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Wetland banking an option for farmers seeking mitigation

WILLMAR — After several years of notably higher grain prices, farmers have an added financial incentive to increase crop production. The two primary means of increasing production are to devote more acres to crop production, or increase the yields on the acres already producing crops.

By Wes Nelson

USDA Farm Service Agency

WILLMAR — After several years of notably higher grain prices, farmers have an added financial incentive to increase crop production. The two primary means of increasing production are to devote more acres to crop production, or increase the yields on the acres already producing crops.

One option for increasing the amount of acres devoted to crop production is to begin cropping land that was previously enrolled in long-term conservation programs. In recent years, the number of acres enrolled in the U.S. Department of Agriculture’s Conservation Reserve Program has declined by 26 percent, from 36.8 million acres in 2007, to today’s 27.1 million acres. It’s assumed that many of the 9.7 million acres removed from CRP have or will be returning to crop production.

Another option for farmers is to bring marginal farmland acres into production. However, many of those marginal areas may require some preparation — removal of existing vegetation, trees or rocks. In addition, drainage systems may need to be installed, or existing systems enhanced, to make the marginal areas suitable for crop production.

In terms of increasing the productivity of the acres already devoted to crop production, studies have consistently shown, and farmers are also discovering, the yield benefits that improved drainage provides. For that reason, we see many more instances where farmers now “pattern tile” entire fields.

Whether it’s bringing marginal land into production or making improvements to existing drainage systems, farmers could impact areas that are classified as wetlands by USDA’s Natural Resources and Conservation Service. Altering the wetland characteristics of identified wetland areas can have serious consequences, including, but not limited to, ineligibility for many federal farm programs.

For farmers concerned about losing their eligibility for federal farm programs, one option worth considering is to mitigate their proposed drainage activity by purchasing offsetting “credits” from another landowner or organization that has previously restored a wetland. This concept and process, called wetland banking, is an option that has received a lot of attention lately.

Wetland protection

on Minnesota agricultural lands

Most wetlands are protected by federal or state programs. In Minnesota, the three primary wetland protection programs are the Minnesota Wetland Conservation Act; the federal wetland compliance or “swampbusting” provision of the 1985 farm bill; and the federal Clean Water Act.

All three of these programs allow for identified wetlands to be drained or filled, under certain circumstances, when other wetlands are established to replace those that were lost. Landowners wanting to impact an existing wetland can establish a replacement wetland themselves — if they have a suitable opportunity — or purchase credits from a wetland bank.

What is wetland banking?

Wetland banking provides a mechanism by which a landowner wanting to impact a wetland can purchase offsetting “credits” from another landowner.

The credit represents acres of wetlands that have been previously approved for wetland replacement, subsequently restored and deposited in the wetland bank. This provides an additional option for landowners who don’t have the opportunity to establish replacement wetlands. In addition, monetary compensation is provided to the owner of the wetland bank site.

The number of credits a particular bank site can generate is determined by state and local governments. Once approved for deposit, the owner of the bank site can sell the credits to other landowners proposing to drain or impact a wetland, with the price of the credits negotiated between the buyer and the seller.

The landowner retains ownership and use of the property used for credit. However, a perpetual conservation easement protects the wetland from activities that would degrade it. In addition, the property can be bought or sold like any other parcel.

Minnesota’s two wetland banks and their differences

In Minnesota, producers can mitigate the proposed impacting of wetlands by purchasing credits from either the Regular Wetland Bank or the Ag Wetland Bank. Both wetland banks are administered by the Minnesota Board of Water and Soil Resources, but the banks themselves are privately owned.

The Regular Wetland Bank is open to all individuals and businesses to purchase wetland credits. These credits can be used for a variety of needs, from commercial development, home construction and agricultural needs.

The Regular Wetland Bank has banks located throughout the state, with over 100 banks available with credits to sell. For USDA’s wetland compliance or “swampbusting” purposes, credits from the Regular Wetland Bank can be used for any wetland mitigation. However, the credits must be located within the same or adjacent wetland bank service area.

Minnesota’s other wetland bank, the Ag Wetland Bank, is only open to agricultural producers looking to purchase credits to mitigate wetlands on agricultural lands. Since the Ag Wetland Bank is relatively new, banks in this group are not well-dispersed through the state at this time. However, more banks are expected to become available in the near future.

Wetland credits purchased from the Ag Wetland Bank must also be located within the same or adjacent bank service area as the wetland that a producer would like to mitigate.

Expiring CRP contracts

may qualify

for wetland banking credits

Many Conservation Reserve Program participants have contracts that have expired or that will expire in the near future. In many cases, CRP contract holders, as part of their contract agreements, may have restored previously drained wetlands.

Landowners with expired CRP contracts can choose to return their acres to pre-contract cropland conditions by restoring any previous wetland drainage systems.

Another option would be to retain the restored wetlands and use them to mitigate for current or future wetland impacts, or deposit the wetland credit in the Ag Wetland Bank. This could provide a monetary return to the landowner while helping other farmers better utilize land more suited for crop production.

Farmers and landowners wanting to learn more about purchasing or earning credits under Minnesota’s wetland banking process should visit with a representative of USDA’s Natural Resources and Conservation Service or their local Soil and Water Conservation District office. Additional information can also be found at

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.