Under an innovative approach, Maryland is funding seven Pay-for-Success projects in Pennsylvania and Maryland totaling $11M to reduce nutrient loads entering the Chesapeake Bay.
Maryland will fund these upstream projects through an interstate agency, the Susquehanna River Basin Commission, working with the Maryland Department of the Environment through a “pay-for-success” model. The model provides payment for verified environmental outcomes only upon demonstration of successful implementation. In this instance, upstream nutrient reductions will count toward Maryland’s Conowingo Watershed Implementation Plan obligations.
The projects will help mitigate water quality impacts caused by the Conowingo Dam on the Chesapeake Bay reaching its sediment trapping capacity and no longer preventing a portion of the nutrient pollutant load from flowing downstream. This first round of funding covers nitrogen reductions priced from approximately $150 per pound of nitrogen reduced, to as low as approximately $6 per pound, for a variety of practices. Total annual nitrogen loads are projected to be reduced by approximately 46,000 pounds per year, for a total of approximately 368,200 pounds of nitrogen reduced over the lifespans of the projects funded.
At the 2022 ECOS Spring Meeting, states heard about Maryland’s then-new Conservation Finance Act H.B. 653/S.B. 348, which allows environment, transportation, and other agencies to implement a pay-for-success contracting model with private investors. The law also authorizes the state and counties to buy “environmental outcomes” as a commodity, including soil carbon, carbon sequestration, and water quality outcomes. See more information on the recent request for proposals here and on CFA implementation here.
