When event planners huddled last fall at the Baltimore Convention Center for a workshop on sustainable conferences, they chowed down on locally sourced foods, including oysters on the half shell farmed on the Eastern Shore.

Those shellfish earned a green premium. The convention center not only paid to stock its raw bar, but it also agreed to pay extra for an ecosystem service the oysters provided before being harvested: removing water-fouling nitrogen from the Chesapeake Bay.

Raw bar

The Baltimore Convention Center offered a raw bar for a workshop last fall and agreed to pay extra for the ecosystem service the oysters provided when they removed nitrogen from the water before being harvested. (Photo courtesy of Baltimore Convention Center)

That deal is among the first of its kind to be struck under Maryland’s water quality trading program, which aims to harness the power of the marketplace to reduce nutrient and sediment pollution in the Bay and its tributaries.

The transaction was a drop in the proverbial bucket, based on the removal of just four pounds of nitrogen, when more than 200 million pounds of that nutrient get into the Chesapeake annually from wastewater, farm runoff and urban stormwater. But aquaculture advocates, who’ve been waiting years to see a deal like this, hope that many more will follow.

“It’s an organic solution to an age-old problem,” said Johnny Shockley, chairman of Blue Oyster Environmental, an aquaculture company in Cambridge that brokered the nitrogen credit deal.

Shockley, a third-generation waterman, gave up traditional crabbing and oystering a decade ago to go into oyster farming. Last year, he started Blue Oyster Environmental to help scale up Maryland’s aquaculture industry while simultaneously helping to improve the Bay’s water quality. It’s a dream shared by others.

“Maryland and Virginia have bought into the concept of using a market-based approach to clean up the Chesapeake,” Shockley said. “And it just so happens that oysters and oyster aquaculture fit very neatly into that concept as a best management practice.”

Getting from concept to the market, though, has been a slow and painstaking process that’s only now begun to show tentative results.

The concept seems straightforward. Oysters are prolific filter feeders, each one pumping several gallons of water daily through its gills to sift out and consume algae and other organic particles.

As they feed, oysters assimilate some of the nutrients from their diet into their gray, slimy tissue and hard shells. They neutralize some more algae-feeding nitrogen by turning it into a harmless gas. And they make the water clearer by removing some of the sediment suspended in it.

For those reasons and more, scientists, environmentalists and policy makers have long regarded oysters as a missing link to reviving the Chesapeake’s health. But overharvesting, disease and habitat loss have depleted the bivalve population — and its filtration capacity — to 1% or less of historic levels. To help revive the Bay, both Maryland and Virginia have pledged to conduct large-scale oyster restoration projects by 2025 in five of its tributaries. Virginia recently added a sixth, the Elizabeth River, to its commitment.

Those efforts are under the gun, though, with just two of the 11 restoration projects finished so far. Even when completed, they’ll still be just a fraction of what’s needed to return oysters to their one-time abundance.

“We want to support their restoration,” said Suzanne Dorsey, assistant secretary of the Maryland Department of the Environment. Aquaculture, she added, “is a really important approach to do that.” 

Trading on oysters

Federal and state officials, along with some environmentalists, hope to enlist oyster aquaculture in the Bay restoration effort through water quality trading. Typically, trading can occur when a municipality or some other discharger needs to reduce the amount of nutrient pollution it generates. Instead of making the cut from its own activities, the polluter could pay a farmer to plant trees or do something else — at less expense — to prevent a comparable amount of nutrients from getting in the water elsewhere. With their ability to soak up nutrients, oysters are seen as another option.

In December 2016, after studying the scientific literature, a panel of experts advising the federal-state Chesapeake Bay Program recommended awarding nitrogen removal credits to aquaculture operations based on the number and size of oysters that are harvested.

It’s taken years to work out the details and set ground rules aimed at ensuring the nutrient reductions claimed are real. But as of April, 10 different oyster farmers had listed credits for sale on the MDE’s online “trading board.” No deals had been finalized, but Greg Sandi, who helps manage the MDE trading program, said he knew of two or three in varying stages of negotiation.

