Wetland mitigation banking is the restoration, creation or enhancement of wetlands for the purpose of compensating for unavoidable impacts to wetlands at another location. Wetland mitigation banking is commonly used to compensate for wetland impacts from development, but it also used for impacts from agriculture.
Conservation compliance provisions for wetlands, commonly called Swampbuster provisions, aim to remove certain incentives to produce agricultural commodities on converted wetlands. Producers seeking benefits through most USDA programs must meet conservation compliance by filing form AD-1026, affirming they will not drain, dredge or fill wetlands in order to grow commodity crops. In situations where avoidance or on-site mitigation is challenging, the Farm Bill allows for off-site mitigation through mitigation banking.
How Mitigation Banking Works
Producers can buy credits from wetlands mitigation banks to compensate for the impact of lost wetlands. Wetland mitigation banks are established through the restoration, creation or enhancement of wetlands. When a mitigation bank is established, the landowner retains ownership and use of the property, while a conservation easement protects the wetlands from degrading activities. The size and scope of the wetland restoration, creation or enhancement activities determine the quantity of credits available for sale. The price of credits is negotiated between the buyer and seller.
Bank sponsors develop mitigation banks. A bank sponsor is any individual or entity that develops wetlands for use in wetland mitigation banking. The sponsor is responsible for the cost of wetland development, as well as long-term maintenance to ensure that the wetland continues to function as designed in the future.
Credits are determined using a functional assessment procedure that evaluates individual wetland functions. As the credits are sold, they are subtracted from the bank until all of the available credits are purchased. At this time, the mitigation bank closes and no additional credits can be sold from that bank.
Mitigation Banks and Land Use
Only wetlands that have been restored, enhanced or created can qualify as a site for wetland mitigation banks. Preserving existing wetlands does not qualify as this does not produce replacement acres of wetlands. Bank sponsors should consider the credit market in the local area to determine whether the bank would be best suited to provide agriculture credits.
As a general rule, former wetlands restored to their original condition provide the best chance for success in generating wetland functions and values. Next best is wetland enhancement, and lastly, wetland creation on land without a prior history of wetland conditions. Long-term success and stability are important considerations, since the bank sponsor is required to provide long-term site maintenance to ensure it continues to function as designed.