The Forest Conservation market was opened following the enactment of the Forest Conservation Act (FCA) in 1991 to minimize loss of forest resources from development. The FCA requires residential and commercial developers to replace trees cut during development. If a developer is unable to plant trees on the construction site, s/he may:

• Buy forest mitigation credits generated by landowner "forest mitigation banks." A landowner can create a "forest mitigation bank" by permanently protecting existing forest land or through afforestation/reforestation; or
• Pay a fee to the county that may then be used to buy forest mitigation credits generated by landowner "forest mitigation banks."

The first step in determining your eligibility is to visit Forests for the Bay's LandServer. LandServer creates a report using publicly available data that estimates your potential to generate credits for a variety of market areas. Each county has their own FCA regulations managed by the county planning department. Eighteen counties --Anne Arundel, Baltimore, Calvert, Carroll, Charles, Cecil, Dorchester, Frederick, Harford, Howard, Kent, Montgomery, Prince George's, Queen Anne's, Somerset, St. Mary's, Washington, and Worcester--and two cities --Elkton and Havre de Grace-- allow for private landowner banking. 

Each county and city program has slightly different planting site eligibility requirements for a tree planting to qualify as a bank. Generally, a forest mitigation bank must be located in a priority area as defined by state and local statute, be subject to a permanent conservation easement, and must meet the rules of the local jurisdiction. There are four defined priority areas for tree plantings general to all jurisdictions across the state that allow for private landowners banking. These are areas that:

• Establish or enhance a riparian stream or wetland buffer;
• Locate within a 100-year floodplain;
  
• Contain steep slopes, erosive soils, low productivity agricutlural and; and/or
• Locate within an agricultural preservation district. 

 A given county or city may have other priority areas in addition to these four. See the Forest Conservation Bank Requirements by County for more information. 

You may generate credits by planting trees or conserving existing woodlands. Some counties only qualify new tree plantings for forest mitigation credits. You can learn more about the rules specific to your county by reviewing the Forest Conservation Bank Requirements by County. 

In most counties, one acre of forest is equal to one forest mitigation credit. Some counties use a smaller geographic increment for defining credits, usually 1/10 of an acre. In all cases, credits may be subdivided when sold to developers. For example, if a developer is only required to provied 1/2 acre of forest mitigation, they can meet this obligation by purchasing 1/2 of a forest mitigation credit from your bank. The other 1/2 credit is still available for sale to a different developer. 

Most counties and cities that allow for private landowner banking do not require a minimum mitigation bank size threshold. The counties that do have a minimum acreage range from just under a quarter acre 10,000 to as much as 10 acres. 

Because credit demand results from residential and commercial development, credit values will be highest in counties with high rates of development and limited supply of credits from landowners. Generally, credit values will be higher for mitigation banks containing newly planted forests than for mitigation banks containing protected existing forests. Another factor in determining the price of forest mitigation credits is the forest mitigation in-lieu fee rate in your county. Counties with higher in-lieu fee rates tend to have higher credit prices because the in-lieu fee rate serves as an indicator of the value of forest land in the county. More urban counties tend to have higher in-lieu fee rates.

As an example, in 2008, Frederick County estimated the value of forest mitigation credits from mitigation banks containing newly planted forest at $16,000 to $20,000 per acre. The estimated value of forest mitigation credits from mitigation banks containing already existing woodlands was $6,400 to $8,000 per acre. At the time these estimates were made, the county in-lieu fee rate was $0.43 per sq/ft or $18,730.90 per acre. The current in-lieu fee rate in Frederick County ranges from $0.43 to $0.54 per sq/ft (depending on whether the bank is established in a priority area or not) or $18,730.83 to $23,522.44 per acre. As a result, it is reasonable to expect that the value of mitigation credits has increased slightly or remained the same since 2008.

In most counties, one acre of forest is equal to one forest mitigation credit. Some counties use a smaller geographic increment for defining credits, usually 1/10 of an acre. In all cases, credits may be subdivided when sold to developers.  

