What is Mitigation Banking?

Mitigation banking stems from the requirements of the  Clean Water Act, Endangered Species Act, and other  federal and state regulations for "mitigation" of  impacts to certain natural resources when development  and other activities will affect those natural  resources. Under the Federal Endangered Species Act, a  habitat conservation plan that is designed to protect  and "recover" a threatened or endangered species can  require that a landowner "minimize or mitigate" for  activities that are damaging to the species. The Federal  Clean Water Act also requires mitigation for activities  that alter or harm existing wetlands.

Environmental mitigation is also required under several  state laws. For example, under the California  Environmental Quality Act, if a proposed project will  "substantially diminish habitat for fish, wildlife or  plants," mitigation is required. Compensatory mitigation  is also required as a condition to "take" (kill, harm,  etc.) a species under the California Endangered Species  Act.

The concept of a "bank" refers to the general act of  "banking" or storing credits that are assigned to the  ecological value that is created through the act of the  creation, restoration, enhancement or preservation.  Mitigation banks can be certified as "conservation"  banks or "wetlands" banks. Conservation banks sell  credits related to the habitat used by endangered  species or endangered species themselves. Wetlands  banks, on the other hand, sell credits related to the  creation, restoration, enhancement or preservation of  wetlands.

The value of a bank is determined by quantifying the  resources restored or created in terms of "credits."  These credits can then be sold to those parties who need  to mitigate for impacts they will have of the same  ecological type and in the same ecological region. For  example, Dove Ridge offers credits for vernal pools  (habitat to the federally endangered vernal pool fairy  shrimp), among other natural resources. Customers pay  the one-time fee to purchase the credits, and in return,  the mitigation bank is responsible for preserving that  natural resource in perpetuity.