By Timothy B. Wheeler | October 10, 2019 | Bay Journal

Like two kids playing in the mud, a pair of excavators carve a new channel for an eroding stream on a farm in Cecil County, MD. One hulking machine picks up a tree trunk, pivots and passes it across the gash in the ground. The other grabs it and deposits it in the bank.

Across the Chesapeake watershed, degraded streams are getting similar facelifts in an attempt to curb the flow of nutrients and sediment fouling the troubled Bay.

What’s unusual about the Cecil County stream work is its scale — and its financing.

While most restoration projects tackle up to a few thousand feet of stream at a time, nearly 10 miles of Little Elk Creek and Little Northeast Creek are undergoing extreme makeovers.

And unlike most such projects, the firm directing these is fronting the costs. Ecosystem Investment Partners, a Baltimore-based company, expects to be paid only when the jobs are done and proven effective at reducing pollution.

“If we don’t deliver a working project, I don’t get paid,” said Nick Dilks, one of EIP’s three managing partners.

EIP is a relative newcomer to the long-running Bay cleanup effort. Founded in 2006, the private company has worked elsewhere until lately, conducting 62 restoration projects in 11 states.

It has developed wetland and stream mitigation banks that encompass 87,000 acres and restored nearly 79 miles of streams. The firm and its partners restored degraded ecosystems, then sold “credits” for those improvements to developers and government agencies needing to offset the environmental impacts of new development or road building.

Until recently, Dilks said, there didn’t seem to be much demand in the Bay watershed for the large-scale restoration work that EIP undertakes.

But these days, as watershed states and localities struggle to make the nutrient and sediment pollution reductions called for in the Bay’s “pollution diet,” they are looking for ways to stretch available funds. By putting together large projects, EIP promises to lower the per-pound cost of pollution reduction — and guarantee results.

“In the mitigation business,” Dilks explained, “we’re very used to and comfortable with building restoration projects with our capital and expertise. We’re really trying to apply that to the Bay restoration.”

Traditionally, state and local agencies have awarded grants or contracts to private restoration firms to fix eroding streams or create wetlands. The firms get paid a portion of the money upfront, then receive installments as the projects proceed.

But EIP uses its own funds to scout, design and execute stream restoration projects. It does receive a small portion of its grant or contract funds once it obtains all necessary permits, but the final payment is made only after the construction work is complete and shown after five years to be performing as specified.

The company has finished four projects in Cecil, in addition to the two under way. When all six are completed, EIP will have restored more than 15 miles of three different streams in that northeastern corner of Maryland at the head of the Chesapeake.

The four earlier projects, which in 2017 and 2018 restored about 5 miles of Principio Creek, were mainly underwritten with nearly $12.5 million in grants from the state’s Chesapeake and Coastal Bays Trust Fund.

Until then, the state had been funding smaller restorations involving less than a mile of stream. Most were on public land, which ensured access. But the Principio Creek projects involved private land owned by four different families.

“It’s a large investment for the state,” acknowledged Gabe Cohee, director of restoration financing for the state Department of Natural Resources. But the “pay for success” arrangement with EIP made the commitment attractive.

“It reduced our risk,” he said. “It gave us more confidence because we were paying at the end of the project” instead of paying quarterly installments or at multiple milestones along the way.

The combined size of the projects also brought economies of scale, Cohee said. The projected cost averaged around $700 per pound of nitrogen pollution kept out of the Bay, he said, compared to around $2,000 per pound for other stream restorations.

With the stabilization of the stream’s eroding channel and the planting of about 80 acres of streamside buffer, Cohee estimated the four projects would keep about 30,000 pounds of nitrogen and 2,700 pounds of phosphorus out of the water.

Cecil County chipped in a 10% match to the state grants for the Principio restoration, according to Kordell Wilen, the county’s development plans review chief. In doing so, the county got credit toward its Bay cleanup obligations at a bargain price.

The client for the two projects under way is the State Highways Administration, which in 2018 agreed to pay EIP a combined $23 million for the work, slated for completion next year.

The EIP projects are among several the agency has undertaken around Maryland to help meet its regulatory obligations to compensate for polluted runoff from state highways. SHA spokesman Charlie Gischlar said the Little Elk project, covering more than 7 miles of the stream, is probably one of the biggest the agency has funded.

