The Canadian Wildlife Federation (CWF) welcomes the inclusion of third-party habitat banking and in-lieu fee provisions in Bill C-39, tabled by the federal government on Sept. 21.

The proposed legislative change follows calls by CWF to amend the Fisheries Act to enable new tools to offset harms to fish and fish habitats. With aquatic habitat loss a major source of biodiversity decline in Canada, this is an important step to promote long-term conservation and habitat restoration, keeping Canada’s waterways healthy. 

At present, the offsetting process in Canada largely relies on project proponents to individually address harms to fish and fish habitats caused by development activities. This approach has been largely ineffective, as offsetting requirements are applied inconsistently, and offsets are typically smaller than habitats harmed or fail to perform as intended. Additionally, thousands of smaller projects result in residual harm that is not offset each year. This is because the amount of harm is too small to address effectively through individual restoration projects. For decades, this has been contributing to a cumulative loss and degradation of fish habitat in Canada. 

Improving Outcomes by Pooling Resources 

Third-party habitat banking and in-lieu fees can make offsetting more effective by pooling resources and enabling restoration projects that are important and effective at large ecosystem scales, providing far greater fish-habitat benefits across Canada. Third parties, including Indigenous communities, not-for-profit conservation organizations, habitat restoration companies, and even local-led and community groups can then lead habitat restoration activities at scale, rather than on a project-by-project basis.  

Giving Credit Where Credit is Due 

Third-party habitat banking enables the creation of credits for ongoing restoration and conservation work, which can then be sold to companies engaged in construction activities. In-lieu fees can generate significant funding to pay for additional habitat restoration. Both mechanisms pool offsetting resources and streamline regulatory decisions, reducing administrative burdens for governments and proponents. This supports rapid economic growth and development in Canada and enables cost-savings from reduced red tape to be redirected to support habitat restoration: a win-win outcome. 

Of the offsetting mechanisms, habitat banking is seen as the most effective because habitats are restored before any environmental damage occurs. This creates habitat benefits upfront while requiring that the restoration is proven to be effective before credits are sold to offset harm from development projects. 

Improving the Fisheries Act 

Enabling third-party habitat banking and in-lieu fees has been a top-priority for CWF’s advocacy work over the past 15 years. The newly introduced amendments will establish the legislative architecture for third-party habitat banking and in-lieu fees by broadening the Fisheries Act. 

In sum, this bill will expand offsetting requirements from the current framework where the developer is the only one who can undertake the conservation offset project. Responsibility for effectively offsetting harm will continue to rest with developers for certain projects where this is the best model, such as when a particularly important habitat is harmed and needs to be restored directly. In other situations, and especially for small projects that cannot be effectively offset directly by developers, these changes will create the legal foundation for independent groups to lead restoration efforts, including restoring habitat in advance to generate certified credits to sell to project proponents requiring offsets, helping to create a new restoration economy for Canada. 

Next steps 

Amendments to the Fisheries Act are an important first step in improving the conservation of aquatic ecosystems. CWF will continue to work with the federal government to develop the third-party habitat banking system once the bill is passed. If done well, improved offsetting will ensure net-positive gains for fish and fish habitats affected by development.