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Investing in the environment pays off for Woodberry firm

Nick Dilks, managing partner at Ecosystem Investment Partners
Nick Dilks, managing partner at Ecosystem Investment Partners - Steve Ruark
Baltimore’s Woodberry neighborhood, known for its eponymous farm-to-table restaurant and rehabbed historic buildings, seems an unlikely setting for an investment firm. But then again, the folks who work at Ecosystem Investment Partners aren’t your typical investors.

Ecosystem raises money to restore and protect rural streams and wetlands — a field known as mitigation banking, which has been growing the last few years. So it seems only fitting that this eco-friendly investment firm moved its eight employees from Towson to Woodberry last year to help out the environment in its own backyard. Employees are now near the light rail and inspiring redevelopment projects, like the Clipper Mill complex, home to Woodberry Kitchen.

“We liked the neighborhood for its proximity to transit and the green redevelopment,” says Katherine Birnie, Ecosystem’s director of markets.

Restoring wetlands allows Ecosystem to bank and sell conservation credits to developers who need them to fulfill federal government regulations like the Clean Water Act. It just raised $181 million from individuals, institutions and foundations for its second fund, which it’s investing in three land restoration projects: two in Louisiana and one in Minnesota. It has also invested in three land restoration projects — also known as “mitigation banks” — in Virginia and Delaware.

The field of mitigation banking has been growing since the economy started to recover a few years ago and hit an all time high last year, says Luke Zorich, director of member services at the National Mitigation Banking Association. More than 514,000 stream and wetland credits were awarded last year.

The association has two other members in Maryland: Greenvest LLC in Annapolis and Environmental Banc & Exchange in Owings Mills. Mitigation banking companies all share the same goal, that is to have no net loss in U.S. land, Zorich says.

Ecosystem’s clients include the City of Chesapeake in Virginia, the Hampton Roads Executive Airport, the U.S. Navy and a handful of residential developers. 

Tara Fisher, an environmental specialist with the Public Works Department of the City of Chesapeake, Va., will be using Ecosystem to get its two-land connector road in Virginia Beach, Va., off the ground over the next six months. Ecosystem is investing in a 966-acre wetland in Chesapeake, Va., known as the Dover Farm Bank.

“Everyone we’ve met has been very forthcoming, telling us what's going on as they're creating the bank, letting us come for visits,” Fisher says of Ecosystem.

Interest in companies like Ecosystem is growing among investors who want to invest in something other than stocks and bonds, says Matthew Weinschenk, senior analyst at Wall Street Daily, published by Baltimore’s Agora Inc. Investors get their returns from Ecosystem, after it sells credits to developers.

“There’s always going to be a demand for truly alternative investments, especially since the financial crisis.”

Ecosystem’s staff is an eclectic group, with their skills mimicking what’s needed to do the restoration. First, the company has to acquire the land, which calls for real estate experts. Next, various federal agencies need to declare the land a “mitigation bank.” That means that the land is permanently protected because of its natural resources. Lastly, Ecosystem sells the credits to developers, and that’s where their financial gurus step in. Being able to be an “all-in-one project developer” is key. Traditionally, investment companies acquire protected land rather than finding and restoring the land on their own.

Ecosystem actively works with conservation groups so it has greater access to projects.

“Working with them gives us greater opportunity to access great projects,” Ecosystem Managing Partner Nick Dilks says. “They’re also very knowledgeable about the landscape across the country.”

Typically, mitigation banks restore land as needed by developers, which means they’re only able to restore a few acres at a time. Some of Ecosystem’s projects restore as much 10,000 acres or more.

Says Birnie, “Given that development needs to happen and is going to happen, we offer a way for there to be a beneficial environmental outcome.”

Katharine Schildt Scrivener is a freelance writer in Federal Hill. She authors the blog From A to Pink.

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