By learning the above-terminology, a legal professional can maximize its value-add to clients in the areas of direct legal advocacy, oversight of all stages of land-use planning, and fashioning conservation public policy.  Over a six-part series to follow, each of the above terms, one at a time, with be explained so that the reader will come away with a working understanding of conservation land development’s definitional framework.

This post advocates greater consideration of conservation development techniques at the wildland-housing interface in California’s fire-prone areas to reduce housing destruction risk.  For land use planning to become more effective in mitigating fire destruction risk, it needs to be based on a comprehensive understanding of where and how to locate and arrange new homes within the landscape they are placed.

As discussed in my recent post Fire Policy at the Wildland-Housing Interface: The Unsolved Problem Land Use Lawyers Are Well-Positioned to Help Solve, in those parts of California with a Mediterranean climate, land use decisions play a significant factor in fire risk to housing.  That is due to the commonplace practice of land use planning placing houses at the edge of fire-prone natural areas in traditional housing development configurations.  Incorporating fire risk mitigation into land use planning represents a shift in traditional thinking from focusing on fire resilience and fire suppression (a central tenet of traditional land development methods) to minimizing exposure to fire destruction through the informed placement of new residential structures (a concept consistent with conservation development’s core principals).

A September 18, 2020, Pew Charitable Trusts article titled California May Need More Fire to Fix its Wildfire Problem provides an insightful synopsis of the need for California’s leadership to reconsider the long-term strategy of suppressing fires to minimize structure destruction at the wildland-housing interface.  That article captures the chicken-egg nature of the problem: “[e]ven as leaders rethink the role of fire [suppression], development throughout the state has made it much more difficult to let things burn.”

Successfully reducing the vulnerability of communities built at the wildland-housing interface to fire-caused destruction requires a multi-pronged approach.  I recommend that policymakers consider the benefits and potential of a new approach to fire mitigation: start with and build the approach around conservation land development techniques.  This is because such land use techniques are based on maintaining what has historically regulated the scope of fire destruction: healthy natural ecosystems.  Ron Goode, chairman of the North Fork Mono Tribe in California’s central valley, who has led many prescribed burns, believes that California “needs to give more attention to restoring healthy ecosystems, rather than focusing only on fire suppression.”


Traditional land development techniques do not incorporate as an objective the maintenance of natural ecosystem functions on the landscape in which development occurs.  The absence of such an objective unnecessarily increases the risk of housing destruction in fire-prone areas.  The past twenty years have made clear that removing flammable materials from around housing structures and constructing housing with fire-resistant materials is not enough.

The relatively new Stevenson Ranch development in Santa Clarita, California, provides a useful example of a well-intentioned – but insufficient – approach to long-term fire risk mitigation.  With 5,000 master-planned homes, the Stevenson Ranch development sits in the middle of an extremely fire-prone area.  Brush and chaparral-covered dry hills dominate the Santa Clarita valley in which the development sits.  A 2007 L.A. Times article Why Some Averted Disaster discussed the 2003 Simi Fire that burned 108,204 acres, including right up to the edge of Stevenson Ranch.  The article credits the development for having “made their own luck” by building the homes with fire-resistant materials and ringing the development with a 200-foot greenbelt that replaced native vegetation with fire-resistant plants.

However, such a fire mitigation approach at best may have provided a mere short-term solution.  That is because the long-term ecological impacts on chaparral and sage scrub landscapes from fire clearance measures are prone to having significant long-term detrimental ecosystem impacts.  The authors of a 2008 study found that scientific evidence increasingly shows that the cumulative effects of defensive space actions, like fire clearance measures, “is a primary contributing force of ecotype change, habitat destruction, slope destabilization, [and] water quality impairment . . . .”[1]  Recent indications are that all of those impacts increase the risk of future fire destruction.


For land use lawyers and land use decision-makers, there are two key takeaways from recent scientific studies.  First, land use laws and regulations that emphasize (a) the removal of chaparral and sage shrublands around housing development and (b) with the utilization of fire-resistant building materials are not the best long-term means to mitigate fire risk for homes at the wildland-housing interface.  Second, such land use laws and regulations also have detrimental long-term environmental impacts beyond the fire-related impacts.