 To plant ten acres of new trees, the approximate cost is:

• $50,000 to establish the trees (based on $5,000 per acre, which includes trees, materials, labor, and administrative fees);
  
• $1,000 to purchase a financial guarantee as a completion bond with an insurance company on the survival of the trees planted in the forest bank (based on 2% of the project cost). Alternatively, a landowner may purchase a financial guarantee as a letter of credit through a financial institution. The financial guarantee is returned to the bank owner after one to three years assuming successful bank establishment. The cost can vary given the type of guarantee (e.g., bond, letter of credit, or surety). By establishing a forest management plan in advance, the assessment rate may be lowered, while also allowing you to take advantage of cost-share resources through the Natural Resource Conservation Service or the Maryland Forest Service to assist in planting costs. 

To protect ten acres of existing woodlands, the approximate cost is:

• $5,000 to develop the project (based on $500 per acre, which includes administrative fees).

 To generate forest mitigation credits, the following is required:

• A permanent conservation easement that restricts development in the project area. Local, state, and federal tax benefits may be available. 
• All other documentation and applications required by your county. This generally includes a banking agreement with the county, a banking plan that show the bank's location on a survey map and provides a plan for planting and maintaining trees, a form of financial assurance against bank failure, and a maintenance agreement.
• Your banking plan and other paperwork must be prepared by a Maryland Certified Forestry Professional.
• All purchased credits will be monitored for the life of the project by county staff. During the first few years after you establish a mitigation bank, monitoring will be conducted in accordance with your maintenance agreement with the county. After the maintenance period, the county will conduct periodic monitoring in order to ensure your forest bank is maintained as required in the banking agreement and conservation easement. 

Contact Forests for the Bay (forests@allianceforthebay.org) to learn more about the services we provide to help you develop a mitigation bank. 

 To get started with forest mitigation bank, simply:

• Contact Craig Highfield, Chesapeake Forests Program Director, for assistance in developing a forest bank.
• Once a project plan is established, we will work with you to assess your credit potential through the Woodland Crediting Platform. Pending your approval, your bank may be listed on the Woodland Crediting Platform markeplace with your number of estimated credits. Potential buyers will now be able to find you. 
• Contact a sevice provider to help you develop your bank. Alternatively, you can hire a service provider at the beginning of the process. [A list of potential service providers will be available soon.]
• After your county approves your bank, we will update your listing on the Woodland Crediting Platform with the actual number of registered credits you can sell. Buyers will now be more interested in your property.
• Complete transaction with buyer and report results to Forests for the Bay.  

 By implementing conservation actions that lower nitrogen and phosphorus loads to waterways, landowners can generate credits and sell them to organizations whom voluntarily purchase the credits or entities like waste water treatment plants that need credits to maintain compliance with government-provided permits. Maryland facilitates the trading of nitrogen and phosphorus credits between farmers/woodland owners and permitted facilities like wastewater treatment plants. The first step in determining your eligibility is to visit LandServer. LandServer can generate a report that estimates your potential to generate credits for a variety of market areas.

Agricultural lands present in the Chesapeake Bay portion of Maryland are eligible to generate and sell nitrogen and phosphorus credits.

To generate credits through your woods, landowners reduce nutrient loads to waterways by implementing one or more of the following approved best management practices:

• Riparian forest buffer
• Wetland restoration
• Tree planting
• Forest harvesting practices

Other non-forest enhancements may also generate credits; check the Maryland Nutrient Trading website for more information on these practices.

Each chosen practice must also follow these guidelines:

• In order to generate credits, you will need a Maryland Department of Agriculture-approved Nutrient Managemetn Plan (NMP) or a Manure Management Plan (if relevant; MMP) for your property. A NMP is generally required for all agricultural land used to produce plants, livestock, food, feed, fiber or other agricultural products. A NMP may be developed by a certified University of Maryland specialist, certified consultant, or a farmer trained by the Maryland Department of Agriculture to write a NMP. A NMP is not free, however there is nutrient management planning cost share available to support plan development. If you do not yet have a plan for your property, contact your Maryland Department of Agriculture Nutrient Management Regional Office to learn more about a NMP and available cost share assistance to support your plan development.  
• Landowners must demonstrate that they have already reduced nutrient loads to levels required by the State of Maryland. These limits are known as “baselines.” The level of nutrient reductions needed to meet the baseline vary by watershed. Watersheds include the Western Shore, Eastern Shore, Patuxent, Potomac, and Susquehanna. In order to meet the baseline, landowners often implement best management practices to reduce their nutrient load. Consult with your regional Soil Conservation District office or contact Forests for the Bay for guidance on determining your property’s nutrient load and identifying the best management practices for your property to reach the baseline.  
• Landowners must comply with all local, state, federal laws, regulations, and programs.
• The nutrient credit trade cannot cause or contribute to degrading water quality effects locally, downstream or, bay wide.
• Projects paid for by government dollars - e.g., USDA NRCS Environmental Quality Incentives Program (EQIP) or USDA FSA Conservation Reserve Enhancement Program (CREP) - are not eligible to generate nutrient credits during the life of the project. However, a farmer’s private share of any cost-share program is eligible.
• The idling of whole or substantial portions of farms is not eligible to generate credits.
• Credits can only be generated once a practice is installed.

