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Mitigation Banking Mitigation banks are increasingly proposed and used as a way to offset destruction of the Nation's remaining natural wetlands. The concept is that a "mitigation banker" who may be a government agency, nonprofit entity or entrepreneur will create, restore or enhance a wetland and sell "credits" to public and private developers as mitigation for filling wetlands somewhere else. For reasons set forth below, this is likely to contribute to loss of existing natural wetlands and to the functions and values (e.g. flood protection, habitat, water purification) that such wetlands provide. It is difficult and expensive to create or restore a wetland. Under the best of circumstances it takes many years, and is unlikely to replace all of the functions destroyed by the filling of the natural wetland site. In the meantime, the developer will probably have been permitted to pay a sum of money and proceed with destruction of the natural wetland. The mitigation bank may take the form of enhancing an existing wetland, possibly one on public property such as a wildlife refuge. It may even take the form of merely acquiring an existing functioning wetland. In either case, this will cause a net loss of wetlands and is contrary to the Nation's established "no net loss" policy. In many regions (South San Francisco Bay is an example) there are no large parcels of property available which are suitable for creating or restoring wetlands. In such regions mitigation banks would be located far away. This would make it highly unlikely that lost functions such as flood plain and wildlife habitat would be replaced. Federal, state and local agencies charged with protection of wetlands will be tempted to take the easy way out by authorizing payments to mitigation banks in lieu of emphasizing avoidance of wetland destruction or requiring onsite or nearby mitigation which would more likely replace lost functions. This may be good for developers and convenient for agencies, but will be detrimental to wetlands. There may be a role for mitigation banks for small wetland fills that regularly are permitted without mitigation, but only if used selectively and under the following conditions: Every effort is made to avoid or minimize wetland damage and it is not possible to compensate on or adjacent to the project site. The mitigation bank is close to the project site and was not a functioning wetland prior to establishment of the bank. No wetlands destruction is permitted until it is certain that new wetlands at the mitigation bank are fully functioning and will replace the functions and values that will be lost at the project site. There are additional issues that have caused concern among environmentalists. First, frequently public agencies propose use of public funds to establish mitigation banks which will sell credits to private developers. Many environmentalists feel that credits from such banks should be available only to public projects. An additional concern is how can remedial work and proper management by the owner of a mitigation bank be assured in perpetuity? This is especially important if the owner is a private entrepreneur. Environmentalists are also concerned that some banks involve the use of mitigation credits that are "marketable", in other words can be freely transferred from investors to developers. Such schemes entail the issuance of a certificate stating that a bank contains, for example, 20 acres of tidal salt marsh with fully established vegetation such as cord grass, pickleweed, etc. The developer who has purchased this certificate can present it to the Corps of Engineers, or other regulatory body as full mitigation for the fill of a similar tidal salt marsh. Unfortunately, such "cookie cutter" mitigation is not likely to assure that the new wetland will provide adequate habitat or other functions lost by destruction of the natural marsh. The fiscal pressures on publicly financed mitigation banks are an additional concern. At least one state agency recently considered using revenue bonds to finance the establishment of coastal wetland mitigation banking projects. Under the plan, which was abandoned, interest and principal on such bonds would have been payable solely from revenue received from the sale of mitigation bank credits. It is obvious that, under such an arrangement, public and private bondholders, eager for a return on their investment, could create considerable pressure to maximize sale of inappropriate mitigation bank credits if payments fell behind. See also Mitigation Banking Guidelines. Up to Top