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Wetland Mitigation Banking: Environmentalists Express Concerns

Deborah Fleischer

If you talk to some environmentalists about wetland mitigation banks, passions run high. Environmentalists are not seeing the benefits they have been promised by banking, and point instead to a litany of problems. In this piece, the Ecosystem Marketplace talks to the environmental community about their concerns with mitigation banks. In a future article we will talk to wetland mitigation bankers about their responses to these concerns.

If you talk to some environmentalists about wetland mitigation banks, passions run high. Environmentalists are not seeing the benefits they have been promised by banking, and point instead to a litany of problems. In this piece, the Ecosystem Marketplace talks to the environmental community about their concerns with mitigation banks. In a future article we will talk to wetland mitigation bankers about their responses to these concerns.

No Net Loss: Are We Meeting the Goal?

When the US program for wetland mitigation and compensation (the program that gave birth to the wetland mitigation banking industry) was set up more than two decades ago, it was touted as a way to achieve "no net loss" of wetlands in the US. Not surprisingly, therefore, at the heart of the controversy over mitigation banking lie two simple questions: "Are we achieving no net loss?" and "Do wetland mitigation banks replace lost functions better than other forms of mitigation? Answering the first question is fairly straightforward. A 2001 National Research Council (NRC) report (see http://www.nap.edu/books/0309074320/html/) concludes that while the loss of total wetland area has slowed in the past two decades, the goal of "no net loss" of wetlands (particularly when one takes into account wetland functions) is not being met by mitigation. According to John Mack, a wetland ecologist with Ohio EPA, if you measure the quality of wetland habitat we are creating, "we are not meeting the no net loss goal."

Replacement of Lost Functions: On-Site vs. Off-Site Banks

Answering the second question is a bit trickier. The answer will depend on what criteria you use to measure success and who you talk to. If developers cannot feasibly avoid impacting wetland resources, a wetland mitigation bank allows them to compensate for the unavoidable impact by purchasing credits at an off-site location where wetlands have been restored, created, enhanced, and in exceptional cases, preserved by a bank. Bankers are enthusiastic about mitigation banking and argue it offers both economic and ecological benefits to on-site mitigation because you consolidate your scientific, economic, and adaptive management resources. Proponents of banks maintain that mitigation banks provide ecological benefits by creating large, more ecologically viable wetlands, make the development process more efficient, and avoid the creation of small, isolated pockets of wetlands. Another benefit from the banker perspective is that the mitigation sometimes takes place before the impact, minimizing temporal losses. And finally, proponents propose that banks provide a higher level of wetland restoration and management expertise than an individual developer can provide. "Long term, ecologically, mitigation banks are more viable," offers Anthony Georges of the Mount Burdell Wetland Conservation Bank in northern California. Georges adds, "mitigation banks are the preferred method for wetland mitigation for two main environmental reasons: their larger size can support greater plant and animal diversity and they have a higher probability of remaining ecologically viable over the long-term." "Prove it, prove it, prove it," responds Julie Sibbing, Senior Program Manager for Agriculture and Wetlands Policy at the National Wildlife Federation. "We are not opponents of mitigation banking, we are being pushed in that direction due to the belligerence of the mitigation community. We see a place for banking. It is a viable approach to mitigation. Our objection is to the assumption — with absolutely no evidence — that mitigation banking somehow creates superior mitigation and does a superior job at replacing functionally the wetlands that are destroyed through development," says Sibbing. "Show me the science. Show me that they are producing superior wetlands," she adds. Georges backs up his claims with the recent position statement by the Society of Wetland Scientists supporting wetland mitigation banks and the 2001 NRC report, which states that third-party compensation approaches, including mitigation banks, "offer some advantages over permittee-responsible mitigation." Some of the differences between Georges and Sibbing may in fact be answered through Mack's work. The Ohio Environmental Protection Agency (EPA) is completing a study to assess the ecological functioning of 12 mitigation banks in Ohio. The results of this study will help shed more light on the ecological success of wetland mitigation banks.

Watershed Planning vs. Loss of Local Wetland Functions

There is a growing body of evidence, supported by the 2001 NRC report, that mitigation sites identified in the context of a watershed plan can improve the ability to establish wetland functions. Therefore, in some situations, off-site mitigation can be preferable to random, isolated mitigation projects that do not take into account such factors as historic wetland ranges, threats to the ecosystem and functions of concern, and specific restoration needs within a watershed. Despite this trend, the Sierra Club and Golden Gate Audubon would prefer to see mitigation occur as close as possible to the impact site and via project-by-project mitigation. Art Feinstein, Director of Conservation at Golden Gate Audubon, cautions, "Wetland functions are very site specific." For instance, he argues, if you lose ecosystem services such as flood storage, groundwater recharge, wildlife and fisheries habitat, and nutrient cycling at one location, can it really be replaced at another location miles away? Feinstein explains, "If the system worked appropriately, mitigation would be more effective if regulators looked for sites as close as possible to the impact." Robin Mann, Chair of the Sierra Club National Wetlands Working Group, agrees. "Some wetland functions," she says, "are important to keep local, such as flood storage and habitat functions."

Performance Standards

Another concern that has been raised regarding mitigation banking has to do with how you measure success. Without adequate performance criteria, say the critics, it is difficult to determine the success or failure of a mitigation site. And, they add, the performance standards currently in place tend to be stated in vague goals or based on criteria that do not measure ecological functions and values. According to a 2002 Environmental Law Institute (ELI) report entitled Banks and Fees: The Status of Off-Site Wetland Mitigation In the United States, over a third of the instruments for wetland mitigation banks fail to specify required performance standards. "And very few included standards for water quality, soils, wildlife habitat or other criteria," adds Jessica Wilkinson, Senior Science and Policy Analyst at ELI and Director of their wetlands program. "Ideally, you would have a lot tied to the performance standards, including credit release schedules and mitigation ratios," explains Wilkinson. The ELI report argues that, ideally, standards should measure a broad array of the major functions, related to hydrology, vegetation, water quality, wildlife habitat, and soil. Also, the report suggests that banks could have their monitoring periods directly linked to achieving final performance criteria, ensuring the development of a functional wetland.

