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Mitigation banking profitable for Missouri farmers

For Dexter, Mo., farmer Davis Minton, there can be just as much profit in wetlands as there is in cropland, under the right circumstances.

Minton and his family farm around 5,000 acres of corn, rice and cotton adjacent to the Otter Slough Conservation Area, 4,700 acres of prime waterfowl habitat and a popular duck-hunting spot.

The farm has converted a significant amount of its cropland to wetlands, including 250 acres dedicated to a private enterprise called a mitigation bank. The farm earns income from the bank, collecting a one-time credit from farmers looking to “trade” wetlands on their farms for one in the bank.

The Mintons also sell hunting leases on some of the wetlands bank units. Income from both exceed what would normally be made from cropping the land, according to Minton.

Here’s how the mitigation bank works, according to Minton. “If you have a piece of wetlands in a field that you want to (drain or convert to cropland), the first step would be to have the Natural Resources Conservation Service in your district determine how many acres of wetlands you have. You’ll have to have a 404 and a 401 certification from the Corps of Engineers.

“The Corps of Engineers will determine the ratio — how many acres of wetlands you have and how many credits you have to buy from the mitigation bank to offset the process of destroying the wetlands on your farm.

“When NRCS concurs with the ratio, you will be issued certification. The farmer makes a one-time payment or credit. After that, the farmer has absolved himself of protecting the wetlands forever. It’s as though it never existed on the farmer’s property. Since it is a financial expense, it is also a tax deduction, so there is some offset to the credit.”

The Mintons — Davis, his father, Keith, mother, Betty, and brother, Bradley — came up with the idea for a bank after former president George H.W. Bush announced a no-net loss wetlands policy for the United States. For agriculture, the policy meant that if a landowner drained a wetlands on one part of his land, he had to mitigate the loss by creating another wetlands somewhere else on the property.

Essentially, the Mintons allow a farmer with wetlands to mitigate the loss offsite to their wetlands, for a price. When mitigated acres from all sources reach the number of acres in the bank, the bank is considered full, and cannot offer further mitigation.

“We’ve been very successful in our venture, although we ran into a dry spell at first when we didn’t receive any interest,” Minton said. “Then as it became publicized, people became aware that they could do offsite mitigation.”

“It’s good for the resource, too,” said Chris Hamilton with NRCS, “because you mitigate to a wetlands complex versus a single piece of land in the corner of a field where a lot of farmers don’t have the management capabilities to deal with it.”

Today, all credits have been sold in the Minton’s 250-acre mitigation bank, and plans are being drawn up for another 200 acres. While the potential for success is encouraging, Minton advises anyone interested in developing a mitigation bank “to go to the FSA office to determine how many acres of wetlands are potential mitigation acres. You don’t want to create a 300-acre bank and find out that your service area has only 140 acres of farmed wetlands.”

Before Minton created his mitigation bank, he sought plenty of advice from local, state and federal resource agencies. “I used the knowledge of the people at Otter Slough and NRCS, and people I know and respect who had extensive knowledge of wetlands development.

“We had a lot of good, informal discussion on how to get the job done. We not only brought in the wetlands resource people, but forestry people and fisheries biologists.”

Minton’s father and uncle drained the wetlands and converted them to cropland in the 1950s and 1960s, when Minton was a small boy. “It was bottomland, hardwood timber, cypress-tupelo slough. Years before we acquired it, it belonged to a group of hunters and was called the Dexter Hunting Club. It was wilderness. In my lifetime, it has gone full circle, from wilderness to being cleared for cropland to being restored.”

Building and managing a wetlands is a lot like producing a crop of corn, cotton, rice or soybeans, according to Minton. It takes dirt work, weed control, timely nitrogen applications and smart water management.

The farm spent about $500 an acre to create the wetlands, using its own equipment, excavators, backhoes, dirt scoops, lasers — “everything we needed we had in our farming operation.”

Water management is the single-most important tool to create wetlands, according to Minton. “You have to know how to draw down water correctly to give grass an opportunity to compete against broadleaves and noxious weeds and give a good mix of vegetation which is critical to a wetlands.

“I probably go to the extreme, but I apply about 45 to 50 pounds of nitrogen annually to insure that the wetlands flourish. We don’t want noxious weeds to overtake the site. That is part of my management obligation.”

Another important tool is to occasionally disturb the soil in some areas to prevent the mix of vegetation from getting out of balance.

This also opens the wetlands up, so that in late August, early September, migrating birds can see the open water and are a lot more comfortable going down into the open spaces and walking into the heavier vegetation.

“You also put all that matter into the soil surface and when it starts to decay, you get this huge bloom of invertebrates, which is another food source. That’s another opportunity for food product that you didn’t have.”

To create and manage a wetlands also requires an attribute not uncommon among farmers — the power of observation.

“If you really pay attention to what is going on, you start to notice that shorebirds like very gradual slow slopes. Egrets and cranes work off considerably steeper slopes.”

Admittedly, Minton has gone to more trouble than most to not only create wetlands, but to expedite their development.

“Because this was the first agricultural mitigation bank, there are many people (including NRCS chief Bruce Knight) who come to the site to visit. One reason we do all this extensive management is that society has to see almost instant success.

“We have to show that we can take ground that has been extensively cropped and revert it back to a wetlands that can sustain itself,” Minton said. “There is also a shadow of responsibility that follows me and I feel a sense of obligation to the people who put faith in me to build it.”


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