WASHINGTON--Eighteen months ago, Richard Adamski's plans to build a retirement home on Maryland's Eastern Shore were side-lined by the race to save the country's vanishing wetlands.

The federal government will not give the former Maryland state trooper permission to construct a house, drivcway and septic system on 5,200 square feet of his two-thirds-acre lot a half mile from a river emptying into the Chesapeake Bay.

Unless, that is, Adamski, 53, agrees to buy twice as much land as his construction would disturb and grow a wooded, non-tidal wetlands there.

The condition attached to approval of Adamski's request for a wetlands fill permit is part of a stepped-up effort on the part of the federal government to first avoid, then offset, losses to the country's wetlands through mitigation and, less commonly, mitigation banking.

Under mitigation a landowner agrees to replace elsewhere on the property the wetlands that are to be destroyed. Under mitigation banking, a landowner or developer may re-establish a large wetland area to make up for future destruction of smaller parcels of wetlands on separate pieces of land.

Adamski, who sunk $15,500 of his life savings into the land, said he is not a rich man. U.S. Army Corps officials who grant wetlands permits, he said, must have "figured I hit Lotto and could go out and buy property any time I wanted."

Although surrounding property owners have cleared and built on their land since the area was subdivided 20 years ago the political climate had changed by the time Adamski decided to retire to the idyllic setting he had visited so often in the last 30 years.

Acknowledging the inequity of the situation, Tom Filip, a head official at the Baltimore Army Corp district office handling the Adamski case, said it "splits my guts apart. The timing caught this guy badly."

But, Filip added "the bay needs those wetlands to be healthy. Mother Nature is still hurting."

Filip is among federal officials determined to fulfill President Bush's campaign pledge of "no net loss" of wetlands.

The lower 48 states, where half of the wetlands of 200 years ago have disappeared, continue to lose the fragile ecological systems at a rate of 290,000 acres a year, said Steve Moyer, a lobbyist for the National Wildlife Federation.

Susan Tomasky, counsel for the National Wetlands Coalition of oil companies and other land developers, said the extent of wetland losses due to new development is "not insignificant," but constitutes only 50,000 acres a year, with farming largely accounting for the rest. Most wetlands are privately owned, she said.

Sometimes described as "nature's kidneys," wetlands detoxify pollutants, provide habitat and breeding grounds for fish, birds and animals and control flooding.

"Five percent of the landscape east of the Mississippi and 1 percent west is wetlands, but the pressures to develop wetlands are enormous," said Thomas Muir, a wildlife biologist with the U.S. Fish and Wildlife Service. "It seems like a small price to pay to protect the resource, but it is a big price is you own part of the 5 percent."

Yet, it is unlikely the country will achieve the no net loss goal unless mitigation is part of the solution, said Rhod Shaw, legislative director for Rep. Jimmy Hayes (D-La). "Sixty to 70 percent of the population lives within 50 miles of a coast. People like living and vacationing near water."

The government's wetlands mitigation policy, however, brings with it a passel of questions, including whether humans can replicate the often complex biological systems nature creates, how near the restored site must be to the lost wetlands and who is responsible for sustaining the new wetlands over the years.

Mitigation banking is one strategy that potentially could solve some of the problems, but has been discouraged by federal officials, developers claim. Environmentalists warn, though, that it could raise other problems.

The practice awards "credits" for flooding and re-planting once functional wetlands at a single large site, generally around 100 acres. Once the new wetlands prove viable, the restorer can exchange the credits for the right to fill in other wetlands.

To work, mitigation bankers "need to create a balance sheet for each watershed" that creates as much clean water and habitat for fish and wildlife as is lost through the destruction of wetlands, Muir said.

To date, state highway departments, city port authorities and oil companies planning to disturb large swaths of wetlands have gone to the trouble and expense of compensating ahead of time for unavoidable losses in the same watershed.

There are an estimated 37 mitigation banks proposed or in operation in 20 states, according to the EPA, but no figures have been compiled on how much new wetlands have been created through banks or at individual permit sites.

With a slight twist, however, some enterprising operators could turn mitigation banking into a money-making venture, several natural resources officials predict.

The entrepreneurs would take the risk of successfully reproducing wetlands and then sell credits to property owners facing wetlands mitigation as a condition of securing a fill permit, Muir said.

Some builders in suburban Chicago's Lake County are trying to develop their own county-wide mitigation bank, but so far have not pulled off what Gurnee builder Roger Gatewood described as a frustrating feat.

The idea received a boost recently, as part of a policy change announced by Bush Aug. 9 in the way wetlands boundaries are drawn. The administration endorsed a "market-oriented" mitigation banking system. It would replace the preference for on-site mitigation for all except the most valuable and pristine areas, according to a White House statement.

The President's announcement, however, means the federal government will begin "actively promoting " mitigation banking for the first time, said Michael Davis, a top Army Corps official in charge of overseeing the wetlands permit program.

In addition, mitigation banking works particularly well for "very small fills," requested by individuals with small land holdings like Adamski, said EPA wetlands division official Clifford Rader.

In July the State of Maryland unveiled a non-tidal wetlands compensation mitigation fund to handle situations like the Adamski case, said David G. Burke, non-tidal wetlands division chief for the Maryland Department of Natural Resources.

Use of the fund is limited to individuals granted an Army Corps permit to disturb less than an acre of non-tidal wetlands where replacement of the losses is not feasible on the owner's property. The state will then restore large wetlands tracts using the funds.

Maryland officials, Adamski said, have told him he could contribute $1,750 to the fund, but he said he is waiting to receive the offer from the state in writing before making up his mind.

The Army Corps' Filip called the state's alternative a "bargain," estimating that the quarter-acre mitigation condition placed on Adamski's permit could cost $27,000 and possibly more because Adamski may have to purchase a quarter acre of land to satisfy local zoning requirements.

Some conservation interests, however, oppose mitigation banking. National Wildlife's Moyer said he fears the approach will amount to giving developers "blank checks" to destroy natural wetlands instead of trying to avoid and minimize the impact in the first place.

Moyer did, however, allow that mitigation banks could serve a limited role for small landowners proposing limited wetlands losses.

Private property rights activist Peggy Reigle, who has championed Adamski's case, said she is encouraging him to wait until Bush's new wetlands policy pronouncement goes into effect early next year.

At that point, Adamski's property may no longer be considered wetlands over which the Army Corps has jurisdiction, letting him avoid the mitigation issue altogether, said Reigle, founder of the Cambridge, Md.-based Fairness to Land Owners Committee. "Many people do not own real wetlands, but land classified as wetlands."

But scientists believe these lands, even if wet below the surface for a few days out of the year, produce the kinds of vegetation vital to filtering pollutants and converting toxins threatening the survival of the country's waters, such as the Chesapeake Bay.

Environmentalists claim the Bush announcement would recast the wetlands boundaries to drop from protection a third of the 100 million acres currently covered in the lower 48 states.

Supporters of the move, however, argue that the land in question should never have been pronounced wetlands in the first place, saying the President is correcting an injustice, not opening ecologically significant acreage to development.