Mitigation banking is a complex topic that often varies in different parts of the country due to differing regulatory practices that are in place. However, the general concept is fairly simple. Mitigation banking refers to a system of credits devised to ensure that ecological loss to areas such as wetlands, as a result of development, is compensated for by the development and restoration of various natural habitats or resources in other areas so that there is little, or minimum negative impact on the environment. The following breaks down the basic terminology and process of mitigation banking and outlines its various impacts.
Wetlands are areas often populated with trees, grasses, moss, and other fauna, as well as wildlife. Containing water except in periods of severe drought, wetlands are also commonly referred to as swamps, marshes, and bogs.
Wetlands have a variety of important functions that benefit people and wildlife, including providing habitat for wildlife and plants, filtering, cleaning and storing water, collecting and holding flood waters, and absorbing wind and tidal forces.
Fundamentals of Mitigation
To mitigate means to reduce the severity of something, or to lessen the gravity of an offence or a mistake. In the case of mitigation banking, the goal is to lessen the damage caused to the environment so that there is minimal or zero net loss.
Mitigation banking is the practice of taking a degraded wetland and restoring it to a more natural condition. It is used to help landowners or developers offset how wetlands are impacted by their projects. This is accomplished through the replacement of wetland functions through the creation of wetlands in another area or through the restoration of a certain area of wetlands.
The goal is to replace wetland functions, which provide a variety of public benefits, such as flood storage and water quality protection, in addition to the benefits to nature such as protecting fish and wildlife habitats, and groundwater recharge. The key to success is to ensure the development that happens on remaining wetlands are done in a responsible way that both optimizes the human use of the area as well as protects the native habitats.
Mitigation Banking Process
Though the protocols and regulations vary depending on the area, mitigation banking essentially requires that developers or landowners replace or mitigate any natural wetland functions that would be lost during or after development. These regulations are administered by the US Army Corps of Engineers and mandated through Section 404 of the Clean Water Act.
After the mitigation banker purchases the site that they wish to regenerate, they work alongside a regulatory agency to approve plans for building and maintaining the bank. Environmentalists and scientists use precise specifications to rank an area’s function and put in place detailed requirements to offset any lost function before development plans can be approved.
The regulatory agencies also approve the number of mitigation credits that the bank can earn and sell for a certain restoration project. The credits are then available for purchase to anyone looking to develop on or near the wetland, which will be negatively impacted. The mitigation banker is responsible for the development plus the future upkeep and maintenance of the mitigation bank.
Mitigation Banking Credits
Wetlands established in a mitigation bank provide “credits” that can be sold to permit applicants, or used by the bank sponsor to meet permit conditions. Different types of wetland credits are available for purchase depending on the area, which may include salt marsh, seasonal wetlands, vernal pool, and forested wetlands, just to name a few.
To better illustrate, as a commercial bank uses cash as an ‘asset’ that it can loan to customers, a mitigation bank uses mitigation credits as its assets. These credits can eventually be sold to those who are trying to offset mitigation debits; generally purchasers are individuals or entities looking to undertake commercial development projects.
Benefits of Mitigation Banks
Mitigation banks benefit both those who are concerned with conservation efforts and communities who are seeking development. Mitigation banking helps safeguard the future of wetlands. The regulation and mitigation banking process ensures that more wetland areas and habitats are being created, restored, or preserved and made available to developers who then must buy the habitat mitigation as a condition of approval for development. Since urbanization and industrialization are inevitable in our developing world, mitigation banks help to offset the environmental impact and aid in protecting nature and natural habitats.
They are also good for the economy. Mitigation banking is beneficial to developers who are keen to be associated with successful environmentally friendly ‘green’ projects that are necessary for growth and development. Mitigation banks are more efficient for developers. It can take years to get a permit for on-site mitigation however, that time can be cut to a mere six months by using a mitigation bank. This time saving translates into saving months or years or interest thus improving profits for buyers.
Mitigation banks are a system set in place to limit the ecological impact to our environment from the permittee to the mitigation banker through the use of credits and debits under strict regulatory guidelines. The mitigation banker is responsible for the development, restoration, and preservation of the bank site while earning mitigation credits, which are the sold to an interested party, in most cases, a developer. The mitigation banking system has many advantages, most notably the environmental benefits and the economics of development. The future for mitigation banking is promising both for investors and for natural environments and wildlife.