
DATE: Monday, September 22, 1997            TAG: 9709220082

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY SCOTT HARPER, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:  158 lines

$25 MILLION ``WETLANDS BANK'' AIMS TO STOCKPILE WETLANDS DEVELOPERS COULD ``REPLACE'' DESTROYED WETLANDS BY PAYING MONEY TO THE PROTECTED ECOLOGICAL RESERVE.

A local investment group is proposing to buy some 10,000 acres of farmland, swamp and forest in southeast Virginia and northeast North Carolina in a bid to create one of the biggest ``wetlands banks'' on the East Coast.

The estimated $25 million venture - which appears headed for government approval, despite some objections - is the latest and largest free-market experiment in the mid-Atlantic region for replacing valuable wetlands lost under new highways, homes and shopping malls.

Under federal law, wetlands destroyed by such projects must be restored nearby. With a ``bank,'' investors buy large chunks of existing wetlands, then sell them, piece by piece, as ``credits'' to developers.

As envisioned, the bank could compensate for such big-impact projects as the widening of Route 64 in North Carolina, from Manteo to Plymouth, near two national wildlife refuges.

The proposal comes as the U.S. Fish and Wildlife Service issues a report that, during a decade of serious talk and tough restrictions, more than 1 million acres of wetlands vanished nationwide from 1985 to 1995.

Nationwide, an average of 117,000 acres a year were lost during that decade, according to the study.

While such numbers are higher than what the Clinton administration has previously estimated, federal officials said the report shows the rate of destruction is at least slowing down: From 1975 to 1985, more than 3 million acres were destroyed.

In coastal Virginia and North Carolina, such ecologically vital bogs and marshes dominate the lush, low-lying landscape.

Unique for its size and for crossing state lines, the proposed wetlands bank shows how government and business are slowly moving away from a traditional system of repairing nature that, most experts say, has largely failed.

Federal law requires developers to restore the wetlands they ruin. For years they complied by trying to build their own replacements, planting grasses and flooding nearby properties.

But these man-made copies often died or shriveled from neglect, or were so scattered that they performed little of the functions of a real wetland - controlling runoff, providing wildlife habitat and purging pollutants from groundwater.

Banks, on the other hand, deal only in natural wetlands. And after all the credits are sold to developers, the wetlands bank is closed and all its land is given to a government agency or conservation group for protection.

Some environmentalists have objected to the concept, arguing that banks make it too easy for developers to work in these sensitive, disappearing areas. Simply writing a check to a private bank, the activists contend, surely cannot lead to meaningful wetlands protection.

Donald Carr, a former Justice Department lawyer representing the investment group, says the proposed Virginia-North Carolina bank would help the environment and the regional business community.

The Army Corps of Engineers, which regulates wetlands and must approve of any new bank, agrees.

``This is doing something very positive for the environment while also making them money,'' said Steve Martin, an environmental scientist for the corps in Norfolk. ``It's been a lot of work bringing everything together, but we think it's a good, exciting project.''

The corps in North Carolina already has approved the bank, and Martin said signatures from officials in Virginia are expected soon. Carr hopes to be open for business in six to eight weeks.

Eight parcels of land - supporting black bear, otter, fox, rare stands of Atlantic white cedar and habitat for threatened shrews, butterflies and neo-tropical birds - would be preserved under the plan, Carr said.

About half of the targeted tracts are forest and swamp, while the other half consist of old wetlands converted to farmland. These will be returned to their former condition, Carr said.

Environmentally, the bank's overall objective is to help re-establish the historic reaches of the Great Dismal Swamp, which has been splintered and whittled by decades' worth of growth and development. Hence, the bank's formal name: The Great Dismal Swamp Restoration Bank.

But this is not just about environmental goodwill, Carr conceded. He noted that investors - whom he would identify only as ``about 10 Tidewater real estate and construction people'' - expect to make a tidy sum by selling credits to developers and government agencies in need of wetlands compensation.

``We're not going to be shy when we say that, yes, there's a free-market dynamic at work here,'' said Carr, a Washington-based attorney who previously worked in the Reagan and Bush administrations.

``But it would be terribly wrong to say this was some sort of rapacious, land-baron deal. There will be substantial environmental gain from this,'' he said.

Not everyone is so sure. The Fish and Wildlife Service will likely not endorse the bank, according to memos from the agency that list numerous concerns, including how the bank will operate, long-term monitoring of wetlands and financial commitments.

One of the chief criticisms is what's called ``up-front crediting.'' As designed, a developer could buy up to 15 percent of his wetlands compensation and then start his project, assuming he has obtained all necessary permits.

The wildlife service and environmentalists are worried that this speeds the development process too much; they say all of the compensation should be completed before work can begin.

``Essentially, you can plan, make an investment and go,'' said Ann Jennings, a wetlands expert with the Chesapeake Bay Foundation. ``We're not sure that sends the right message.''

The banking project still can move forward without the Fish and Wildlife Service's blessing, however. And Carr seems resolved that his group cannot satisfy the service's desires.

``Fish and Wildlife's mission is to preserve habitat and, as they note, too much of this habitat has already been lost,'' he said. ``So they're going to be against most anything that leads to development in wetlands.''

The U.S. Environmental Protection Agency, state natural resources agencies in Virginia and North Carolina and two environmental groups, however, give the bank a thumbs-up.

``If done right, these banks are not an evil,'' said Peter Stokely, an EPA environmental scientist who supports the Great Dismal Swamp Bank. ``With this one, they seem to have the proper safeguards in place; the end result will be wetlands restoration.''

As of 1995, 77 wetlands banks had been established in the nation, with 23 in the Southeast, according to the Army Corps. Three are in Virginia, two in South Hampton Roads.

The corps said the proposed Great Dismal Swamp Bank would be the largest bank in Virginia and North Carolina and one of the biggest on the East Coast. Two other sprawling banks are in South Carolina and Florida. ILLUSTRATION: Color photo

GREAT DISMAL SWAMP WILDLIFE REFUGE

The investors' environmental objective is to help re-establish the

historic reaches of the Great Dismal Swamp.

Graphic

IN THE BALANCE

Under federal law, wetlands destroyed by development must be

restored nearby.

With a ``bank,'' investors buy large chunks of existing wetlands

then sell them, piece by piece, as ``credits'' to developers.

After all the credits are sold, the wetlands bank is closed and

the land is given to a government agency or conservation group for

protection.