Sometime next fall, barges loaded with sediment dredged from shipping channels will begin putting back something the Bay has taken away: an island.

During the next 24 years, if all goes according to plan, 38 million cubic yards of sediment will be used to rebuild a 1,110-acre complex of uplands and marshes off Maryland's Eastern Shore that will eventually provide habitat for birds, fish, shellfish and other Bay creatures.

And within a few months, work crews are expected to literally lay the groundwork for the project when they begin building the dikes that will shelter the new island.

The Poplar Island project will be the largest attempt ever made to put material dredged from shipping lanes to a "beneficial use," though it will carry a price tag of more than $450 million.

Proponents say it demonstrates how some of the 400 million cubic yards of sediment dredged annually from the nation's shipping lanes can be used as a resource rather than as a waste.

"We believe it could be a model for a lot of other ports," said John Gill, a biologist with the U.S. Fish and Wildlife Service's Chesapeake Bay Field Office. "I know there are concerns about the cost of Poplar Island, but we see it as a partial solution to the traditional negative environmental approaches to dredge material disposal."

In fact, while locating placement sites for dredged materials is often marked by controversy, nearly everyone supports the Poplar Island project. It is backed by watermen, environmentalists, the Maryland Port Administration, the Army Corps of Engineers, and every state and federal resource agency involved.

The state of Maryland has committed $35 million to begin construction this fall. In Congress, meanwhile, the House Appropriations Committee approved $15 million for the project July 16. "It's a really big step forward, we're really pleased," said Jerry Irvine, a spokesman for Rep. Steny Hoyer, D-Md., who had worked to get the funding. "This is a big victory. The upshot is [funding in the 1997 budget] looks really good."

Other bills in both the House and Senate would authorize continued funding through the life of the project.

A lack of funding support for the Poplar Island project, some worried, would have raised questions about the future of using dredged materials for such projects.

"If you have a beneficial use project like this, which has wide support, and can't get it done, that really calls into question how well we're going to be able to do any of this in other places," said Lee Crockett, a fishery biologist with the National Oceanic and Atmospheric Administrations Chesapeake Bay Office. "It just costs more to beneficially use dredge material."

Dredged material accounts for more than 80 percent of all material dumped into the nation's marine environment each year, according to a report from the U.S. Office of Technology Assessment. Typically, most of that has been treated as a waste and pumped into the water near shipping lanes. But that solution has raised concerns about potential impacts on fish and shellfish habitats, as well as water quality.

Increasingly, many see that sediment not as a waste, but as raw material that can be used for habitat restoration and enhancement. The Bay Program is developing a policy encouraging the use of dredged material to benefit living resources.

But officials acknowledge that - especially at a time when state and federal budgets are tight - major projects like Poplar Island may be increasingly difficult to initiate.

"You have two things going on," said Wayne Young, of Maryland Environmental Service, which provides environmental and technical services to the Maryland Port Administration for dredged material management. "You have the living resource needs of the Bay, and you have the navigation needs. They are not the same. To some extent, the hope is that there could be a win-win solution found in which materials from the navigation projects could be made available for beneficial use. The questions are, is it affordable and who pays for it?"

Funding formulas for dredging projects are complex, but typically the Army Corps of Engineers covers 75 percent, and the states or local "sponsors" pick up the rest. Sponsors are responsible for finding disposal sites.

But the corps evaluates all placement options, comparing them to the "least cost" environmentally acceptable solution

Depositing the material into the open water is almost always cheaper than hauling it someplace else and building an island, oyster reef or other habitat.

For Poplar Island, according to an environmental impact statement completed by the corps, the total dredging and construction cost is $458.4 million.

The "least cost" option would be putting the sediment into an area of the Bay known as the "deep trough," which runs 20 miles from Kent Island to the Little Choptank River and is up to 140 feet deep.

That option would avoid the expense of building an island, creating habitat, planting vegetation and - most significantly - hauling the sediment. Poplar Island is farther from the shipping channels than the deep trough.

Though dredging is typically done in the fall and winter to minimize environmental impacts, some consider the deep trough option unacceptable.

Water in the deep trough is typically depleted of oxygen - or anoxic - in the summer. Dumping sediment in anoxic conditions tends to pull nutrients out of the sediment and puts them back into the water where they trigger algae blooms that worsen Bay water quality. When that algae dies and sinks to the bottom, it decomposes in a process that further depletes water of the oxygen needed by many aquatic animals.

"I think dumping in the deep trough is throwing good money after bad," said John Wolflin, director of the USF&WS's Che-sapeake Bay Field Office. "Poplar Island is taking what is regarded by many people as a problem, the deposition of dredged material which has been historically just dumped back into the Bay, and putting that material to beneficial use."

Over the 24-year project life, dumping in the deep trough would cost only $151.2 million. That means the added cost of building Poplar Island is $307 million.

Because Poplar Island is more expensive than the least-cost option, it requires a special appropriation from Congress to make it a reality. In the fiscal year beginning Oct. 1, under the House bill, it will get the entire $15 million typically allotted for beneficial use projects in the entire nation. The Senate recently approved a bill authorizing funds for the life of the project.

