August 3, 2006

Washington banks on wetland mitigation

  • Pilot program run by the Department of Ecology and Army Corps of Engineers allows developers to buy credits in wetland mitigation banks to offset their projects’ impacts on wetlands.
    Habitat Bank


    Sometimes impacts to wetlands from development are unavoidable. Wetlands are critical components of our watersheds, but historically they have been cheap to buy and easy to fill.

    Now that we understand the important role played by wetlands in a healthy watershed, we realize that we need to maintain and enhance the wetlands that remain. When impacts to wetlands are permitted, regulations stipulate “no net loss” -- so it’s required that the wetlands be replaced.

    Ideally, replacement happens on-site or in very close proximity to where the impacts occur. However, wetlands are complex habitat that require special soils, unique plant and animal species, and plenty of water. Viable replacement cannot always be done successfully on-site.

    Recent studies by the federal government, state agencies and others have found that many of the wetland mitigation projects done in the last 10 years have failed. A common problem has been that previous regulations forced mitigation to be done on-site often in places that didn’t work. Making matters worse, after a few years if the conditions are not right, the wetland plants die and blackberries and other invasive plants take over.

    Photo courtesy Habitat Bank
    One of the first wetland mitigation banks in the state consists of 225 acres between Duvall and Monroe.

    In urbanized areas, these mitigation sites are often fenced and surrounded by buildings and asphalt, making their value to wetland wildlife questionable. In many jurisdictions, no one is responsible for the long-term repair or maintenance of these sites when they fail.

    Mitigation banks

    To do a better job of mitigating for wetland impacts when on-site options are risky or unavailable, hundreds of wetland banks have been established throughout the United States over the last 10 years.

    Mitigation banks consolidate the mitigation for multiple impacts into large sites that are restored in advance, are carefully located so that they will be successful, and contribute in a sustainable way to the overall health of the watershed. In addition, the rules that establish mitigation banks require monitoring and maintenance of the sites for 10 years, and most importantly, the sites are protected in perpetuity with a conservation easement overseen by a third party entity such as a land trust.

    Credits from mitigation banks are for sale to developers who have received permits to impact wetlands only when performance standards indicate that the wetland is working properly.

    To provide the best possible range of mitigation options, banking programs allow public and private entities to establish wetland banks. Today, banks are run by cities, counties, water districts, farmers, transportation agencies, entrepreneurs and large corporations.

    A high percentage of banks are built by private entities looking to make a profit. This is a high-risk business because mitigation credit demand is only created by the small percentage of permitted wetland impacts that cannot be mitigated on-site, and credits have to sell for less that what it would cost developers to do the mitigation themselves. With planning, patience, capital, willing regulators and enough demand for mitigation credits, it can be done and the result is new high-quality wetlands.

    The pilot banking program

    Washington state was slow to implement a wetland banking program since it requires coordination of city, county, state and federal regulations regarding wetlands — layers of regulation that most states don’t have.

    With the well-documented failure of the old mitigation programs, there is a new resolve to get all levels of regulation written to allow and support mitigation banking. Leading the way is the Department of Ecology and U.S. Army Corps of Engineers, who both regulate impacts to larger wetlands and oversee most of the larger mitigation projects.

    Current updating of critical area regulations at the county and city levels gives planners the opportunity to add language that clearly allows and encourages mitigation banks when on-site mitigation is not an option.

    The Department of Ecology and Corps of Engineers established a pilot program to evaluate the mitigation bank permitting process and to test the feasibility of getting all jurisdictions to work together. The goal is to permit six different banks and refine a set of banking rules that can be adopted by the state to complement existing federal guidance.

    So far, it has been a difficult process with only two banks approved. Several are close, but others have run into problems.

    One of the first banks approved was the Snohomish Basin Mitigation Bank located between Duvall and Monroe at the confluence of the Skykomish and Snoqualmie rivers. This 225-acre bank serves King and Snohomish counties from North Bend to Monroe, west into Everett and up to Marysville and Arlington. The first customers include the Lake Stevens School District, King County and the state Department of Transportation.

    Mitigation bank proposals have been delayed by local groups that oppose returning agricultural land to wetlands, tribes that object to restoration strategies, King County’s agricultural production districts that specifically prevent mitigation banking, and the challenge of finding usable sites.

    The biggest mitigation banker in the state is the Department of Transportation, who has two permitted banks and others in various stages of development. WSDOT banks are primarily for the agency’s own use, since road projects can have large mitigation requirements.

    The city of Renton and Clark County are involved in bank proposals within their jurisdictions that would help them with the mitigation requirements of their own capital improvement projects. Also, a number of local and out-of-state firms have proposed or permitted private banks through Ecology’s pilot banking program.

    Using mitigation banks

    For the most part, banks have been proposed in watersheds on the west side of the state where wetlands are common, cities are experiencing rapid growth and there is expected demand for mitigation credits. Each bank has a defined service area where the credits can be used that is generally part of a single watershed such as the Snohomish River system.

    Regulators, from the Corps of Engineers to the planning department of a local city, will only allow applicants to use a mitigation bank if there is no option to avoid impacting the wetland and there is not a good location for on-site mitigation.

    Developers cannot buy mitigation credits in advance of a permit application and then expect to get their project approved. If a permit is issued that allows impacts to wetlands, the applicant may be able to save significant time and money by using mitigation credits to satisfy permit requirements.

    Mitigation credits range in price depending upon what the land costs are in an area and the costs of developing alternate wetland mitigation options. The cost for mitigation credits from the Snohomish Basin Mitigation Bank is approximately $4 per square foot of Category 3 wetlands impacted.

    Not just for wetlands

    Mitigation banks are a valuable tool in maintaining the health of our watersheds from the ongoing impacts of development. They perform much better in the long run than many of the small mitigation projects of the past that have been poorly implemented.

    Banks initially were designed for wetland impacts, but are being used for stream and buffer impacts as well by many jurisdictions.

    With updated critical area ordinances calling for wider buffers around wetlands and streams, regulators will be looking for tools that give them flexibility to make good land-use decisions. In Washington, banks will play a bigger role in the future as the regulations that create and control them get worked out on the federal, state and local levels.

    Victor Woodward is owner of Habitat Bank LLC, developer of the Snohomish Basin Mitigation Bank, the first private bank approved through a pilot program by the Corps of Engineers and Department of Ecology.

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