Jordan and Johnny Schockley, Blue Oyster Environmental

Jordan Shockley, left, CEO of Blue Oyster and his father, Johnny, at the Blue Oyster Environmental storefront office in Cambridge.

With only a few deals in the works, it’s too early to say what growers might earn from selling credits. Because trading is new in Maryland, the price paid can range from $75 per pound to a few thousand dollars, the MDE’s Dorsey said. Credits from sales of farmed oysters, though, are only good for the year in which they were harvested, so anyone needing offsets would have to pay for them annually.

The convention center deal is basically done, awaiting only a check to be issued for the nitrogen credits purchased, said the facility’s deputy director, Mac Campbell.

Campbell said the deal grew out of an encounter he had with Jordan Shockley, Johnny’s son and CEO of Blue Oyster Environmental. The convention center wants to market itself as a venue for sustainable meetings, Campbell explained, by serving local foods and shrinking the environmental footprint of its events.

“I’d never heard of oyster nitrogen offset credits before,” Campbell said. But, he added, “When you think Baltimore and you’re bringing your event here, it’s all about the Bay. It’s about crabs and oysters. I think it’s a logical line to draw.”

So, Blue Oyster Environmental arranged for the convention center to buy 400 farm-raised oysters and pay $1,600 extra for the related nutrient reduction credits for its sustainable events session from the Orchard Point Oyster Co.

Campbell said he viewed it as a test to see how such transactions work and how they’d be accepted.

Scott Budden, co-owner of Orchard Point, said the significance of the deal goes beyond the relatively small amount of money involved this time.

“It is a way to compensate growers for the service they’re providing the public,’’ he said. Oysters do what no other pollution control can, he said, by removing nutrients after they’ve gotten into the water.

The payments are especially welcome now, he added, because oyster growers have had two tough years and appear in for a third. Harvests suffered in 2018 when record rainfall turned the Bay fresh, and again last year, when hatcheries couldn’t produce the spat needed for a new crop. Now, the coronavirus pandemic has shut growers’ markets with restaurants and raw bars.

“Farming’s very hard work, and it’s not a get rich scheme,” Budden said. “Any little bit is going to help.” 

Demonstrating possibility

The convention center deal was purely voluntary. Usually, trades are to satisfy a regulatory requirement. Anne Arundel County, for example, has agreed to purchase nitrogen and phosphorus removal credits from an oyster farm on the West River south of Annapolis to help meet state mandates for treating stormwater runoff.

Erik Michelsen, who runs the county’s watershed protection and restoration program, said Anne Arundel will be paying $4,950 for 107 pounds of nitrogen and 12 pounds of phosphorus removed from the river by oysters cultivated and harvested there by Rob and Terry Witt of Shady Side.

The credits being bought are equivalent to treating runoff from 3 acres of impervious surface, Michelsen said — a smidgeon of roughly 5,000 acres of pavement, buildings and other hard surfaces in the county. But Michelsen said county officials think it’s worth “demonstrating the possibility that this can be done by supporting local aquaculture — and maybe catalyzing efforts on a larger scale.”

Terry Witt already thinks it’s “a huge thing.” She and her husband Rob raise oysters on leased bottom to supplement what they can harvest in the wild. The deal with Anne Arundel was brokered through the Maryland Seafood Cooperative, of which she is board president.

“It’s a daunting thing to plant oysters, and you have to wait three to four years … before you can harvest them,” she said. Being paid for nutrient reduction credits “is like icing on the cake,” she said. The added income can help farmers grow their businesses, she said.

Still, there are challenges. The prospective buyers on the MDE website are industries or government entities looking to buy more and different credits than any individual oyster farmer has to offer. And trades are limited, geographically. In an effort to see that cleanup occurs where pollution is produced, MDE specified that credits can only be sold in the watershed where they’re generated. Many oyster farms are in rural areas on the Eastern Shore and in Southern Maryland, with few industries or wastewater plants.