"The argument that we have made consistently throughout this process is that there is a cost right now that no one is calculating by disposing of dredge material in the least-cost fashion, which generally means overboard dumping," said Charlie Stek, an aide to Sen. Paul Sarbanes, D-Md. "We're spending billions of dollars cleaning up the Chesapeake Bay. Should we in turn be dumping dredge material, adding sedimentation to the Bay, at the very time that we're spending all this money to clean it up?"

Still, funding for costly beneficial use projects at both the state and federal level must compete with other needs. The state's share must compete with other transportation needs, such as highway construction. And the federal money must compete with dredging needs throughout the nation.

While it is easy to put a price tag on the costs of Poplar Island, it is difficult to quantify the benefits of Poplar Island, though biologists - and the corps' environmental impact statement - say they will be substantial.

That's because island habitats, which offer refuge from human disturbance for many sensitive species, have rapidly vanished in recent decades.

These islands are particularly important habitats. They are nesting and production areas for many birds, such as snowy egrets, common egrets, cattle egrets, common terns, double-crested cormorants, great blue herons, little blue herons, green herons and black ducks. Diamondback terrapins nest on the beaches, and river otters fish from the island shores. Intertidal wetlands on the fringe provide refuge and spawning areas for fish and crabs.

Slowly, the islands have been sinking as sea levels have risen. Waves have eaten away at what's left. In the last 150 years, about 10,500 acres of islands have been lost in the middle eastern portion of the Bay.

Poplar Island is thought to have measured about 2,000 acres in the 1600s. In the 1800s, it still had more than 1,100 acres. And at the turn of the century it supported 15 families, a general store, a post office, a school, a church and a sawmill. By 1930, the community was abandoned as the island eroded away.

Poplar Island today consists of about 5 acres, divided among four tiny islands. It continues to erode at a rate of about 13 feet a year, and - barring any action - would be gone by the turn of the century.

As part of the project, resource agencies plan an extensive monitoring program to document not only how much habitat is created, but the numbers and types of birds, fish and other wildlife that use the island and nearby habitats.

The USF&WS's Gill said benefits should start showing up as soon as a containment dike is built around the island.

The dike, he said, should immediately help recreate an 800-acre cove that historically existed near the island. When the waves are blocked, Bay grasses should return to the cove, Gill said, improving water quality and providing new habitat for crabs and juvenile fish.

"When the outer part of the island disappeared, it opened that area up to pretty severe wave climate, which prevented the grasses from recolonizing," Gill said. "So we're hoping - I would put pretty good odds on this - that we would get that bed back."

As envisioned, the Poplar Island project would consist of a 35,000-foot dike, rising 8 to 12 feet above water level, that would enclose a 1,110-acre dredge placement site.

Over the next 24 years, it would be filled with sediment dredged out of some of the 50-foot-deep shipping channels that connect the Port of Baltimore to the mouth of the Bay and the Atlantic Ocean.

The site would receive about 2 million cubic yards of dredge material each year. That material would be placed into "cells" at the island. As the cells are filled, they would be used to create a mix of habitats including uplands, wetlands and tidal pools. When finished, about half the site would be uplands, and half wetlands. Because the cells would be completed incrementally, some of the island would be available as habitat before the entire project was complete.

In the final stages, openings would be cut in the dike to allow water to flow back and forth between the island and the Bay. Most of the dike would remain in place to prevent the restored island from once again eroding into the Bay.

Overall, the project would restore nearly 2 square miles of diverse habitats that could be used by species throughout the entire Bay food chain, from microscopic phytoplankton and zooplankton to fish and crabs to herons and bald eagles.

Poplar Island is also critical to Maryland shipping. The state needs Poplar Island to ensure there are enough placement sites to meet dredging needs for the Port of Baltimore in coming years.

The port handles about 40 million tons of commerce a year, and generates 87,000 jobs. Economic activity related directly or indirectly to the port represents 10 percent of Maryland's entire economy, and dredging is critical to its survival.

The dredge material that will be sent to Poplar Island each year accounts for a large chunk of port's disposal needs. Typically, 4 million to 5 million cubic yards of material is dredged each year to maintain channels that lead to the port, though that amount will pass 10 million cubic yards in some of the coming years as certain navigation lanes are enlarged.

Baltimore has 126 miles of shipping lanes to maintain, more than any other port in the nation. The amount that must be dredged has increased in recent years as ships have gotten bigger.

While Poplar Island will handle a large portion of that material, it cannot handle it all. The state and federal agencies are exploring a full range of placement options, such as expanding an existing open-water placement site in the Upper Bay.

A plan identifying placement sites to handle dredge materials for the next two decades is to be completed by Sept. 1.

Because of the high cost of Poplar Island, the state will strike a balance by using a mix of lower cost disposal options, such as expanding the existing open-water disposal site in the Upper Bay, to meet its dredging needs. "We need a range of options," said Frank Hamons, manager of harbor development for the Maryland Port Administration. "Poplar by itself will not solve our dredge needs."