Banking on Mitigation Banks

Jaivime Evaristo
3 min readDec 10, 2022
Tuckahoe Wildlife Area (Source: Ducks Unlimited)

The State of New Jersey (NJ) Freshwater Wetlands Protection Act (FWPA), created in 1988, “provides a permitting program that regulates all activities in freshwater wetlands, as well as in transition areas”. Among others, FWPA stipulates that mitigation is required for the permanent loss of greater than 0.1 acre of wetland, and may be required for less than 0.1 acre if the applicant fails to minimize or avoid impacts to wetlands. Unlike other environmental laws that bear penalties too low to deter violators, the NJFWPA could charge up to $50,000 per day for violations. In most construction projects, such level of penalty is deemed high enough to serve as a deterrent to potential violators.

There are three alternatives in mitigating wetland losses in NJ (under an Individual Permit): (1) create, restore, or enhance onsite (2) purchase credits from a mitigation bank in same watershed or within the watershed management area, and (3) contribute an in-lieu fee as a condition for issuing a permit. This post is regarding wetland mitigation banks. Because compared to the other two alternatives, mitigation banking is less straightforward.

Wetland mitigation banks are large tracts of wetlands that are created and/or restored and monitored. By and large, mitigation banks are a mechanism that private and government agencies have developed in mitigating wetland loss. The concept works like the “carbon credits” that the free market has engineered in dealing with greenhouse gas emissions. That is, the mitigation mechanism is built in advance of development and is then sold to clients who need credits. This results in the emergence of a wetland credit “trading market”. The State of NJ has been promoting wetland mitigation banks as an alternative to small-scale, onsite mitigation. Proponents of wetland mitigation banks suggest several potential advantages of this mechanism:

1. Consolidates many small wetland mitigation projects into a larger, potentially more ecologically valuable site.

2. Encourages greater diversity of habitat and wetland functions.

3. Helps create more sustainable systems.

4. Provides greater likelihood of success, since the banks are up and running before unavoidable damage occurs to a wetland(s) at another site.

Potential advantages notwithstanding, there are issues in relation to some fundamental and practical implications of wetland mitigation banking. Firstly, the United States adopts a “no net loss” policy regarding wetlands. Whilst mitigation banking conceptually embodies adherence to no-net-loss policy, some technical and fundamental scientific issues arise with respect to the application of this policy from the perspective of wetland functions and values. The question is, can “no net loss” be attained, in fact, considering the typical intricacies of one wetland to another in terms of ecosystem services, functions, etc.? Secondly, because credits are largely based on acreage and not on functions, can the same really support the achievement of a “no net loss” objective? Lastly, since mitigation banks are effectively a manifestation of the free market, they exist for profit and involve regulation and oversight.

Overall, proponents of mitigation banks argue that the system has “been proven to deliver the highest quality, most reliable offset to environmental impacts”. As the world grapples with adapting to the effects of climate and land use change, wetland mitigation banking may have some pragmatic appeal. Nonetheless, wherever there is a viable and practicable choice for avoiding risk of loss instead of mitigating it, this must be pursued with equal fervor.

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Jaivime Evaristo

Jaivime Evaristo is Assistant Professor of Environmental Sciences at Utrecht University.