Fuel management measures that remove significant native vegetation at the wildland-housing interface leads to substantial environmental degradation of native ecosystems.  Hillside and riparian areas are destabilized.  Traditional methods of lot parcelization and increased road building to ensure firefighting access results in preventable habitat fragmentation.

In southern California’s chaparral and sage shrubland dominate landscapes, those native vegetation systems play an essential role in delivering and supporting ecosystem services that many in southern California directly and indirectly benefit.  The vegetation’s most significant functions are stabilizing southern California’s vast hillside soils and fostering water infiltration into soils.  Chaparral regrows quickly when fire occurs as part of the natural fire cycle, thereby reinforcing ecosystem-wide life cycles.  Conversely, if chaparral unnaturally burns too frequently, it does not regrow and instead is replaced with much more fire-prone alien grasslands.  Such negative ecosystem impacts have the unintended long-term consequence of increasing the occurrence of unnatural fire.

The better approach for southern California’s fire-prone areas lies in land use planning that:

  • Minimizes alternations to the natural landscape, and
  • Is designed to allow fire to occur naturally.[2]

Both of the above are core tenants of conservation development’s ecosystem-based approach to land development.  Such an approach has not been widely tested.  Therefore there is no guarantee that even ecosystem-based land use planning, like conservation development, will sufficiently mitigate structural fire risk in fire-prone areas.  However, recent scientific studies across various disciplines indicate that an ecosystem-based approach to land development at the wildland-housing interface can both lessen environmental impacts from landscape alterations done in the name of fire defense and provide greater protection against future fires.[3]  Such science should lead the way forward, with land use attorneys among its lead advocates.

[1] Stephanie Pincetl, et al., It’s the land use not the fuels: Fires and land development in Southern California, REAL ESTATE REVIEW 37.1, at 25 (2008).

[2] Van Butsic, et al., Can Private Land Conservation Reduce Wildfire Risk to Homes? A Case Study in San Diego County, California, USA, LANDSCAPE AND URBAN PLANNING 157, 161-169 (2017) (discussing how acquisition and preservation of natural landscapes can contribute to the reduction of wildfire risk to homes in exurban areas, using San Diego County, California, as its case study).

[3] Alexandra D. Syphard et al., Setting Priorities for Private Land Conservation in Fire-Prone Landscapes: are Fire Risk Reduction and Biodiversity Conservation Competing or Compatible Objectives?, ECOLOGY & SOCIETY 21.3, at 2 (2016).

The recent catastrophic fires in southern California have, again, raised concern about growth in the wildland-urban fringe.

The astute words above are not from September 2020, as wildfires currently ravage across the western United States, but from 2008.  Such remarks reflect the crucial role land use lawyers should have been playing to address what is suitably described as “a home ignition problem, not a fire suppression problem in wind-driven wildfires.”  As the debate over the appropriate solution continues, the opportunity is there for land use lawyers to provide the missing piece to a much-needed solution: how to comprehensively reduce fire risk for housing built at the wildland-housing interface.

Case Study: California’s Chaparral Regions

There is no fire-prone landscape more in need of land use law revisions for housing development at the wildland-housing interface (or exurban fringe) than California’s vast chaparral areas.  The following map, showing the chaparral dominate ecosystems, reveals the magnitude of the challenge:


The California Chaparral Institute is one of the most vocal advocates for changing fire policy in California to reflect the ecosystem in which housing is placed.  The institute is very vocal that “most of California’s most devastating fires have been far from any forest.”  The most destructive fires occur where the largest number of home buyers want to live: those parts of California with a Mediterranean-type climate with their characteristic mildly wet and mildly cool winters and warm and dry summers.  The problem is that the ecosystems of Mediterranean-type climate zones are highly fire-prone.  The following 2007 map, courtesy of Cal Fire, reveals a striking overlay with the chaparral dominate areas identified in the map above:

The Critical Fire Policy Question

As indicated by the 2008 quote above, the critical fire policy question has been around for some time.  That question is: to what extent is the destruction of housing by wildland fires at the wildland-housing interface a function of land use planning decisions?  Specifically, to what extent is the placement and arrangement of housing relative to the spatial landscape patterns of wildland fire hazards the driving cause of housing destroyed by fire when compared to fuel buildup and a warming climate?

