Wetland and stream compensatory mitigation as a funding vehicle for US public housing authorities
Kelsey Peterson (AECOM) & Todd BenDor (University of North Carolina, Chapel Hill)
What if restoring polluted streams behind public housing complexes could directly fund new affordable housing? This innovative approach, explored in our recent Urban Affairs Review article, introduces public housing authorities (PHAs) to a unique opportunity to generate additional revenue by participating in federal "compensatory mitigation" markets. Through our study of the Durham Housing Authority (DHA) in North Carolina, we demonstrate pathways through which urban stream and wetland restoration can be financially viable, environmentally beneficial, and socially impactful.
Here’s how it works. Under federal law, developers impacting wetlands or stream ecosystems must purchase mitigation "credits" – offsets produced via ecological restoration of degraded ecosystems elsewhere. Typically, these restoration projects occur far from impacted urban communities due to the availability of cheaper rural land. Our research flips this approach, proposing that PHAs use their underutilized lands, often marginal, flood-prone, or otherwise unbuildable, to host these restoration projects within the communities most affected by environmental degradation.
By evaluating DHA’s properties, we identified over 11,000 feet of potentially degraded stream channels and 9 acres of wetlands that may be suitable for mitigation activities. Financial analyses showed that even conservative scenarios, such as partnering with North Carolina’s Division of Mitigation Services, could net approximately $2 million over nine years without selling any land. These revenues could address crucial budget gaps, fund upgrades to existing housing, support new developments, or even provide job training for residents involved in restoration work.
Importantly, these projects also bring significant non-financial benefits, including improved flood resilience, cleaner waterways, and new urban green spaces, amenities that have historically been lacking in low-income neighborhoods. As climate change intensifies flooding and storm events, turning neglected urban streams and wetlands into assets becomes increasingly urgent.
However, this promising approach isn't without challenges. Urban restoration can be complex, often disrupted by utility lines, private property issues, and extensive regulatory requirements. Ethical considerations also arise, as selling mitigation credits essentially permits environmental damage elsewhere. Therefore, robust regulatory safeguards and partnerships with experienced environmental groups or state agencies are essential.
Across North Carolina alone, PHAs manage thousands of acres bordering streams or wetlands. Nationwide, similar opportunities likely exist, offering a creative path for funding both affordable housing and environmental resilience.
Ultimately, urban compensatory mitigation presents a powerful opportunity for PHAs: turning neglected urban spaces into vibrant, revenue-generating environments that enhance both community resilience and quality of life. With careful planning and effective partnerships, public housing authorities can provide safer and healthier affordable housing while addressing longstanding environmental inequities.
Kelsey Peterson, CFM, is a climate adaptation and flood-resilience planner at AECOM focusing on North Carolina communities.
Todd BenDor, PhD is the Distinguished Professor of Sustainable Community Design and Chair of the Department of City and Regional Planning at the University of North Carolina at Chapel Hill.