Right now they're a bit a third wheel. It's also rather counterintuitive because it seems like the habitat exists separate from the species. The habitat is made up of the things IN it.
Mechanically we could eliminate the Habitat cards easily right now and shift the Event cards to simply targetting matching Terrains/Climates with absolutely no loss.
Why do I think the Habitats don't work? It's not that they don't work, they just don't work significantly well to justify their existence. Since Photosynthesizing and Molecular Carbon consuming species can currently be played anywhere that's a valid Terrain/Climate match, they effectively do all the work of a Habitat card. The Habitat cards are superflous and don't add any value. They just add an unnecessary step.
One of the issues I've been finding here is that the Events are too powerful with the Habitat switching and that its very easy to be completely SCREWED by not drawing a Habitat. You either have to lard the deck with non-points scoring Habitats to protect yourself or risk being totally hosed. You can sometimes spend several turns doing nothing but discarding and drawing, just to find a Habitat.
The swings in scoring are REALLY large (see my playtest reports) and I'm suspecting would be REALLY frustrating for kids. It's really easy to wipe the entire board and force EVERYTHING to be discarded right now. That is just plain NOT FUN. It also very unbalanced as early in the game it may wipe the board or near end game, may wipe large chunks of the board.
It also would free up more space for species in the deck, which are, lets face it, the INTERESTING part. The Habitats also currently don't score points, so behave differently. Eliminating them would eliminate the confusion of having some cards that don't score.
The Events could then just have their wording switched to change the Terrain/Climate/etc of the species they're played on directly. (so Flood would change all the Terrain symbols on a species card to Freshwater and you'd then have the option to discard that species to fix the broken chains, or surrounding species) It works just as well for causing changes on the board but its way easier to counter or recover from if you don't have to draw a SPECIFIC card to start over again. As is, if you lose a Habitat card to an Event you could spend multiple turns just discarding and drawing, looking for another Habitat to start over with.
It would also eliminate some of the confusing we were having with the Range attribute and whether you can play Photsynthesizing species beyond the Range. Range currently adds complexity without adding value.
This would also fix the issue we're having with Movement as it would shrink the size of the board by not having those cards on the board.
The Habitats might still be useful as the "start" block, but in the deck they're just a distraction from the core of the game.
KISS: Keep It Simple, Stupid. Everything Habitats currently do could be done better with minor tweaks to the wording of the Species cards themselves. Eliminating them will make things less confusing, more balanced, and more fun. It would require only minor wording to eliminate them entirely, which sort of indicates just how superfluous they are.