Crafting an effective solution to address the above questions is as much a legal challenge as it is a science challenge.  The absence of land use lawyers in tackling the complex question is undoubtedly a contributing factor to why a solution remains elusive.  However, the lack of land use lawyers at the table is not surprising since the fire policy and fire management debate, especially in the media, has focused primarily on the issue of climate change and the ill-fated fire management policy of fuel suppression.  The buildup of native vegetation fuels due to fire suppression policies, combined with a drier climate, does contribute to the severity of fires in the areas identified and discussed herein.  The point is that such factors are not the underlying cause driving the destructiveness of fires over the past twenty years when the destruction level is calculated based on housing units destroyed.

Non-Legal Works Make Obvious the Need for Land Use Attorney Involvement

The absence of land use lawyers in the discussion is not for the lack of selected non-legal experts raising what are – at the core – land use law questions.  A thorough article addressing the role of land use decisions on the fire impacts was a collaborative effort of ecologists, urban planners, habitat preservation advocates (and from which the opening quote above came).  Titled It’s the Land Use Not the Fuels: Fires and Land Development in Southern California, the authors persuasively articulate how fire in California’s wind-driven chaparral and scrubland terrestrial ecosystems is driven primarily by past land use decisions.[2]  These land use decisions placed too many fire-susceptible housing configurations in highly flammable landscapes.

It’s the Land Use Not the Fuels’ authors argue that the prevailing pattern of land use development at southern California’s the exurban fringe – traditional master-planned communities and large-lot ranchettes that have disproportionately expanded into naturally fire-prone ecosystems to meet housing demand – creates a volatile mix.[3]  The increase in fire severity for communities located at the wildland interface is a reflection of that mix.[4]

Housing Development Designs Need to Fit the Ecosystem in which they are Placed

Taking the research, arguments, and conclusions set forth in It’s the Land Use Not the Fuels and similar articles, I contend that the root of the problem is that housing development designs – a reflection of the underlying land use law – have not fit the ecosystems in which such developments were placed.

The suboptimal fit of development designs is best reflected in the common practice of traditionally built housing communities at southern California’s exurban fringe simply converting large areas of native chaparral and shrublands into significantly more flammable alien vegetation such as alien-dominated grasslands.[5]  Such habitat conversion has broader ecosystem impacts.  Native chaparral and shrubland-based ecosystems – to many peoples’ surprise – are characterized by high biodiversity.  Such ecosystems also serve vital watershed protection and soil erosion preventative functions.  When such ecosystem alternations occur, it then creates a feedback loop that further erodes the ecosystem’s natural fire regulation cycle.

The reality for exurban development in southern California is that large-acreage, fast-moving, high-intensity wildfires have historically been part of southern California’s landscape.  The challenge for public land use decision-makers is developing a strategy to reduce the risk of catastrophic wildland fires in conjunction with the private sector real estate developer community.  The solution lies in crafting and revising land use laws to fit the fire-prone chaparral and shrubland dominate ecosystems where housing at the wildland-housing interface is being developed.  I will layout out the specifics of a proposed solution in a future post.

[1] V. Thomas Parker, Chaparral of California, in ENCYCLOPEDIA OF THE WORLD’S BIOMES 457-472 (Michael Goldstein & Dominick DellaSala, eds., 2019), 1-14 (2019).

[2] Stephanie Pincetl et al., It’s the Land Use Not the Fuels: Fires and Land Development In Southern California, 37 REAL ESTATE REVIEW 1, 25-42 (2008).

[3] Id.

[4] Id.

[5] See generally Jon E. Keeley et al., Alien Plant Dynamics Following Fire in Mediterranean‐Climate California Shrublands, 15(6) ECOLOGICAL APPLICATIONS 1849, 2109-2125 (2005).

Legal advisors to both environmental organizations and land developers must never lose sight of the principle that when dealing with administrative agencies, their client’s run the risk of the regulatory agency’s decision not being the final say.  The risk often arises from the differing ways the application of statutory construction can occur.  Statutory construction is the process of determining what a particular statute means for the purpose of accurately applying the statute to a given situation.  Montana’s long-simmering exempt well dispute is an instructive example that winning an administrative battle over statutory construction does not mean you ultimately win the judicial or legislative battle over those branches ’ construction of the same statute.

