There is a federal law that says when wetlands are destroyed by development or industry, they must be replaced somewhere nearby. It is a provision of the Clean Water Act in place since 1980, but it’s getting new attention because of increased industrial development in Louisiana.
There is a giant pipe that runs four miles from the Mississippi River over land to an expanse of open water just south of Belle Chasse on the West Bank. Rich murky river water spews from the pipe, so that the mud will settle and build new land. This open water used to be healthy marsh.
George Howard, a North Carolinan with a hearty laugh, plans to make it healthy again. He’s the CEO of Restoration Systems.
His giant rubber boots stuck in the mud on a sunny day as he watched excavators spread the sediment out in the swamp to build land. It’s a noisy, messy job, “That is the absolute brand-newest part of the state of Louisiana. It is a nice kind of darkish-grey color that is a mixture of sand which has come from everywhere from Colorado to Minnesota to Tennessee.”
Restoration Systems restores wetlands and streams across the country -- for profit. Once the company has restored a patch of land, it sells credits for that work to companies who need to offset their footprint. A 1980 provision of the Clean Water Act requires that if you develop any part of the wetlands -- be it a petrochemical plant or a levee -- you have to preserve or restore wetlands nearby to make up for it.
Howard’s partner in this project is Great Lakes Dredging, and it’s fronting $20 million to rebuild about 300 acres of marsh. “This is privately financed entirely,” says Howard. “We’re actually doing it speculatively. There is no government money or private money, or outside private money… going into the project right now.”
This process of a private company preserving or restoring land to offset someone else’s development is called a mitigation bank.
It has to be approved by the Army Corps of Engineers. Chief of the Corps’s regulatory office, Martin Mayer, says sometimes developers do the restoration work themselves, but usually they buy credits in a mitigation bank. Louisiana has more than 100.
“The majority of the banks… virtually every one of them, is a privately-sponsored, entrepreneurial bank,” says Mayer.
The Corps approves these for-profit restoration projects and also authorizes the offset transactions.
It can be pretty lucrative. Howard estimates that one acre of the kind of marsh he’s restoring could sell for between $35,000 and $150,000.
It is the Corps that determines the ecological value of any given land, based on how much storm surge it absorbs, for example, or how much habitat it creates for plants and animals.
Mark Davis directs Tulane’s Institute on Water Resources Law and Policy. For all of the state’s talk about protecting the coast, a market for destruction of wetlands may be necessary but that doesn’t make it a good thing.
“To me one of the great values of mitigation banks is that they show you what the actual value of the wetlands are, and it’s not small,” says Davis. “If it costs thousands and thousands of dollars to mitigate, then perhaps we should think a whole lot more carefully about whether we should conserve them, because it’s going to be very expensive to restore them.”
The demand for credits fluctuates. But Mayer, with the Corps, says interest in mitigation banking is high right now because of the growth of industry along the Mississippi River. If a chemical company wants to build a 50-acre plant along the river in Baton Rouge, it will need to buy offsets for the number of acres of wetland it impacts.
Mayer says, “There is a lot of interest in the oil and gas industry with the LNG facilities. So… we’re very busy at this time.”
It is an indicator of a thriving energy economy that it’s still worth building in the wetlands even with the cost of offsets. But as the state battles an eroding coast and looks for long-term solutions, Davis says offsets are not the answer.
“In an ideal world there wouldn’t be as much demand as they may be counting on because you would be avoiding and minimizing your impacts, rather than compensating for them,” says Davis.
A mitigation bank is not true restoration, he says. When you do the math, you wind up with the same amount of wetlands, not more.
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