The Cecil Land Trust has had a major role in EIP’s projects there. Bill Kilby, the trust’s executive director, said he and Nick Dilks, then with the nonprofit Conservation Fund, worked together about 20 years ago to preserve Cecil farmland under Maryland’s Rural Legacy program. That experience helped forge their partnership to put together large-scale stream restoration projects.

Kilby, a former longtime dairy farmer, used his ties to the local agricultural community to recruit farmers willing to participate. It helped that EIP was willing to cover the full cost of the work and even pay landowners for setting aside the land needed to establish riparian buffers.

“We had to go out and convince all these farmers,” he said. “They wanted to do it — most people would like to do it — but it’s just so cost-prohibitive to do it on their own.”

Still, it wasn’t easy to line up often independent-minded farmers along a targeted stretch of stream, Kilby said. The Little Elk restoration project, for instance, required the consent of 11 contiguous landowners, according to Troy Anderson, EIP’s assistant director operations.

Some hesitated, he said, because they worried the stream work would disrupt their farming operations or leave the landscape scarred by heavy construction equipment. Kilby assured them their concerns would be addressed, and anything disturbed put back once the project is done.

“The farmers are trusting us to do the right thing,” Kilby said. “I won’t say we haven’t done anything wrong. It’s pretty invasive work.” But the targeted streams have been so degraded by livestock incursions and other old farming practices, he said, that it’s not enough to just plant trees along the banks.

To do the Cecil projects, EIP has brought in Appalachian Stream Restoration, a West Virginia-based firm it has worked with before.

“We’ve probably built over 200,000 linear feet of stream with this team,” Anderson said.

Restoration involves re-sculpting and rebuilding streambeds to reduce erosion, but also to increase habitat for fish and other wildlife. In some cases, they straighten an overly meandering stretch a bit; in others, they add hairpin-shaped oxbows to slow down high flows.

The work involves clearing the land and removing some streamside trees. But the contractor uses the felled trunks to shore up stream banks, and the uprooted stumps are inserted in places, roots pointing skyward, to provide habitat.

Doug James, Appalachian’s site foreman, said the team works with farmers to minimize disruption. While looking over a sheep pasture where the next restoration would take place, he said they planned to work around a large tree under which the flock was seeking shelter from the sun.

“We want to be very careful and save everything that we can,” he said.

When construction begins, the stream’s water gets pumped through a pipe around the stretch of channel being reworked. When that’s finished, the water’s restored and tree seedlings, shrubs and grasses are planted along the banks.

Life returns before long to the channel. While pointing out results of some work in Cecil County, Anderson and Dave Urban, EIP’s managing director for operations, turned over a rock in a stretch of stream restored in the spring and found insects clinging to it. In a stretch of Principio Creek finished last year, tiny fish darted through clear, rippling water.

The land trust takes responsibility for maintaining the stream buffers after the projects are finished, with some funds provided by EIP for that purpose.

As an added environmental benefit, Kilby said, he’s persuaded some farmers who agree to the stream restoration to put their whole farm in land preservation.

“It’s the kind of people we’re working with,” he said. “They don’t want to see sediment going into Chesapeake Bay. We can make it happen.”

Don and Debbie Moore are among the landowners Kilby has enlisted for restoring Little Northeast Creek. They raise grain, hay and sheep on the 150-acre farm that has been in the Moore family for close to 75 years.

The Moores keep their sheep out of the creek. But decades ago, Don Moore explained, the farm was a dairy operation with no stream fencing. The erosion caused by those cattle getting in and out of the water remains.

Moore said he liked the idea of restoring the stream when Kilby first broached it two years ago. But he worried about the potential disturbance. His concerns were eased, he said, after learning from farmers involved in the earlier projects that they were satisfied with the results.

“We certainly want to be good stewards of the land,” Moore said, “and our goal is to hopefully leave it better than when we got it.”

To Kilby, it’s a testament to the power of networking and of building community trust. “I can’t imagine it getting done any other way.”

It’s not clear whether this is the start of a trend. The DNR’s Cohee said that while a few other sizable stream restorations are under way, he doesn’t foresee a lot of other companies being able or willing to front the costs of such projects. And there’s a need to focus more on reclaiming smaller stretches of streams in urban areas, where the costs are higher.

EIP’s Dilks, though, says he still sees opportunities to, as he put it, “do well and do good at the same time.”

“I would foresee this happening in lots of other geographies,” he said.