“There’s nothing upriver of us but marsh,” said Ted Cooney, founder of Madhouse Oysters on Hoopers Island in Dorchester County.

The MDE’s Sandi acknowledged that the opportunities for oyster farmers to sell their credits are limited now. But he said that MDE officials are looking for “new and creative ways” to incentivize trades. 

VA holds back

Fledgling as the market is, at least some Maryland growers are trying it out. While Virginia’s aquaculture industry is much larger than Maryland’s, growers there have shown little interest to date.

“It’s something we’ve all talked about, and thus far, no one is convinced that this is a money-making proposition for growers,” said Mike Oesterling, executive director of the Shellfish Growers of Virginia.

One, the Oyster Company of Virginia, recognized the potential early on of trading and offsets. It got state approval in 2015 and again in 2018 to earn and sell nutrient removal credits. Tolar Nolley, the company’s founder, said the “in situ nutrient remediation program” he’s crafted can boost the aquaculture industry and help clean the Bay at the same time.

“Through modeled and measured science, we do have an opportunity to accelerate domestic seafood in the Chesapeake Bay, to help with restoration projects and also to help stabilize the waterfront communities,” Nolley said.

So far, though, Nolley’s company has yet to apply for state approval of any nutrient credits, according to Allan Brockenbrough, water permits manager for the Virginia Department of Environmental Quality. Nolley said that a significant deal is in the works. But the state regulator expressed doubt that aquaculture can gain much traction in the state’s trading market.

“I don’t know if it will ever take off,” Brockenbrough said. “It takes an awful lot of oysters to generate a reasonable credit, and you’re competing against other credits produced on the market by wastewater plants that are also readily available.”

Johnny and Jordan Shockley acknowledge the challenges, but say they’re working to overcome them. They want to “bundle” credits from various growers to make them more attractive to buyers, and they’re looking for ways to structure deals that aren’t so bound by geography. They’re convinced that more growers will want in once they see credits finally getting sold.

One boost might come from the state’s Clean Water Commerce Act, under which the MDE is authorized to spend up to $10 million in the coming year for “the purchase of cost-effective nitrogen, phosphorus and sediment load reductions” that will help clean up the Bay. Those funds can buy reductions anywhere in the state, an MDE spokesman said.

The Blue Oyster team also is hoping that the Bay Program will soon approve granting water quality credits for restoring oyster reefs. With hundreds of acres to be seeded with billions of hatchery spat, those projects could reduce large amounts of nitrogen and phosphorus — much more than any single oyster farm. And the credits could be perpetual rather than annual, because the oysters will stay in the water and — assuming they survive — continue converting nitrogen to harmless gas.

Traditional watermen would also like to get a piece of the nutrient trading action, with payment for the water-fouling nutrients removed when they harvest oysters from public reefs. The Bay Program expert panel is looking at proposing limited credit for harvesting hatchery-produced oysters from public fishing grounds, according to the panel’s chair, Jeff Cornwell, a research professor at the University of Maryland Center for Environmental Science’s Horn Point Laboratory.

Eventually, the Shockleys said, they hope the aquaculture industry can tap into a stream of revenue similar in size to the $25 billion a year that now is spent on mitigating wetlands losses in the United States. They’re planning to develop a modern oyster-processing operation in Cambridge and even create a ”lifestyle brand” around oysters that can engage the public more in the restoration effort.

“We’re looking to find solutions,” Johnny Shockley said. While there’s a lot of friction now over oyster restoration and aquaculture, he said, “we’re looking to bring the community together, the NGOs [nongovernmental organizations], the watermen and the entire population, to be focused on putting more oysters in the Bay.”

Tim Wheeler is the Bay Journal's associate editor and senior writer, based in Maryland. You can reach him at 410-409-3469 or twheeler@bayjournal.com.

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