INTRODUCTION Wetlands@ long considered undesirable wastelands@ have entered into a new era as the public begins to regard them as valuable ecosystems worthy of protection. However@ wetlands are often located in areas where people wish to reside@ conduct business@ build highways@ recreate@ or produce minerals. To help resolve conflicts between wetland preservation and development in or near wetlands@ the National Wetlands Policy Forum in 1988 issued a report which proposed the national goal of no-overall-net-loss of wetlands and specifically advocated the establishment of mitigation banks to help achieve this end. The Clinton Administration's wetland policy parallels this proposal as do several bills in Congress. Wetland mitigation banking provides compensatory mitigation at one location for a number of independent development activities. A wetland mitigation bank could originate with restoration of a degraded wetland@ enhancement of a functioning wetland@ creation of a new wetland@ or@ in unique situations@ preservation of an existing wetland. Wetland mitigation banking is performed at a location separate from where fill activity is to take place (offsite mitigation)@ and may involve resources that are physically and biologically different from those that were lost (out-of-kind mitigation). Banks can be constructed for the sole use of one party (self-financed); they can be constructed by a group who then will sell the wetland credits to the general public (market or fee based); or they can be in the form of a trust fund that developers pay into and which will be used to can)'-out compensation activities at a later date. Since 1980@ approximately 45 wetland mitigation banks have been created by government agencies and private organizations@ with many more in various stages of planning or development. An evaluation of these state and local banks is a logical step prior to a major federal initiative under the Clean Water Act. Indeed@ there are a number of such studies in progress. Beyond these reviews@ there also may be important lessons for wetland mitigation banking in the historical record of other environmental trading programs. Since the early 1970' s@ EPA and several states have introduced many environmental trading programs. Anderson et al. (1990) and Anderson (forthcoming) provide brief summaries of these programs. A careful analysis of the programs could yield information that would improve wetland mitigation banking policy. Accordingly@ this paper takes a step in that direction by examining EPA's air emission trading program@ the oldest and most extensive environmental trading program.