The number of credits that your project generates will depend on a number of factors including your property's existing nutrient loads to waterways, the nutrient baselines for your watershed, proximity to the Chesapeake Bay, selected best management practice(s), etc.Maryland’s nutrient trading website can help you calculate your potential credit yield. 
 

Nutrient credit markets are just emerging, so there are few benchmarks for what credits may be worth. As the nutrient trading market develops, more information on credit prices will be available.

There are costs associated with generating and selling credits. You may choose to pay a consultant or other outside experts to design your project and help prepare a contract to sell credits. The Forest for the Bay website maintains a list of qualified experts. Once a project and contract are completed, it must be verified before credits can be registered. Fees related to project design and contract development will in most cases need to be paid prior to the sale of credits.

Project development costs will vary depending on which practices you are interested in pursuing. In some cases you can arrange with conservation groups and consultants to bear up-front expenses, which can be recouped once credits are sold. 

 Government cost share are available to help landowners implement the best management practices need to meet the baseline requirements for Nutrient Trading. Marginal pasturelands and active or recently actice croplands alongside waterways and/or waterbodies may be eligible for cost share assistance to plant riparian forest buffers through the Farm Service Agency's Conservation Reserve Enhancement Program(CREP). Landonwers enrolled in CREP may receive upwards of 87.5% cost share on the eligible costs associated with planting trees and shrubs as well as other practices meant to keep cattle out of streams, including alternative watering sources, exclusion fencing, and cattle crossings. In addition, landowners receive an annual soil rental payment for the land taken out of production, plus an additional annual payment of 200% the soil rental rate, a one time practice incentive payment, and a one time sign up bonus. The USDA NRCS Environmental Quality Incentives Program (EQIP) also provides cost share assistance for best management practices need to meet the baseline requirements. 

In addition to government funding, there may be non-governmental programs available to aid landowners in meeting their baseline requirements. Landowners interested in enrolling in CREP may apply for the Alliance for the Chesapeake Bay's Healthy Stream Farm Stewardship Program. For each acre of riparian forest buffer planted by the landowner through CREP, the landowner may receive a voucher of up to $3,000 for implementation of other best management practices on the property, with a cap of $20,000 per farm.

Private funding, unlike government funding, may be used to finance the design of the credit-generating practices and the costs associated with contract development. In some cases, you may arrange with conservation grups and consultants to bear up-front expense, which may be recouped once credits are sold. Contact forests@allianceforthebay.org to learn more about programs the Alliance currently is offering to support these efforts. 

•  All credits will be registered with State of Maryland. This allows landowners to document their conservation actions and buyers to obtain certainty that each credit represents real nitrogen reductions.
• Projects need to be verified and monitored.

•  Generate a LandServer report to determine your watershed, to identify your potential to generate credits, and to learn about available conservation funding opportunities to help you reach your baseline.
• Contact Forests for the Bay for assistance generating a nutrient credit estimate for your property using the Forests for the Bay’sWoodland Crediting Platform. A Forests for the Bay professional will also guide you in identifying conservation funding to help you meet your baseline and can direct you to a qualified expert for help submitting a Maryland Agriculture Nutrient Credit Registration and Certification application. Maryland’s nutrient website will automatically populate this form for you or you download the application here.
  
• Establish a posting of your completed project on the Woodland Crediting Platform.
• Complete transaction with a buyer and report to Maryland’s registry through their nutrient trading website.