What is Mitigation Banking?

A wetland enhancement, restoration, creation and/or preservation project that serves to offset unavoidable wetland impacts.



The dictionary definition of mitigation is “to reduce the effect of an action.”
In wetland regulations, the term has the same meaning -to reduce the negative effects of a proposed development activity. When application is made for a permit to fill a wetland, a process must be followed to mitigate the negative impacts to the wetland.


Unavoidable wetland impacts from development activities are required to be compensated through a compensatory mitigation plan. The required compensatory mitigation plan is where Mitigation Banking plays a role.


In Colorado, wetland impacts are governed by Section 404 of the Clean Water Act. Development activities that affect wetlands must be authorized in advance of the impacts through a U.S. Army Corps of Engineers permit application. In order to obtain a permit to fill wetlands, the permit applicants must establish in order:


  • That the impacts to the wetland resources cannot be avoided
  • Construction design and modification have been made to minimize the wetland impacts
  • A compensation mitigation plan for unavoidable wetland impacts has been prepared
Mitigation Banks have several advantages over individual mitigation projects.

Wetland Mitigation Banking, as defined by the Federal Agencies is “wetland restoration, creation, enhancement and in exceptional circumstances, preservation undertaken expressly for the purpose of compensating for unavoidable wetland losses in advance of development actions, when such compensation cannot be achieved at the development site or would not be as environmentally beneficial.” For the wetland restoration, creation and enhancement of large tracts of acreage, the Mitigation Bank receives endorsed credits that can be sold to offset adverse but authorized wetland impacts (debits).

In 1995, five Federal Agencies, (U.S. Army Corps of Engineers, U.S. Environmental Protection Agency, Fish and Wildlife Service, Natural Resource Conservation Service and National Oceanic and Atmospheric Administration) issued “their final policy guidance regarding the establishment, use and operation of mitigation banks for the purpose of providing compensation for adverse impacts to wetlands…” The Federal Agencies, encouraging the use of mitigation banks, recognize the potential benefits mitigation banking offers by providing more environmentally effective mitigation.  Mitigation Banks are designed to create, restore and/or enhance large ecologically important wetland areas in advance of the permitted wetland impacts. Dependent upon the wetland type, value and size, a mitigation bank is authorized by the Army Corps of Engineers or governing Regulatory Agency to sell mitigation credits to the permit applicant. The permit applicant may have the option for a percentage of onsite and offsite compensatory mitigation. When a permit applicant purchases credits from a mitigation bank to fulfill their compensatory mitigation requirements, they are released of the liability, risk and maintenance requirements.

Published in 2001, studies performed by the National Academy of Sciences and the General Accounting Office have documented the difference in success of between wetland mitigation banks and individual mitigation. The ten year study makes it clear the high degree of failure in attempted individual mitigation sites makes wetland mitigation banks the Regulators preferred choice in most occasions.

Mitigation banks establish larger offsite wetland tracts that are used to mitigate for a number of smaller isolated wetlands already impacted due to proximity to urban-developed areas. Wetland Mitigation Banks are conserved in perpetuity to provide functions of ground water recharge and discharge, flood storage and desynchronization, shoreline anchoring and dissipation of erosive forces, sediment trapping, food chain support, habitat diversity, water quality, recreation and open space.