Wetland Resource Group Meeting March 9 1993

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E 0 programs such as §404 and state programs that regulate land development by filling for urban uses— commercial, indus- trial, and residential purposes and public infrastructure— where that land continues to have wetlands characteristics according to some delineation procedures. Generally, those who seek a permit for wetlands filling must demonstrate to the satisfaction of the regulatory authorities that they have considered all "practicable" alter- natives to avoid the wetlands and that the activity proposed for the filled wetlands is water dependent.' And, when a permit is granted compensation for the filled wetlands in- kind and on -site, if at all possible, is expected. Taken to- gether, these are termed the "sequencing" rules. Over time the geographic scope of wetlands regulation and sequencing has expanded from riparian areas to isolated wetlands and to— possibly —areas where water may seldom reach the surface of the soil. The expanding geographic scope catches more land in the regulatory net and highlights three related concerns about wetlands regulation: inflexibil- ity, economic burden, and environmental loss. What is meant by inflexibility? In the sequencing review there is little concern for the costs of the foregone develop- ment opportunity to the applicant, the region, or the nation. And, no matter how degraded the wetlands, or no matter how isolated they are from a larger watershed, the current regu- latory program insists on avoidance for all activities not deemed to be water dependent. Inflexibility leads to economic burden and, perhaps, the undermining of the public consensus that has developed in support of wetlands management. To be blunt, the sequenc- ing and compensation requirements of current wetlands permitting are implicit taxes on land development, since all wetlands development bears a compensation cost for the functions lost. Of course, it pays a far greater cost if the permit is denied, since some share of the development value is lost. This implicit "tax" and the reduction of development value are most politically acceptable when the public inter- est gains from wetlands protection are the most clear. Hence the regulatory program was able to maintain support when riparian areas and certain isolated wetlands with obvious wetlands functions were the target of regulation. But as the geographic scope of the program expands, whatever the scientific merit of delineating areas as wetlands, the land subject to this implicit tax and development value reduction increases and the social consensus for the current permit program weakens. What was perceived initially as protec- tion of critical, but limited, areas of the environment appears to have become a national land settlement regulation and taxation policy through the back door of wetlands regula- tion. The inflexibility of sequencing can also work to the detri- ment of environmental improvement. There is- little attention paid to the fragmentation, isolation, and functional degrada- tion of the wetlands preserved or compensated for by in -kind and on -site creation and restoration. Commercial and resi- dential development winding among so- called protected wetlands is the product of the re gulatory rules which stress wetlands avoidance. Wetlands in the midst of concrete park- ing lots are the product of on -site compensation require- ments. The effect of this development — whether or not the prod- uct of the permit process —has often been to diminish the ecological functions of wetlands by polluted runoff, by changes in hydrologic regimes, and by the fragmentation of the landscape which isolates the wetlands from the surround- ing uplands, waters, and biological resources of the water- shed. These functional effects which occur away from the wetlands site, are uninventoried and escape regulation. As a result, in many areas wetlands exist, but their functions in the watershed are so degraded that their contribution to watershed processes is insignificant. To move beyond the current regulatory program and its problems, the nation needs a wetlands management pro- gram, as distinct from a wetlands regulatory program. Wet - lands management must be part of a total landscape perspec -. tive which recognizes two realities. First, wetlands protec- tion must be part of a total land settlement policy which resets market signals. And, also, wetlands per se are not the concern. Concern is.for the role wetlands play in support of watershed ecosystems. I will comment on land settlement only in passing, al- though it may be the more significant of the two points. In the not - too - distant past, markets did not allocate wetlands as we desired — they weren't being drained rapidly enough. We set about to make policy that encouraged drainage. These polices were a resounding success, since this rigged market induced landowners to _drain over 50 percent of the nation's wetlands, mostly for agriculture. Today, we have a new understanding of what we think of wetlands and these mar- ket outcomes are deemed to be undesirable. Deregulation of markets in the broadest sense may save wetlands more effectively than more regulation. To illus- trate, the 1985 "Swampbuster" reforms and the 1986 Tax Reform Act eliminated the incentives to conversion in the tax code. The results — in my view — have been to slow and indeed stop wetlands loss to agricultural conversion. Where do we go with this story now? Throughout the nation, the urban development pressure on nontidal and coastal wetlands is determined by the way people seek to settle the land. This land settlement has been described as sprawl. It seems to me — and I could elaborate — that government policy, more than the so- called free market, is at work in sprawling settlement over the landscape with one consequence being development pressure on wetlands. What policies am I talking about? Exclusionary zoning such as large lot subdivision rules, local government fiscal policy, failures to maintain the habitability of central cities and close -in suburbs, gasoline pricing policy, tax policy toward real estate, and many more. Reform these polices to let market forces work and sprawl will be diminished, much as reform of agricultural and tax policy to let the markets work has taken pressure off wetlands from agricultural develop- ment. Having said this let me return to the more mundane — reform of current wetlands regulation. The second message from landscape thinking is that the functional value of an existing wetland, in a given location, is established by its contribution to a larger aquatic system. We have to recognize that existing wetlands are an accident of the development process and do not necessarily bear any relationship to the optimal configuration of those wetlands within the landscape. We should be thinking about reinte- grating wetlands that have been lost or degraded into ecologically optimal locations. Wetlands regulation should acknowledge this watershed perspective. Instead, there re- mains a too strong tendency in the current regulatory pro- gram to protect the status quo and not look for opportunities to advance environmental improvement at the watershed JANUARY /FEBRUARY 1993 5