A lesson from Louisiana: Saving coastal communities

As coastal Louisiana continues to degrade, communities are left increasingly vulnerable to catastrophic storm flooding. The coastal wetlands, a century ago treated as disposable and often dredged for canals or drained and leveed for agriculture, grazing, or development, are actually an ecologically crucial habitat which acts as a natural buffer against extreme flooding. Restoring these coastal wetlands is imperative to protect Louisiana’s coast from further decline due to manmade and natural causes.

There is a clearer way forward to restore these fragile and valuable wetlands with the establishment of a new approach known as “Pay for Success” that incentivizes best possible outcomes.

{mosads}With little attention from the public or press, in 2017 Gov. John Bel Edwards (D) and the Louisiana State Legislature authorized in statute — and Louisiana’s Coastal Protection and Restoration Authority (CPRA) is beginning to implement today — a fundamentally different approach to building coastal marsh.

Anyone acquainted with the history of coastal engineering knows the story of engineer James Buchanan Eads and his wildly successful effort in the 1880s to tame the very lowest reach of the Mississippi River.

For eons the river had flowed shallow and uncontrolled into the Gulf; Eads’ scheme was to build massive jetties to direct a more concentrated flow at the river’s mouth, and scour a deep channel in the perennially shallow river bottom at South Pass. His great public work was a demonstrable success and allowed New Orleans to become the nation’s largest port.

While Eads’ technical accomplishment is widely studied, few appreciate the way he was compensated and allowed to invest in his civil achievement. Eads put his own money into the venture, agreeing to be paid by the government only upon a successful outcome.

 An excerpt on the Corps of Engineer’s website recounts the contract as follows:

“Eads offered not only to build jetties that would deepen South Pass but to maintain a 30-foot channel for the next 20 years. He promised to get results first and charge the government later. If he failed, he would be a ruined man; if he succeeded, the United States Government agreed to pay him $8 million!”

Today’s public policy wonks call this type of “at-risk” agreement an “Outcome-Based Performance Based Contract,” or “Pay-for-Success.” While generally not as dramatic as the one Eads offered, such arrangements between the public and private sector are enjoying a renaissance among government contracting authorities — including Louisiana’s Coastal Protection and Restoration Authority.

CPRA’s Outcome-Based Performance Contracting pilot program allows entrepreneurial companies like Restoration Systems, financed by institutional investors, to restore coastal wetlands and be reimbursed over time — but only if the restored marsh is healthy and functioning as promised.

The success of this new approach to government procurement could be very important for the coast.

Currently there is little incentive to optimize time and talent. Baton Rouge and its federal partners enter into a multitude of separate government contracts defining the many tasks and responsibilities of marsh restoration as separate “deliverables” to the government.

Planning, surveying, engineering, dredging; monitoring or mud buggies; all the many tasks of restoring the coast are purchased separately with no financial incentive for quick action, long-term responsibility, or creativity on the part of the contractor. All are paid by the “hour,” or “yard,” and the government bears the risk of ecological failure, which is more likely without a better, more accountable approach.

In the new procurement system payment is made on a different unit of measure: Acres.

{mossecondads}Only upon the delivery of thriving acres of restored marsh and new land over a five-year period will the government pay the contractor. As with Eads, the return to the provider comes in increments directly associated with successful production for the public good.

James Eads’ challenge to create modern New Orleans was existential, much like the current effort to protect Coastal Louisiana. It will be fascinating to see if more than a century later the same dynamic of pairing private investment with risk-taking can be brought to bear to repair nature rather than control it. Louisiana’s long history of entrepreneurialism, including Eads’ specific example, are reason to believe that harnessing private incentive in the interest of public purpose is as relevant and urgent a policy tool today as it was in Eads’ time. The restoration of coastal marsh and the survival of Louisiana’s coasts may very well depend on it.

George A. Howard is CEO of Restoration Systems in Raleigh, North Carolina and a former U.S. Senate staff member. Restoration Systems has restored 300 acres of coastal marsh since 2014 by transporting sand from the Mississippi River.