Stream Mitigation Banking

Stream mitigation banking is a market-based approach for managing negative impacts on fluvial systems under Section 404 of the US Clean Water Act. The core rationale of mitigation banking is that we should protect the environment not by preventing harm, but by pricing it: developers, public-works agencies, and other entities may damage a stream in one location as long as they pay for the restoration of a comparable stream elsewhere (see Compensatory Mitigation and Valuation of Ecosystem Services). That restoration is most often provided by a for-profit company that speculatively purchases rights to land with a degraded stream on it, then restores that stream to produce stream credits. The stream credits can then be purchased by developers or other entities to fulfill the permit obligations incurred by proposing to damage another stream somewhere else (see Stream Mitigation Banking in Practice). Along with its older sister, wetlands mitigation banking, stream mitigation banking is one of the oldest and most firmly established market-based approaches to environmental management in the world. As of 2018, there were nearly 3,500 mitigation banks in the United States, with sales estimated at least $1 billion per year. Mitigation banking has thus become a poster child for market-based (also referred to as neoliberal) approaches to conservation, inspiring comparable policies to tackle issues from endangered species to carbon dioxide emissions on every continent except Antarctica. However, there has been relatively little biophysical evaluation of whether stream mitigation banking actually leads to better outcomes for fluvial systems, and the data we do have are not promising (see Environmental Impacts).

Demand for Stream Mitigation in Colorado, USA

Colorado, the headwaters for much of the United States, is one of the fastest growing states in terms of both population and land development. These land use changes are impacting jurisdictional streams, and thus require compensatory stream mitigation via environmental restoration. In this article, we first characterize current demand and supply for stream mitigation for the entire state of Colorado. Second, we assess future demand by forecasting and mapping the lengths of streams that will likely be impacted by specific development and land use changes. Third, based on our interviews with experts, stakeholders, resource managers, and regulators, we provide insight on how regulatory climate, challenges, and water resource developments may influence demand for stream mitigation. From geospatial analyses of permit data, we found that there is currently demand for compensatory stream mitigation in 13 of the 89 HUC-8 watersheds across Colorado. Permanent riverine impacts from 2012–2017 requiring compensatory mitigation totaled 38,292 linear feet (LF). The supply of stream mitigation credits falls well short of this demand. There has only been one approved stream mitigation bank in Colorado, supplying only 2539 LF credits. Based on our analyses of future growth and development in Colorado, there will be relatively high demand for stream mitigation credits in the next 5–10 years. While most of these impacts will be around the Denver metropolitan area, we identified some new areas of the state that will experience high demand for stream mitigation. Given regulatory agencies’ stated preference for mitigation banks, the high demand for stream mitigation credits, and the short supply of stream credits, there should be an active market for stream mitigation banks in Colorado. However, there are some key obstacles preventing this market from moving forward, with permanent water rights’ acquisitions at the top of the list. Ensuring stream mitigation compliance is essential for restoring and maintaining the chemical, physical, and biological integrity of stream systems in Colorado and beyond.

Permitting, Designing, and Constructing a Compensatory Saltmarsh Along the Savannah River

Southern LNG Inc. (SLNG), located near Savannah, Georgia, is one of only four LNG import terminals currently operating in the continental United States. In 1999, SLNG proposed to increase their existing turning basin to alleviate a navigation bottleneck and to accommodate safer docking for the tankers of ever-increasing size that navigate the Savannah River. Additionally, in 2001, SLNG proposed an expansion project which included the creation of a new slip. The expansion of the existing turning basin and the creation of the slip was predicted to permanently impact 3.29-acres of saltmarsh and 0.80-acres of protected estuarine mudflats. Since no saltmarsh mitigation banks are located in the State of Georgia, SLNG designed a mitigation plan to develop an in-kind compensatory wetland that was sited on the southern end of SLNG’s property. The created wetland was established in July 2003 and is undergoing a seven-year monitoring period. To date, the created wetland is functioning similarly to adjacent, naturally-occurring saltmarsh systems that are also located in the Savannah River.