Calculating Wetland Mitigation Banking Credits: Adjusting for Wetland Function and Location

Abstract

Private, governmental, and non-governmental entities enhance, restore, and create wetlands in order to sell credits to permit recipients who impact wetlands. In this article, we model the cost minimization conditions for wetland mitigation banking and define the conditions necessary to maintain wetland services. The U.S. Army Corps of Engineers adjusts the trading ratio between impacted and restored wetlands to account for differences in wetland function. We provide evidence that location is relevant to policy effectiveness and show how location could be included in credit calculation.