Project Summary

Project Background

In December 2007, in collaboration with efforts by The Conservation Fund (TCF) and the State of Delaware to conserve the last-remaining, large blocks of forest land in Delaware, Ecosystem Investment Partners (EIP) acquired 1,206 acres within the Cypress Forest Swamp Legacy Area in Sussex County, Delaware.

The property was selected by EIP because of:

• It’s conservation significance as a large block of intact forest land in a rapidly growing area of the State
• The potential for significant restoration of the rich biodiversity and the wetland ecosystems on the property

Known as the "Daisey" and "James" Tracts, these highly developable properties were sold as part of a larger disposition by one of the few remaining industrial forest land owners in Deleware; a national trend promulgated by a realization that rural land values have shifted from timber production to development. Due to a shortfall of available public and philanthropic conservation funding (which have been the sources of the State’s past forestland conservation efforts), EIP was asked to participate in the conservation effort. If not acquired for conservation, the properties would most likely have been converted to their highest-and-best use; residential subdivision. By working together, TCF, the State and EIP were able to save over 2,300 acres of this ownership from this almost certain fate.

Over the past two centuries, the Daisey and James Tracts have been significantly altered from their original, natural state of deciduous hardwood forests; first for intensive agriculture in the 19th century, then for monocultured pine plantations in the 20th century. The result of these actions has been the loss of over 50% of Delaware’s pre-settlement wetlands, now represented by just a handful of remnants like the 15,000 acre Cypress Swamp Preserve just to the east of EIP’s property.

Using private investment capital, and market-based conservation and restoration mechanisms, EIP is collaborating with conservationists in Delaware who are working to reverse these historic impacts and bring back the rich biodiversity and ecological benefits once bestowed by these rich wetland ecosystems. Working with the US Fish & Wildlife Service, State of Delaware and the US Army Corps of Engineers, EIP is utilizing the strong demand for ecosystem service credits found in southern Delaware (needed to offset unavoidable impacts to wetlands and streams) to pay for the conservation and restoration of the Daisey and James Tracts, as well as generate an attractive return for EIP’s investors. Credits are being generated through the establishment of Deleware's first private wetland mitigation bank and the restoration of over 350 acres of the property’s original wetlands.

Once all of the wetland mitigation credits have been sold, the properties will either be sold to the State Forest or Wildlife Management Areas, or to a private conservation buyer subject to permanent conservation easements. Revenues generated by the sale of mitigation credits will also allow EIP to establish a long-term monitoring and maintenance fund for the property to insure the quality and viability of its restored ecosystems.

Before . . . Decades of pulp extensive ditching and manipulation of these wet soils in southern Deleware has resulted in the loss of most natural habitat functions. Access roads and perimeter ditches affect the extent and quality of both on-site habitat as well as the adjacent fringe areas of forested wetlands.

Primary Components of Value

• Wetlands Mitigation Banking – EIP will establish the first, private wetlands mitigation bank in Delaware through the restoration and protection of over 340 acres of the property’s former wetlands. Demand for mitigation is driven in part by the expansion of a nearby land fill and the mitigation needs of a regional airport. Additional demand will be driven by infrastructure, commercial and residential development.
• Conservation Finance – The properties are within the acquisition boundary of the Cypress Swamp Forest Legacy Area, making them eligible for federal Forest Legacy conservation easement funding. EIP is working with TCF and the state to sell conservation easements over the property within the next few years.

Secondary Components of Value

• Timber Management – The property lies in the Delmarva Peninsula's most productive pine growing region. It has traditionally been managed for loblolly pine pulpwood, a low-margin management practice that would not be economical unless vertically integrated with a mill. As such, EIP will convert the management practices to a longer-term, pole and saw-timber rotation, which willsignificantly increase the value per acre over the life of EIP's investment, while establishing a more ecologically diverse and resilient forest community. EIP will work closely with the Delaware Department of Agriculture's Forest Service to design and implement this new regime. During its ownership, the property's forest resources will be managed consistently with standards and principles set forth by the Sustainable Forestry Initiative (SFI) and/or Forest Stewardship Council (FSC).

After . . . Appropriate restoration of hydrology through ditch filling and installation of control
structures will result in immediate ecological enhancements. Native vegetation species (both
planted and natural re-growth), in conjunction with proper water management will yield high
quality habitat for a variety of wildlife species, as well as reduce downstream flooding.