The announcement by President Bush of a national 'no net loss' wetlands policy is the result of growing public concern about the rapid loss of these important resources. Wetlands provide essential breeding, spawning, nesting and wintering habitats for a major portion of the region's fish and wildlife. In addition, wetlands function to purify surface water, moderate flood flows, maintain year round stream and river flows, reduce erosion and support commercial fishery and recreation industries. In recognition of the importance of wetlands to the environmental quality and economic productivity of the Bay, the Chesapeake Executive Council adopted the Chesapeake Bay Wetlands Policy in December 1988. The Policy includes a commitment to adopt an implementation plan. The annual report discusses the Living Resources Subcommittee's Wetlands Workgroup progress on these projects over the last year, and the near term goals for the next year. The progress to date includes work completed for the first phase and beginning to set up the second phase of the implementation plan.