Ten years ago, on August 10, 2010, the New York Times ran an article titled Mont. Homebuilders Win Battle in Long-Running Well War.  The land developer’s win arose from Montana’s Department of Natural Resources and Conservation (“DNRC”) declining to close a 1993 administrative rule loophole.  The loophole arose from a statutory exemption to the permitting process revolving around the term “combined appropriation.”  By 2010, land developers were increasingly using the loophole to develop subdivisions without obtaining a DNRC water permit.  Land developers took the position that that single-use wells dug for each new home were not a part of a “combined appropriation.”  As a result, such wells were statutorily exempt from the permitting process; if such single-use wells were deemed part of a combined appropriation, then the statutory exemption would not apply.  The use of the loophole allowed developers to avoid incurring the significant additional infrastructure expenses that followed if single-use exempted wells were not used.  However, the homebuilders 2010 win at the administrative agency level was relatively short-lived; the Montana Supreme Court rejected the land developers’ position in a definitive decision in The Clark Fork Coalition v. Tubbs, 384 Mont. 503, 380 P.3d 771 (Mont. 2016).

Tension Across Multiple Stakeholder Groups: The Origin of Competing Statutory Constructions

Two of the primary constituency groups involved in the exempt well dispute include stakeholders that I frequently contend are more often than not best served by working together to find collaborative, long-term solutions – land developers and environmental advocacy organizations.  However, Montana’s exempt well dispute also involves ranchers and farmers who have experienced lower waterway flows that are believed to be compounded by exempt wells.  Laura Ziemer, then and still the head of Trout Unlimited’s Montana Water Project, aptly characterized the legal source of the battle: “tension between new development and protection of senior water rights.”  The ecological implications of the dispute were plainly illustrated by one Montana state legislator, who operates the same water rights that his great-grandfather claimed in 1865: “a few [of the exempt wells] isn’t that bad, but all of a sudden its death by a thousand straws.”

Regulatory Background of Homebuilders’ Use (i.e., Construction) of the Exempt Well Loophole

Beginning in the late 1990s, land developers discovered that the 1993 rule’s language created a loophole.  This loophole allowed land developers to claim that if each new home in a subdivision had a single groundwater well, then the entire development project was exempt from obtaining a new water use permit from the DNRC permit.  As a result, land developers across Montana began bypassing the water permitting process by drilling up to hundreds of alleged exempt wells in new subdivision projects rather than applying to the DNRC for a new water use permit for such subdivisions.

Statutory Construction:  The Root of the Short-Lived Nature of Land Developer’s 2010 Administrative Win and 2016 Judicial Defeat

The undoing of land developer’s 2010 administrative agency win was the six-justice majority’s application of statutory construction over the single dissenting justice’s application of statutory construction in The Clark Fork Coalition v. Tubbs.  The court’s opinion, its analysis of the DNRC’s 1993 rule, and its discussion of the various stakeholders’ legal argument was a full display of the “art of statutory construction.”

The term “combined appropriation” is not defined in Montana’s statutory system by which water rights are acquired, administered, and adjudicated: the Montana Water Use Act, § 85-1-101, MCA, et seq.  The Montana Water Use Act requires a permit for new appropriations of water.  Section 85-2-301, MCA.  Such a permit is obtained through the permitting process administered by the DNRC.  Section 85-2-301, MCA.  The act also includes an “exempt well” provision authorizing landowners to drill a small groundwater well and obtain water without obtaining a permit from the DNRC.  Montana farmers and ranchers long relied on the “exempt well” provision.

Whether a landowner, be it a homeowner in a new subdivision, a rancher, or a farmer, can utilize a groundwater well in lieu of obtaining a DNRC permit has long revolved around the DNRC’s definition of a “combined appropriation.”  The 1993 administrative rule adopted by the DNRC stated that “combined appropriation” meant “groundwater developments, that are physically manifold into the same system.”  Very few – if any — subdivision developments utilizing groundwater wells were ever connected in that manner.  Therefore, by altering the definition of “combined appropriation,” the narrow exemption to the Montana Water Use Act’s permitting process that had previously existed under a 1987 DNRC rule was expanded.  As a result, only groundwater wells physically plumbed together on a new subdivision – which single-use wells were not — would be deemed a “combined appropriation” under the 1993 rule that required a DNRC permit.

