Save a Chicken, Drill a Well

The rolling prairies around this tiny ranch town in the Oklahoma Panhandle might soon be home to an experiment aimed at preserving the habitat of both football-sized fowl and oil-drilling rigs. The area occupied by the brownish birds, known as lesser prairie chickens, spans portions of five states but has shrunk so much that the federal government has said it might classify them as threatened or endangered as early as March. Such a listing would complicate companies' efforts to develop large oil deposits under the grassland where the birds like to nest. To prepare for such an eventuality, ranchers and oil companies, along with the Environmental Defense Fund, are pitching a free-market solution to help both bird and industry thrive: a "habitat exchange." The proposal is meant to benefit all parties by creating a "stock exchange" of sorts, said David Festa, vice president of the land, water and wildlife program at the environmental nonprofit. If the chicken is listed as threatened or endangered, under the exchange plan, ranchers would generate credits by taking steps to protect the bird's habitat, such as tearing out invasive juniper trees or letting land revert to grassland. To drill new wells or build roads, oil companies would offset the impact on the chickens' habitat by purchasing these credits at auctions. "Talking to ranchers, they say, 'There is a lot we can do, but why would we do that for free?' " Mr. Festa said. Work on setting up the exchange has been quietly under way for several months. One participant, Chevron Corp., said it likes the idea of a market-based system that "allows creative solutions that benefit both landowners and the lesser prairie chicken." Other companies, including BP , Exxon Mobil Corp. and Chesapeake Energy Corp., also have participated in meetings to develop the exchange. The plan—which must be approved by the U.S. Fish and Wildlife Service, part of the Interior Department—would be the biggest effort to date to use a "cap-and-trade" approach to habitat preservation. A similar exchange was first tried in central Texas about a decade ago to protect the golden-cheeked warbler, and more recently with a small lizard in west Texas. But the lesser prairie chicken's habitat spans Colorado, Kansas, New Mexico, Oklahoma and Texas...more

This may be an excellent solution, but don't call it a free market.  These folks are hardly free to manage their own property as they choose.