Wetland Banking is a relatively new practice in Minnesota, allowing a developer to purchase wetland credits to replace wetland areas lost to development. The credits are established when a landowner restores a wetland after going through an administrative/regulatory process involving state, federal and local government agencies.
The credits can be quite valuable, depending upon the location of the restored wetland and the local market (the amount of local development activities). The value of wetland credits can range from $5,000 to $15,000 per acre in non-metro areas and from $15,000 to $100,000 per acre in the seven-county metro area.
A number of wetland bank owners have sold all or parts of their wetland bank credit allocation to the State of Minnesota to mitigate wetland losses caused by improvements to state, county and city roads. Due to the recent slump in housing and other construction, the State of Minnesota may now be the major market for wetland credits for the next few years. As the economy improves, we expect the market for wetland banking will also improve.
Over the past several years, many landowners have asked for guidance as to whether they should consider developing a wetland bank. While some landowners have successfully developed wetland banks as a business, it is risky if immediate and regular revenue (credit sales) are needed to provide a source of income. Additionally, there have been differences between the state and the federal government as to what is eligible for credit. These differences have been debated over the past five years and lately, there has been movement to provide a more uniform system of assigning credit values. Our engineers have years of professional experience successfully developing wetlands acceptable to state and federal agencies. These wetlands have been eligible to participate in Minnesota’s Wetland Banking Program.
Some things to consider before creating a wetland bank include:
- Developing a wetland bank should be considered if:
• you desire to restore a wetland for its conservation benefits to your land
• you do not need immediate cash flow to fund the project
• you understand that long-term maintenance of the vegetation and water control structures are required and will cost money
• you understand that you will need to grant a perpetual conservation easement to the state and this easement will prevent you from future cropping or development on the easement area
- If you are considering developing a wetland bank as a business venture, your business plan should include detailed research on: pricing, market trends, existing and potential competing wetland banks in your wetland bank’s service area.
- State and federal laws and regulations are constantly evolving and could increase or decrease the value of your wetland credits over the long term.
- Wetland banking is not considered to be a conservation program. Your wetland banking site is replacing wetlands lost to development at another location.
- The Minnesota Board of Water and Soil Resources (BWSR) is the “Banker” in the Minnesota Wetland Bank, and the restorer of the wetland is the “Account Holder.” The BWSR keeps track of each account’s balance and charges an administrative fee for each transaction.
- You can sell the underlying property and have the option of retaining the wetland credits or transfer the credits to the new property owner. Unless otherwise specified in your contract, the new owner is required to maintain the wetland in accordance with the easement.
Text By: Bruce Sandstrom, Former BWSR Wetland Bank Administrator, March, 2008
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