Before the Montana Supreme Court, land developers put forth a statutory construction of the Montana Water Use Act that fit within the wording of the 1993 rule, arguing “‘combined appropriation’ plainly denotes a ‘physical connection’ between two or more groundwater developments.”  The Clark Fork Coalition v. Tubbs, 384 Mont. at 521.  However, the Montana Supreme Court rejected the land developer’s construction.  Utilizing various canons of statutory construction, the Montana Supreme Court determined that 1993 rule’s construction of “combined appropriation” was inconsistent the “plain language” and the stated statutory purpose of the Montana Water Use Act.  Id. at 515.  Central to the Montana Supreme Court’s ruling was its determination that the 1993 rule directly contradicts the Montana Water Use Act’s statutory language “by adding a connectivity requirement to the wells or developed springs, effectively swallowing up the underlying exception that the Legislature created.”  Id.  Ultimately, the Montana Supreme Court’s ruling was a recognition of what the then-in-place statutory regime intended to do: provide a “permit based system [for] the protection of senior water rights from encroachment by prospective junior appropriators adversely affecting those rights.”  Id. at 507.

The Current Status of Single-Use Wells in New Subdivisions

The Clark Fork Coalition decision did not end the battle.  The Montana Supreme Court ordered that the 1987 rule be reinstated.  That reinstatement effectively closed the loophole that land developers had been relying on to bypass the water permitting process for new subdivisions.  Montana’s legislature responded to the Clark Fork Coalition by doing what the Montana Supreme Court stated the legislature had the power to do: amend the statutory language at issue, thereby requiring a new statutory construction consistent with such new language.  During the 2017 legislative session, Montana’s legislature passed HB 339.  HB 339 added a statutory definition of “combined appropriation” to the Montana Water Use Act, defining “combined appropriation” as “an appropriation of water from the same source aquifer by two or more groundwater developments that are physically manifold into the same system.”  Such statutory language essentially mirrored the 1993 rules definition of “combined appropriation”: “groundwater developments, that are physically manifold into the same system.”  However, Montana’s governor vetoed HB 339.  As a result, the exempt well issue remains open and unresolved.  However, the issue’s lessons in the role of statutory construction in land development matters are worth remembering.

On July 30, 2020, I attended the State Bar of Montana’s one-day Montana Law Seminar.  One of the Montana-specific presentations covered water rights – and the opening slide below aptly captured the topic:

One of Montana’s most prominent water challenges arises from many of its basins being “over-appropriated,” whereby claims filed exceed the available water.  Much has thus been written about Montana land developers utilizing “exempt wells” to meet the water requirement of the residential home development boom that has occurred across the state since 1990.  That fact should not be a surprise since the dispute has the elements of a Shakespearian political drama; it involves:

  • all three branches of government (and a fourth branch if you consider administrative agencies a separate branch, as many argue it often is),
  • water rights (as under the Montana Constitution, all water is owned by the state), and
  • the natural pitting of a traditional way of life and the rights established to support that way of life (ranching and farming) versus the economic pressures to accommodate changing ways-of-life (the subdividing of ranches and farmlands for residential housing).

Origins and Current Status of the Exempt Well Dispute

In the residential land development sphere, the exempt well legal dispute has its origin in a  heavily disputed administrative rule issued in 1993 by the Montana Department of Natural Resources and Conservation, Admin. R. M. 36.12.101(13).  A loophole in the rule that residential land developers began relying on beginning in the late 1990s was litigated to the Montana Supreme Court.  In The Clark Fork Coalition v. Tubbs, 384 Mont. 503, 380 P.3d 771 (Mont. 2016), the Montana Supreme Court ruled the loophole invalid because it conflicted with the underlying statute on which the administrative rule was based.  The state legislature responded by passing legislation that overturned the Montana Supreme Court decision by codifying language the Montana Supreme Court rejected.  Montana’s governor then vetoed the legislation.  The result of this peculiar ping-ponging across Montana’s branches of government  is that the exempt well issue is, as stated by Montana Farm Bureau Federation, “back in the same old, familiar boat; where do we go from here?,” where it remains today.  At its core, the dispute remains about the amount of water diverted by current and potential appropriators.

