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Mitigation banking is the restoration, creation, enhancement, or preservation of a wetland, stream, or habitat conservation area which offsets expected adverse impacts to similar nearby ecosystems. The goal is to replace the exact function and value of the specific wetland habitats that would be adversely affected by a proposed project.
In the United States, the federal government (under section 404 of the Clean Water Act), as well as many state and local governments, requires mitigation for the disturbance or destruction of wetland, stream, or endangered wildlife habitat. Once approved by regulatory agencies, the mitigation bank may sell credits to developers whose projects will impact these various ecosystems.
Credits are the units of exchange and are defined as the ecological value associated with 1-acre (4,000 m2) of a wetland or ecosystem and the linear distance of a stream functioning at the highest possible capacity within the service area of the bank. Credits are evaluated by a Mitigation Bank Review Team.
The MBRT processes and permits the Mitigation Bank. They may consist of some or all of the following: U.S. Army Corps of Engineers, National Marine Fisheries Service, Environmental Protection Agency, US Fish and Wildlife Service, State Environmental Protection Divisions, Local Water Management Districts, County Environmental Departments and the Soil Conservation Service.
There are many advantages to using a mitigation bank over other acceptable industry practices.
Mitigation banks place a perpetual conservation easement on the land, with a trust to fund its stewardship. Many large landowners, including the government are unable to maintain their land so as to retain ecological functionality due to the complexity of the task and the enormity of the cost. Mitigation banks provide advantages to on-site and small parcel mitigation. By consolidating necessary services to create, maintain, and monitor mitigation; banks are able to provide superior services at a lower cost.
Consolidating small parcel wetland loss creates larger more sustainable and functional ecosystems.
Mitigation banks provide many functional business advantages, allowing for ease of development; They allow a developer to maximize the use of their site. Because mitigation bank credits are created prior to impacts, purchasing credits from a mitigation bank decreases permitting time. The cost is often lower than acceptable alternatives. Regulatory burden and risk is passed from developer to mitigation bank.
Due to the consolidation of project parcels make monitoring easier for strained agencies.
Despite policies mandating that habitat trading ensure equivalent value and function, the experience is that most programs are not administered this way. In practice, most habitat trades to date in wetlands programs have been approved on the basis of acres, in many instances ensuring equivalence in neither value nor function. Merely assuming that the compensation involves a similar number of acres falls short of true equivalence unless the replacement ecological functions supplied by those acres are also the same.
- Enrivronmental & Natural Resource Economics 8th edition. Tom Tietenberg, Lynne Lewis. 2009 Pearson Education