A mitigation bank is large-scale wetland and/or stream restoration
project that may be used to offset losses of these aquatic resources, as
authorized by the Department of State Lands (DSL) and by the US Army Corps of
Engineers. The agencies encourage banks
because they can provide greater ecological benefits and are more efficient to
manage than multiple smaller mitigation projects. Mitigation banks can be a profitable business
venture where there is a suitable project site, skilled practitioners, and
market demand. Sales of mitigation
credits can be a source of funding to restore natural areas to be enjoyed by
wildlife as well as nearby landowners. The
number and range of mitigation banks has grown continually since the program
started in 1995, but there are still many locations in the state that are
Prospective mitigation bankers need to be aware of the detailed
requirements and also the risks involved in this unique business venture. Listed
below are some of the common concerns.
A good bank location is one that provides substantial opportunity to provide an
increase in important wetland functions such as flood storage and attenuation,
water quality improvement, a diversity of wetland habitat types, and connecting
corridors for wildlife between these habitats and other protected natural
areas. Often the best mitigation locations are sites that were formerly
wetland, but were drained. The water
source that sustains the new wetland must be reliable. Banks should be sited
where they do not conflict with adjacent land uses, and where human
disturbances will be minimal. If a bank site coincides with the interests and
priorities of a local land trust or other long-term conservation steward, it
may be easier to secure the required arrangement for ongoing management.
Bank establishment requires technical expertise and equipment
Wetland restoration is both a science and an art. It is important to understand
the capability of the soils at your site to target the correct native plant
communities that will succeed there. Expertise in farming and botany, especially
site preparation and weed control, has proven important to the success of
existing banks. Timing of restoration activities can be critical, so it helps
if the appropriate agricultural equipment is readily available. Also, it is
helpful if the banker becomes familiar with the permit procedures of DSL and the
Corps in order to understand their customers' needs.
Bank service areas
A service area is the geographic area where a bank is
allowed to sell credits to applicants for removal-fill permits or to resolve
fill violations. Normally, the agencies identify the 8-digit HUC watershed map as the appropriate
service area; however some variation may be approved if justified by ecological
principles. Therefore, the size of the bank needs to match the market demand
within the watershed.
Timelines to establish a bank
It can take about a year to craft the agreements to begin a new mitigation bank.
DSL and the Corps have drawn up template
documents to make the process more predictable, and the agencies have specific
required timelines for responding to banker submittals. The mitigation bank sponsor will work with an Interagency Review
Team (IRT) to ensure that the plans meet the requirements of all the relevant
agencies, and have a high probability of success. The process includes public
review of the prospectus, agency review of draft and final documents, and
securing permits for construction, water rights, local land use approvals, etc.
Financial resources to establish a bank
A prospective banker should consider the investment necessary to secure
the project site, prepare technical plans and reports, and conduct the initial
site preparation, earth work, and planting.
These steps must be implemented before the agencies can release the
first increment of credits for the banker to sell. Larger sites may be constructed in phases.
Maintenance and long-term stewardship of bank sites
After the bank plan is approved and the project constructed, the agencies will
make annual inspections and review monitoring reports to ensure it is on track
to succeed. The agencies release credits
for sale in increments over a period of 5-7 years as the agreed-upon
performance measures are achieved. The
bank sponsor is required to provide plans and funding for the long-term
protection, management and monitoring of the bank site after all the credit are
Competition among banks
The bank sponsor is responsible for assessing market demand. The
IRT cannot guarantee future credit sales, nor do they prevent new banks from
starting up within the service areas of existing banks. Removal-fill permit
applicants always have the option of conducting their own wetland mitigation,
but it is often more convenient for them to buy credits from a banker rather
than take on the liability for the success of their own mitigation project.
Frequently Asked Questions
How does the IRT determine how many credits will be generated?
State rules allow use of the standard ratios or other accounting methods based on assessment of wetland functional
gains, as approved by DSL. Corps replacement ratios may be different, so
the IRT will discuss and reach agreement on a common denominator to meet
the needs of both agencies.
Who determines the value of a bank credit?
Bankers determine the price of their credits and terms of sale. The IRT does
not get involved in establishing the price for credits.
Can I get credit for protecting an existing wetland?
Preservation of certain types of existing rare or high-quality wetlands is
allowable as mitigation, but the credit ratio is low compared to projects that
yield a net gain of wetland area and functions.
Can a wetland bank allow hunting?
Yes, hunting can be allowed on bank sites, subject to state hunting
For more information about mitigation banking, contact Dana Field; (503) 986-5238.
Steps to establish a new wetland mitigation bank
EPA fact sheet on mitigation banking
HUC Watershed Map