The 1990 and 1996 Farm Bills explicitly authorized mitigation for agricultural wetlands. In 1995, the Departments of Agriculture, Defense, Commerce, and Interior, and the Environmental Protection Agency, jointly issued federal guidance for mitigation banks. Mitigation is only possible, however, when there is a large enough increase in the economic returns from developing the drained wetlands to support the costs of restoring other wetlands. When a shopping center developer impacts wetlands as part of a larger project, the increase in land value and cost savings from expediting the project can justify relatively expensive mitigation. The economics of farm sector wetland mitigation are fundamentally different from mitigation in the commercial sector.
Agricultural producers have far lower rates of return than typical developers.
Normal mitigation banking costs, based on pre-funded mitigation is very expensive. The high cost of some mitigation banking systems effectively preclude agricultural producers from using the mitigation option. Unfortunately, if mitigation is not a viable option in the farm sector, degraded wetlands will further degrade as they continue to be farmed. This is especially the case with wetlands that are farmed whenever possible. Only the wetland acreage, and not wetland values, are protected if mitigation is not available.