Forest mitigation banking benefits environment and development

Amid ongoing debates about forest conservation, some ecology and policy experts insist that expanded forest mitigation banking would produce the biggest environmental benefits and the smartest development patterns. But local governments will need to take action to create forest banking markets.

Facilitated through Maryland’s Forest Conservation Act, mitigation banking enables developers to meet reforestation requirements off site and outsource the planting and maintenance of new tree stands to forest mitigation banks.

The process adds an expense to development projects “and no one is ever excited about spending money. But in the right market, this is the simplest, cheapest and best option,” said Jim Morris, Principal Ecologist at Watershed Environmental, LLC.

Through mitigation banking, developers can hand off the responsibility of locating and acquiring suitable land for planting, developing and implementing a reforesting plan, obtaining necessary approvals and bonds, monitoring the stand and replanting any trees that die within the first few years, Morris said.

In addition to that convenience, “forest mitigation banking delivers by far the best benefit to the environment,” said Kevin Haines, President of Holly Oak Contracting, LLC.

Forest mitigation bankers can locate their plantings on “high-priority sites, like riparian buffers, non-forested wetlands and agricultural areas,” Haines said.

“If you plant trees around agriculture, for example, you are going to filter much more pollution than you would by planting upland in an urban area, especially an area that already has the contemporary stormwater management systems required on new development sites,” said Tom Ballentine, Vice President of Policy and Government Relations for NAIOP Maryland.

By selling forest mitigation credits to multiple developers, bankers can also create much larger tracts of forest than individual developers could create alone.

“If you have a small development, you may end up owing a quarter acre of forest,” Morris said. “A quarter acre of reforestation isn’t terribly meaningful. But some forest mitigation banks are tens of acres. That’s a large, meaningful chunk of habitat that can deliver a lot of environmental benefits.”

Forest mitigation banking also addresses a fundamental problem that can arise in efforts to balance development and the environment.

“Maryland for a long time has focused on smart growth planning which focuses growth in priority areas,” Haines said. “But when you make forests your number one planning tool which we have seen in the recent Anne Arundel forest conservation bill and in other measures, you lose your ability to plan for smart growth.”

Preserving forest within areas designated for high-density development can undermine the financial viability of projects and drive development to more distant, affordable, rural areas.

“That drives sprawl which clearly isn’t good if you are trying to fight climate change, reduce greenhouse gas emissions and improve water quality,” Haines said.

To encourage forest mitigation banking, however, many local governments need to revise their laws and regulations. The fee- in-lieu price for reforestation needs to be set high enough so that it is not regarded as a bargain and the go-to option for developers, Haines said. But it can’t be set so high that it is regarded as unbearable.

For example, the original version of Anne Arundel’s new forest conservation law “proposed a fee in lieu of $2.50 which was a 600 percent increase from the current fee of 40 cents,” Haines said. “Now you might think that would create a robust market where forest mitigation bankers would offer credits at $2.25. In reality, that won’t happen. At that price, developers will do it themselves… They will do scattered one- and two-acre plantings wherever they can find land cheap and your number one
environmental option for reforestation will go out the window.”

“Most jurisdictions need to reevaluate their fee in lieu and other regulations to enable banks to operate and incentivize a healthy market,” Ballentine said. “Many times, offsite forest mitigation banking is the better option, environmentally and financially.”

Originally published in November/December 2019 NAIOP-MD InSites.