The Bigger-Picture Environmental Issue: The Loss of Open Space to Residential Land Development and its Ripple Effect

A simple online search reveals significant attention has been given to the competing interests at stake if residential home builders can develop homes utilizing single groundwater wells.  Specifically, the public, academic, and legal debate appears to fall into one or two categories:

  • The public policy and legal tension between accommodating new residential land development and protecting Montana’s long-established system of protecting holders of senior water rights; and
  • The environmental impact of widespread single groundwater wells on the ongoing ecological health of the water source from which water is diverted.

However, as many groups seek a long-term, collaborative solution, more attention needs to be given to the impact of open space loss across Montana on what underlies the exempt-well – not enough water to go around to satisfy all stakeholders’ preferences.  My reasoning is this: the loss of open space impacts water sources, usually reducing available water to be appropriated downstream; fewer water sources and less water to be appropriated downstream puts further strain on Montana’s already tense water rights legal and public policy state of affairs.

Recommendation: Greater Attention to the Loss of Open Space on Available Water.

More scientific research needs to be conducted accessing the ripple effect of the loss of open space on the water ultimately available to divvy up by Montana’s water rights system.  The exempt-well dispute cannot be allowed to be narrowed down to just being about the amount of water diverted or the cause of the diversion – although those will always be points of contention between current and future appropriators.  What also requires equal attention is what land use changes are impacting the gross availability of water to be allocated to all stakeholders.  Nonprofit research organizations, such as Headwaters Economics, have already raised the issue of the accelerating loss of open space and its impact on water policies and concerns.  The next step is increased research into and policy focus on the ripple effect of the loss of open space.  Whether parties can reach a collaborative solution or the matter is resolved by adversarial legislation or litigation, the information generated by the recommended scientific research will be beneficial to all parties.

Unlike a Rose By Any Other Name, Conservation Development Does Not Always Smell Sweet.

One of conservation development advocates’ core claims is that utilization of the land development technique results in a more environmentally-friendly finished product when compared to conventional land development techniques.  Such a claim is typically true.  It is true because conventional development land use laws do not require the identification and protection of the natural resources of the land to be developed.  However, just because conservation development is typically more environmentally friendly than conventional land development does not mean that its end-result environmental protection sufficiently maintains biodiversity by protecting, cornerstones of biodiversity, such as conserving essential habitat areas or ecosystem functions.  To put it in basic logic terms: just because option A is better than option B does not mean option A is adequate to achieve an objective.  The pertinent question is whether the substance of conservation development land use laws and ordinances adopted by a local jurisdiction leads to the actual maintenance of biodiversity.

Biodiversity is ecosystem focused.  Biodiversity can be succinctly defined as the “variability among living organisms on the earth, including the variability within and between species and within and between ecosystems.”  I recently read a 2012 article titled Do subdivisions designed for conservation actually help wildlife published in the always insightful High Country News.  The article touched on the issue of how effective are conservation development projects at maintaining biodiversity.

The answer to the question is, it depends.  Many conservation development projects built in the last decade have helped preserve biodiversity (including projects discussed in 2012 article).  However, many projects have not lived up to the label “conservation development” as commonly understood by ecologists.  Scientific research has revealed that the end result of many so-called conservation development projects is a natural landscape that has been left ecologically degraded and impaired without meaningful differences to historic checkerboard conventional developments.  For conservation development projects to successfully satisfy its underlying objectives post-completion, maintaining biodiversity can be broken up into three steps.

Step 1: An Ecological Site Analysis of the Ecological Attributes of the Proposed Project’s Land

As correctly explained by Armando Carbonell of the Lincoln Institute of Land Policy, private sector land developers and public sector local land planners must “understand both the ecosystem context and the ecological consequences of their actions.”  The prerequisite to such collaborative understanding is a thorough site analysis of the ecological characteristics of the proposed development project’s land.  The ecological site analysis must assess the four main ecological characteristics of land that are necessary to maintain biodiversity, or as I prefer for land development projects, its “ecological integrity”:

(a) composition,

(b) structure,

(c) function, and

(d) ecological processes.

