Nick Dilks is a managing partner with Baltimore-based Ecosystem Investment Partners, a private equity firm with $207 million under management established in 2006. The firm capitalizes on land-based environmental offset markets that drive revenue to the restoration of wetland, stream and endangered species habitat throughout the United States.
Q. WHAT IS MITIGATION BANKING AND HOW DOES IT APPLY TO YOUR FIRM’S BUSINESS MODEL?
Mitigation banks are land conservation and restoration investments that provide Clean Water Act compliance to infrastructure, mining and development projects with unavoidable, permitted impacts to wetlands and streams. When our firm acquires, restores and permanently protects wetlands and streams in advance of permitted impacts, we are awarded credits that are sold to entities in need of compliance in private, “willing buyer, willing seller” transactions.
EIP operates at a large scale, buying and restoring thousands of acres at a time, providing significant savings to our mitigation credit buyers while also creating regionally significant ecological benefits. Since the early ’80s, mitigation banking has resulted in more than a million acres of wetland and stream habitat restored and protected with private investments on private land. Our investments can also help companies or public works projects that have compliance obligations associated with impacts permitted under the Endangered Species Act or natural resource damage provisions of other environmental laws.
Q. HOW DO YOU FIND PROJECTS AND WHAT KINDS OF SCREENS DO YOU APPLY TO DEEM A PROJECT WORTHY OF INVESTMENT?
Demand for mitigation is created by normal business activity that has unavoidable impacts on wetlands, streams and endangered species habitat. Public works projects like highways and levees have to mitigate their impact, as do private energy, mining and development projects. These projects must minimize impacts to the greatest extent possible, but as America continues to strive for energy independence and our population expands, there will be significant impacts that must be offset.
We buy land that can provide meaningful benefits to water resources and to local communities if it’s restored properly; the benefits are greatest if we locate projects in regions where economic development is moving quickly. We work closely with the country’s leading nonprofit conservation groups; they bring tremendous expertise about regional conservation priorities, and we bring new financial resources.