Maryland is pioneering a cross-state conservation finance model to fund pollution reduction outside its borders while still meeting environmental obligations.
Treating wood as a public utility, rather than a waste product, could reduce fire risk, support insurer re-entry, and unlock economic value that currently goes up in smoke.
Treating wood as a public utility, rather than a waste product, could reduce fire risk, support insurer re-entry, and unlock economic value that currently goes up in smoke.
The Weekly: How Maryland is Spending Its Conservation Dollars in Pennsylvania
Maryland is pioneering a cross-state conservation finance model to fund pollution reduction outside its borders while still meeting environmental obligations.
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The Chesapeake Bay watershed covers 64,000 square miles, stretching from upstate New York through Pennsylvania and down into Maryland and Virginia. Water—and pollutants like nitrogen and phosphorus—flows regardless of state lines, but states sharing that watershed have, in many ways, managed their piece of it independently, a fragmented approach to an interconnected ecological system.
Maryland is now testing a different model: paying for pollution reduction across multiple states in the Susquehanna watershed, an eligible subwatershed of the Chesapeake Bay watershed.
Under the Chesapeake Bay Watershed Agreement, each state has nutrient-reduction targets to restore the Bay’s health. Through the Conowingo Pay for Success Program, Maryland has started spending its own conservation dollars on projects outside its borders, crediting the results toward its own nutrient-reduction obligations.
The model is administered through the Susquehanna River Basin Commission using $25 million in Maryland funding, and the model flips traditional conservation grant-making. Rather than reimbursing contractors for specific activities—a cover crop, a riparian buffer, etc.—the program purchases a single unit of environmental outcome: pounds of nitrogen kept out of the Bay. Applicants compete on cost per pound, meaning projects are selected and paid based on results rather than particular nutrient-reduction practices.
The legal predicate was Maryland’s 2022 Conservation Finance Act, which authorized the state to spend conservation funds outside its borders, provided the receiving state agreed to credit Maryland for the environmental outcomes achieved. “That was pretty radical at the time,” says Harry Huntley, agriculture policy lead at Environmental Policy Innovation Center (EPIC).
The common unit of measurement makes cross-state collaboration possible, says Grace Edinger, EPIC's Conservation Finance Policy Lead. “It can be very challenging to do a stream restoration project in Pennsylvania and compare that to a change in an agricultural practice in Maryland,” she says. Now, pounds of nitrogen kept out of the water become the common currency, which is easily quantifiable. “We all have the same outcome that can be compared apples to apples between states,” says Edinger. “Having that common language is a huge game changer.”
The communication infrastructure matters almost as much as the financing mechanism. “We have a Maryland program, a Pennsylvania program, a Virginia program, and the Susquehanna River Basin Commission that works across state lines, all with the same goal,” says Edinger. “Now they're all coming together and talking about it.”
Huntley and Edinger recently released a paper that examines the four programs to understand which aspects of their design lead to greater cost effectiveness. They found that each program makes choices the others could learn from.
“Maryland has these two things you can copy from Virginia; Virginia has this thing you can copy from Pennsylvania,” says Huntley. “Ultimately, everybody could have a better program.”
Maryland has always had a stake in what happens upstream, and this model makes that stake financially explicit. “If the outcome is Pennsylvania farmers using cover crops, why would Maryland fund Pennsylvania farmers?” says Huntley. “But when you can agree on this quantification methodology, it makes perfect sense that Maryland would pay for nitrogen reductions in the Chesapeake Bay, because we care about the Chesapeake Bay.”
It’s a replicable template, with three preconditions: a quantifiable outcome all parties agree to measure, authorization for one jurisdiction to spend outside its borders, and a coordinating body that can run the procurement.
Other states are paying attention: Washington has been conducting legal analysis on Pay for Success programs, California's Department of Water Resources runs similar outcome-based contracts, and lessons learned are finding their way to Missouri and Arizona. “For a long time in the Chesapeake Bay region, there were all these researchers saying, ‘Hey, this is the thing that makes sense’,” says Huntley. “Now there has been enough momentum here to show that not only can it be done, but it’s actually a great deal for taxpayers and waterways.”
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Get Ready for a Year of Chaotic Weather in the U.S. | WIRED | A looming Western heat wave, low snowpack, and a potential El Niño signal a year of volatile U.S. weather. WIRED explains how natural climate cycles will interact with human-driven warming to amplify extremes, increasing risks of drought, wildfire, and flooding across regions.
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Real Estate & Construction
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Private Investment
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What is Resilient Critical Infrastructure? | The Epicenter Editors | The Epicenter defines infrastructure as the physical, economic, and social systems central to the functioning of an economy and a society. Resiliency in critical infrastructure is about the ability to withstand extreme climate impacts and recover from them quickly.
Extreme Heat: Opportunities for Investors | The Epicenter Editors | Investors can reduce the costs and dangers of extreme heat by fortifying the electrical grid and built environment, advancing alternative cooling innovations, developing public-private partnerships in cooling infrastructure, investing in blended finance tools, and scaling insurance innovations.
The Statistic of the Week
1.5 million acres
1.5 million acres have already burned in wildfires this year, more than triple the 10-year average.
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The Epicenter helps decision makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
Treating wood as a public utility, rather than a waste product, could reduce fire risk, support insurer re-entry, and unlock economic value that currently goes up in smoke.
Treating wood as a public utility, rather than a waste product, could reduce fire risk, support insurer re-entry, and unlock economic value that currently goes up in smoke.
RSG 3-D's non-combustible panel system offers a financially competitive alternative to conventional construction that delivers wildfire, earthquake, and hurricane resilience.
