Estimation and Analysis of Expenses of In-Lieu-Fee Projects that Mitigate Damage to Streams from Land Disturbance in North Carolina

As North Carolina’s economy has grown, the need to mitigate adverse impacts of land disturbance on aquatic ecosystems has also grown. When land disturbance adversely affects streams, a developer or the state’s Department of Transportation can satisfy mitigation requirements through payment of fees to the state’s Ecosystem Enhancement Program (EEP). EEP then manages a stream mitigation project on behalf of the responsible party. EEP has had regulatory authority to require stream mitigation for 10 years. The needs of EEP to reassess its mitigation fee and identify ways to reduce costs of the program have grown over the decade. The first objective of this study was to account for all EEP expenses of design-bid and design-bid-build projects. The second objective was to analyze the determinants of contractual expenses with a cost function. EEP has spent or committed to spend $46.34 million for 45 design-build or designbid-build projects to restore or enhance 191,374 ft. of streams. Expenses per foot have been $242.12. Given its mandate to cover expenses for stream mitigation, EEP must raise mitigation fees, especially those for urban projects, make changes to reduce project expenses, or do both. As the length of a restored or enhanced stream increases, the expenses per foot decrease. The decrease is more pronounced in undeveloped, rural areas. Thus, EEP could produce mitigation for less expense by financing fewer projects with longer reaches or by financing more projects in undeveloped, rural areas. Other states with in-lieu-fee programs for compensatory mitigation might also use these results to reduce contractual expenses.