Mitigation before Impact

Another important issue related to mitigation banking has to do with the timing of when credits are sold. The 1995 banking guidance defines banking as "in advance of development action," but allows for the advance sale of credits under certain circumstances. From an ecological standpoint, you want a mitigation project to be up and running, having met performance standards, before you allow an impact to occur at another location. One argument in support of banks is that they can be implemented and functioning in advance of project impacts. In theory, this could reduce temporal losses in the functional values and reduce uncertainty over whether mitigation is successful in offsetting impacts. However, in reality, credits are sometimes sold before a bank has created functioning habitat. "The bankers are organized, very vocal and have a fair amount of influence. What they say over and over again, is mitigation banking is the only form of third party mitigation that is in advance. But it is not. I think it is a false claim," explains ELI's Wilkinson. According to the 2002 ELI report, "Only 17 banks, or eight percent of all the banks in the US, do not allow credits to be debited until final performance standards for the bank have been met." NWF's Sibbing adds, "They claim that they are doing mitigation in advance, but that is completely ridiculous. They are not." The 2002 ELI report backs up this claim with the fact that, "on average, banks allow for the advance debiting of 66 percent of credits prior to meeting all performance standards." It also points to 10 banks where 100 percent of the credits were sold prior to meeting any performance standards.

Accountability

Another persistent complaint about mitigation is the lack of accountability in the system. "One of the real frustrations," notes Sierra Club's Mann, "is that the Corps of Engineers [US ACE, the government entity responsible for overseeing mitigation banking in the US] is not enforcing mitigation—it is either never done or done poorly." Sibbing shares this frustration. She points out, "No one is held accountable to build a fully functioning wetland that replaces the values destroyed. There is no political will to enforce." "If a project has failed to meet performance criteria, it is difficult to get the banker to fix the problem. There are not a lot of regulatory hooks," adds Mack from Ohio EPA. Mack poses the question, "Who would you sue for enforcement? The answer is not clear."

Public Involvement and Transparency

The federal guidance for the establishment of mitigation banks requires that the US ACE provide notification of the availability of a proposed banking prospectus and allow the public to comment. However, in practice, when speaking with NGOs, they feel they have little or no ability to influence the process on decisions regarding location, design, or service area designation. "The public comment process is very limited—the other evil of the process," comments Golden Gate Audubon's Feinstein. The 2002 ELI report states, "with the exception of a few Corps district and states that provide banking instruments and other documentation on their web sites, the public has very little access to information of banking…"

Facilitation of Development

Another concern of environmentalists is that mitigation banks facilitate development by making it easier for regulatory agencies to give a permit. NWF's Sibbing explains, "Since COE [US ACE] staff believe that mitigation banks work, it makes it easier for them to say yes to a permit." Georges, the managing tenant-in-common at the Mount Burdell Wetland Conservation Bank in California, responds strongly to this claim. "They claim that this promotes development. And the lie of that is that it doesn't because you can't fill [i.e. damage a wetland] just because you have a bank—there is a long, arduous process one must go through first. You must show there are no alternatives, and if they allow you to build, then you address how you will mitigate and you have the choice to mitigate on site." "If a mitigation bank exists or does not exist, does not make any difference for someone getting a permit. If we didn't exist as a mitigation bank, the service area we have would not reduce the number of permits allowed for fill," he adds.

Conclusion

"The bottom line," says Mack is that "consolidation of scientific, technical, economic resources is a really good thing, but what it means is that banks should be the best of what we can achieve mitigation-wise. They should be able to produce a product that is much better than your average mitigation, and if they are not, why bother?" Where does the motivation come from to be a "better than average" banker? "The only way to do it is for the state or federal government to impose uniform ecological performance goals; level the playing field and raise the bar so the more conscientious bankers are rewarded," explains Mack. Many environmental NGOs are opposed to creating more mitigation banks and do not see them as the solution to solving all of the flaws with the current mitigation process. "Mitigation has huge problems. I have gotten to the point where I am despairing of it ever improving because instead of really seriously trying to improve mitigation, the lobbyists for the mitigation banking community are pushing to say, we are the answer. When, we don't know if that is true," concludes NWF's Sibbing. Bankers and environmentalists both have the goal of creating successful, functioning mitigation projects. There could be an obvious partnership between bankers and NGOs that want to work together to address some of the environmentalist's concerns. A start to begin improving the mitigation banking system could include consideration of the following five key elements: 1. If off-site mitigation is necessary, incorporate a watershed approach to site selection that takes into account such factors as: position within the landscape, soils, connectivity, and the hydrological regime. 2. A data driven release of credits for banks where bankers would get an initial release of credits to cover construction costs, but subsequent releases would be tied to meeting performance standards. 3. Development of stronger performance goals to ensure that ecological and hydrological functions are replaced. 4. Incorporation of an adaptive management approach that articulates a process for how a mitigation project will be revised if monitoring data shows that a site is not meeting its performance goals. 5. Improve the availability of information on mitigation banks and engage stakeholders in a process that allows meaningful input on proposed banking instruments. Whether or not regulators and mitigation bankers will meet environmentalists on these issues, however, remains to be seen. Deborah Fleischer, principal of Green Impact Environmental Consulting, is a San Francisco Bay Area consultant who works on land conservation and sustainability issues. She can be reached at Deborah@greenimpact.com. First posted: April 25, 2005

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