Land is said to have ecological integrity/biodiversity when the four primary ecological characteristics exist within their natural ranges of variation and can withstand and recover from most perturbations that result from natural environmental dynamics or human disruptions.

Accordingly, as step one, local land use laws and ordinances must mandate a pre-design, site analysis of the ecological attributes of the proposed project’s land.  It cannot be optional.  The entire project must be surveyed to identify such features as the land’s essential ecosystem functions, its critical wildlife habitat, and the indispensable wildlife corridors between habitat areas.  Disappointingly, a 2014 study co-authored by Sarah Reed, an associate conservation scientist with the Wildlife Conservation Society and a leading researched in the field, found only thirteen percent of adopted conservation development laws required an ecological site analysis prior to a development’s design and planning.

Step 2: Project Design and Planning Around Critical Habitat and Ecological Functions

Once the ecological site analysis is completed, development must be designed and planned around the site analysis’ results.  Mr. Carbonell correctly emphasizes that “[i]ts important (for planners and developers) to start interacting before a design gets finalized.  In the absence of understanding how watersheds work, or how an ecosystem works, you can get development patterns that are not terribly functional.”

At the same time, it is vital to recognize that there is no single way to design a conservation development project.  A conservation development’s design is site-dependent, as well as dependent on the larger scale natural areas in which the site resides.

For meaningful biodiversity protection to occur in a conservation development project requires ecosystem-level protection at a sufficiently large scale.  Therefore, the best designs set aside large areas of high-quality natural open space, strategically connecting the set-aside land across the project’s landscape and, to the fullest extent possible, to any adjacent national forests, state parks, local nature preserves, and conservation easements.  Preexisting wildlife movement corridors must also be retained.  The internal project layout of the housing lots and infrastructure must then be laid out around the preceding requirements.  By doing so should minimize the fragmentation of ecosystems prevalent in conventional land developments, and, unfortunately, present in too many projects labeled as conservation development projects.

Step 3: Ongoing Stewardship of the Land

The final step to maintaining biodiversity is for the development, once completed, to be subject to a long-term stewardship plan.  At a procedural level, such a plan must be enforceable and not mere guidelines or aspirations.  At the substantive level, the stewardship plan must focus on what is necessary to preserve biodiversity post-project completion.  That requires ongoing monitoring of the set-aside lands’ ecological characteristics.  Whenever identified, action must be taken to avoid the introduction of invasive plant species and to restore habitat if any disturbance, natural or human-caused, detrimentally alters the ecosystem.

Key Takeaways

  • When a thorough ecological attribute study is not conducted, a collaborative understanding between private sector developers and public sector planners (as well as third party stakeholders) will not be reached concerning the proposed land development project’s ecosystem context and the ecological consequences of the proposal.
  • Where such a collaborative understanding does not occur, the physical manifestation of a conservation development’s open space will almost certainly not help maintain the developed land’s biodiversity.
  • The term “open space” used in conservation development laws and ordinances is often not synonymous with the conservation of ecosystem functions. The term “open space” is too commonly used to describe human-designed and “made green” spaces, such as pocket parks, soccer fields, and open fields that – although often well-meaning – are nothing more than extremely large lawns.  None of those “open spaces” provide meaningful biodiversity protection and are hardly an improvement over golf courses.
  • Ecologists must have an ongoing role during all of the above-described three steps. Doing so will best ensure that a locality obtains the scientific input necessary to realize the environmental objectives conservation development is intended to achieve.

An insightful academic article on this topic, which is one among many and on which this post relied, is Liba Pejchar et al., Evaluating the Potential for Conservation Development: Biophysical, Economic, and Institutional Perspectives, 21 Conservation Biology 69 (2007).

Since this blog’s focus is on land development principles and practices labeled “conservation development,” it is important for readers to know what conservation development is not.  Generally speaking, true conservation development connects land development to land conservation — in a manner that assures meaningful natural resource protection.

