The species has its main focus in raised bogs and grows there on Sphagnum, according to Wöldecke & Wöldecke (1998) it also occurs in alder and birch quarries. It is a very rare species, sites in non-protected areas could be destroyed by site changes, which can occur at any time. Thus, the conservative estimate of the habitat loss for Phaeogalera stagnina probably exceeds 30%; the rareness of this species and its dependence on the continuously declining habitat (both in the area and in quality) imply that Ph. stagnina subpopulations have decreased in a similar range. As the habitat will continue to decline in the future, so will the population size of Phaeogalera stagnina. Considering the small population size and the continuous decline the species is assessed as VU A2(c).

This species is sometimes treated as a member of the genus Galerina, as G. stagnina. We here consider it as a Northern Hemispheric species (assuming that the Argentinian and Australian findings represent a different taxon).

The species has an Antarctic-Arctic-Alpine distribution, namely in Antarctica, South (Argentina) and North America (USA, Alaska), Asia (Northern Siberia) and Europe. In Europe, it has been recorded from southern (Italy), south-eastern (Romania), western (France, Scotland), central (Switzerland, Liechtenstein, Germany, Austria) and northern Europe (Fennoscandia). Due to a higher collecting effort, in Austria, this species has been discovered several times in recent years in sedimentation zones, fens, raised bogs, bog heaths, high mountain grasslands, snow beds, and diverse Sphagnum stands; it is distributed from lower altitudes to the Alpine regions; in Styria, Carinthia, Upper Austria and Vorarlberg.

Because mires, bogs and fens are wetland habitats with a high water content governing many ecological processes that structure their characteristic communities, their hydrological balance is easily disturbed by increased drainage caused by human activities. Furthermore, mire habitats have been widely destroyed or greatly altered in many areas by the extraction of peat. Extraction of peat and conversion of natural mire habitats to productive agricultural and forestry land have been the main reasons for the decline of mire habitats during recent and more long-term historic times and this decline is still continuing. In the EU countries, all but two of the 13 mire habitat types (85%) are threatened and this is the highest percentage of threatened habitats in all terrestrial and freshwater groups (European Red List of Habitats 2016). These types of habitats are most vulnerable to hydrological system modifications, surface water and air pollution (eutrophication), natural succession and erosion, agriculture intensification, silviculture and forest management, mining (peat extraction) and urbanization. They are also very sensitive to climate change, especially to increasing droughts. According to the recent report by Barthelmes et al. (2015), in the Nordic-Baltic countries, the percentage of drained peatlands amounts to 44.0%, which is a rather low value compared to the total of Europe (almost 60%, Joosten 2009). Moreover, the rather positive picture compared to Europe is, however, attributable to only two countries, Norway and Sweden, in which less than 20% of the peatlands have been drained. Thus, the conservative estimate of the habitat loss for Phaeogalera stagnina probably exceeds 30%; the rareness of this species and its dependence on the continuously declining habitat (both in the area and in quality) imply that Ph. stagnina subpopulations have decreased in a similar range. As the habitat will continue to decline in the future, so will the population size of Phaeogalera stagnina. Considering the small population size and the continuous decline the species is assessed as VU A2(c).

The species has its main focus in raised bogs and grows there on Sphagnum, according to Wöldecke (1998) it also occurs in alder and birch quarries. It is a very rare species.

It is endangered by habitat degradation and loss (e.g. habitat conversion, changing hydrology, mining of peat, building recreational facilities), climate change and pollution. Fens and bogs are unique communities that can be destroyed quickly within some days, but require hundreds, if not thousands, of years to form naturally.

The species can be protected through habitat conservation and preventing the degradation of sites of actual and potential occurrence. This includes, e.g., preventing changes in water regime, avoiding intensification of agriculture and silviculture practices in the neighbouring areas, control over peat extraction, active prevention of the forest succession and erosion, control over the practices leading to eutrophication, etc, and designating key sites for protection. 

Inventory studies and monitoring of known sites, molecular taxonomic studies to determine actual species distribution.

There is no use and trade known.