Wetland Mitigation Banking: Approaches to Credit Determination

Wetland mitigation banking is a regulatory-driven environmental market. Federal regulations, under the Clean Water Act, require a permit for certain impacts to wetlands and other water resources. To obtain a permit, permit applicants must demonstrate that, in planning their development projects, they have avoided and minimized impacts to wetlands to the maximum extent practicable. If there are remaining “unavoidable” impacts to wetlands, these wetland losses, also known as debits, are required to be replaced by the generation of wetland credits. Wetland mitigation banks generate credits for sale to permit applicants by implementing wetland restoration, establishment, enhancement, and preservation projects.

Administering the wetland regulatory program consistently and effectively across different federal agencies and across all 50 states is challenging. To meet this challenge and to attract private sector financing for mitigation banks, it is important to have clear and effective yet flexible national standards for compensatory mitigation, including wetland credit determination.