The Label “Conservation Development” Is Often Misused

Not every development project labeled a conservation development project is a conservation development project (e.g., one that provides for meaningful natural resource protection).  The primary reason for the mislabeling of land development projects as conservation development projects is the variation in requirements local jurisdictions require for a project to be considered a conservation development project under local land use laws.

For example, reducing the quality of the developed land’s functioning ecosystem and biodiversity and replacing it with a patchwork of green lawns for outdoor recreation does not serve the essential objective of conservation development.  Hence, the key determinative factor of whether a land development project is a true conservation development project is twofold:

  • First, the project’s design must significantly outperform conventional subdivisions and baseline scenarios in terms of protecting biodiversity and associated ecosystem functions.
  • Second, the project’s design must not reduce biodiversity and concomitant ecosystem functions below what they would be if the land is not developed.

Conservation Development is not Incompatible with Private Developer Profit Motives

Far from limiting profitability, conservation development projects provide a development approach through which developers can generate financial returns competitive with, and oftentimes above, financial returns that would be generated if a traditional land development approach was.  Not widely discussed in academic literature on the subject, the ability of conservation development to align with the profit making objectives of developers is a strong means by which sustainable development can be achieved with the help of the private sector.  On the project revenue side, homebuyers are willing to pay a premium to live in a more natural environment with a higher amount of intact natural green space and uninhibited local wildlife.  On the project cost side, capital costs can be lower than conventional land development for traditional new infrastructure such as roads, as well as green infrastructure — to protect against environmental hazards such as flooding and water pollution.

Conservation Development Is Not a Device that Stops Growth

The exurban and rural landscape continues to see rapid growth.  Conservation development will not stop growth from occurring.  Both natural condition land, as well as working lands such as large agriculture plots and forest districts, will be altered by conservation development projects.  As is the case with all development forms, conservation development is about how to develop the land.  As Kris Larson of the Minnesota Land Trust put it, conservation development does not save all land, “but it’s a great tool in the right circumstances.”  What true conservation development can do is prevent unnecessary destruction of — and negative impacts on — the ecosystem and “ecosystem services”on the land where development occurs.

Conservation Development is not Green Building

Green building focuses on the planning, design, construction, and operations of the vertical aspects of a development project’s built environment.  The central concerns are energy efficiency, water use, indoor environmental quality such as air quality, use of natural light, waste reduction, reuse, and recycling, and the use of environmentally sustainable materials.  Conservation development focuses on the horizontal aspects of a development project’s site.  The central concerns are ecological mapping at the outset and identification of ecological resources to be preserved, site planning and design around the area’s ecosystem (and other corresponding land planning actions).  The good news is that conservation development and green building standards are not mutually exclusive and indeed often complement one another in a mutually beneficial way.  This is because green building recognizes and is premised upon the vertical built environment having profound effects, both positive and negative, on the natural environment.

Conservation Development is not Mandatory Low Density Development

Conservation development is far too often mistakenly viewed as synonymous with low density development.  While low density conservation development projects occur, where they occur is typically a function of the preexisting landscape in which the conservation development is built.  A typical example is rural areas where the land had previously been subdivided into large farms or ranches.

Conservation Development is not “Cluster” Development

Conservation development and cluster development are commonly misperceived as synonymous.  They are not, although conservation developments can incorporate clustering concepts and occasionally do.  Cluster development congregates residential units into abutting smaller lots in one area (or just a few areas) of a development footprint, which significantly reduces the residential dwelling development footprint.  Cluster development then designates the now more expansive non-lot areas for recreation, common open space, or as natural areas.  It typically connects such areas with pedestrian paths, which can help minimize the infrastructure needs of the development.  However, cluster development does not require the preservation of the development area’s functioning ecosystem and biodiversity, or even site planning and design that preserves some of the area’s natural resources.

Conservation Development is not for only High-Income Homebuyers

Conservation development design principles apply to a wide range of development projects.  This includes projects targeted at middle-income homebuyers.  Also, conservation development projects are increasingly incorporating housing set-asides for lower-income households.  One noteworthy example is Beacon Hill Lane on Block Island, Rhode Island, where seven affordable single-family homes were built for year-round residents next to a natural open space that was permanently preserved.