2022: Spring Damage Control

When you start a company, John Yarchoan ’13 tells me from behind the wheel of a rental car, with the Philadelphia skyline in the rearview mirror, you go in with the idea that it’s going to be huge, that it will do groundbreaking work, that it might even change the world. And then you find yourself dealing with “a nice old lady who wants to make sure she can still see her husband’s gravesite.”

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Yarchoan at a rain garden his company built in Northeast Washington, D.C., to capture stormwater and prevent flooding.

The nice old lady in question is Judy Angstadt, and after an hour or so in the car, we arrive at her house in the tiny township of Oley, Pa., 50 miles northwest of Philly. The off-white, two-story house stands near a stone-sided barn and a grain silo. Cornfields abut one side of the house; across the road, the land slopes gently down 
toward 27 acres of newly protected wildlife habitat, including a stream deemed one of “exceptional value” by the Pennsylvania Department of Environmental Protection. The memorial to Angstadt’s late husband, Roy, sits a few dozen feet from this stream and about 300 yards from her front door, in a field of overgrown grasses, wildflowers and milkweed. Beyond the field, the land is a rich green-yellow in the July sun. At one edge of the clearing stands an impressive—albeit dead—tree, towering over the stand of oaks behind it. Emergent wetlands blur the boundary between land and water as paper-thin pools appear at the base of the sedges, making for soggy conditions underfoot but providing excellent habitat for threatened bog turtles and the multitudinous other species that make up a thriving ecosystem.

Included in this ecosystem is the state’s largest maternity colony of the endangered Indiana bat; it’s these bats, along with the turtles and the stream, that have brought Yarchoan here to Oley. Since founding an environmental mitigation company, Magnolia, in 2016, he has worked with dozens of businesses to offset the environmental damage they do in the course of new development and their normal operations. His work mostly involves restoring and protecting habitats similar to those that were damaged, usually on private property.

On this project in Oley, Yarchoan has been working with Angstadt, as well as with a large cast: the current owner of the 27 acres and the surrounding farmland, a Mennonite farmer; the former property owner, who’d sold the land’s conservation easement to Magnolia; the Pennsylvania Department of Environmental Protection; the Pennsylvania Game Commission; and a local conservation group. Magnolia’s goal is threefold: to protect the property from ever being developed or farmed, to improve the quality of habitat for the bats and turtles, and to stabilize the banks of the stream.

Various state and federal regulations require that, when a company causes unavoidable environmental damage, the company must make up for it by financing the creation of equivalent habitat somewhere nearby, improving existing habitat or protecting habitat that might otherwise be damaged or destroyed. This has led to a thriving market for so-called—and sometimes controversial—offset credits. A company like Magnolia can oversee the restoration, improvement or protection of habitat, and then sell the “credits” generated from that work (and verified by a 
governing agency) to a company that needs to satisfy its legal environmental obligations. At this site, Yarchoan and Magnolia are selling these offset credits to two energy companies: one whose work has disturbed bat and turtle habitat and another that impacted a stream elsewhere in the watershed.

Magnolia’s work spans multiple states and biomes, from this Pennsylvania stream, to pine snakes in New Jersey’s Pinelands, to greater sage grouse habitat in Nevada. The process starts, says Yarchoan, with an analysis of where there might be demand for offset credits—that is to say, what companies are pursuing which sorts of projects, and what environmental damage those projects are likely to cause. Companies will also approach him and let him know they’re planning a project and expect to need certain types of offsets; Magnolia’s most frequent clients are renewable energy developers.

Each project presents different challenges. “If we’re talking about an endangered species offset, it means we have to rely on really good data on where these endangered species are, what type of habitat they use and what types of projects will meaningfully improve their outcome,” Yarchoan says. This can include, as at the Pennsylvania site, protecting and improving habitat for bats; or it may mean that Magnolia pays a farmer to allow a wetland to be restored on a property. In most cases, these rural stakeholders make the projects possible.

Yarchoan has an affable demeanor and a ready, slightly sheepish smile. For him, working with those stakeholders is part of the appeal of his work: “You get to see the ground floor of environmentalism in so many different communities, and see how different people think about the environment and how that interfaces with politics and the law.” The initial interactions aren’t always easy; when he approaches landowners with an offer, he says, “They might say, ‘Yes’; they might say, ‘Screw you.’” Or, he says, they might be interested, but they want to negotiate.

While the concept of environmental mitigation is, on its face, simple—if you hurt the Earth, you have to make up for that somehow—the execution is fractally complicated. The closer you look, the more complexity reveals itself. The idea of making up for environmental damage in one place with environmental improvement or protection in another emerged from the Clean Water Act of 1972. Second perhaps only to the Endangered Species Act in terms of environmental importance and impact in the United States, it enacted strong protections for the country’s rivers, streams and wetlands. But the economies of capitalism require new construction, and so, when impacts on waterways are deemed unavoidable, the Clean Water Act demands compensation. The governing principle is “no net loss.” What that phrase actually means is a topic of some debate.

Man-made replacement of an ecosystem is no easy feat—and some say it may be impossible, at least on a human timescale. “There’s only very limited elements of biodiversity we can confidently replace,” says one expert in conservation offsets, Martine Maron, a professor of environmental management at the University of Queensland. “Vastly more important is avoidance of impacts in the first place.” Maron and others, like David Moreno Mateos, a restoration ecologist at the Harvard Graduate School of 
Design, view the goal of “no net loss” as, in some ways, misleading. A newly created wetland that’s the same size as a wetland that was drained to make way for new construction, for example, won’t have nearly the same complex food web and ecological networks that the destroyed wetland had.

Some regulations try to account for that by requiring more acres of new wetland or habitat to be created than were damaged. Any ecosystem that has been working for tens of thousands of years will probably 
require thousands of years to recover from degradation, argues Moreno Mateos. To make up for that loss, you may need to protect or restore hundreds of times more acreage than what was damaged.

Critics also take issue with the idea that protecting existing habitat counts toward the goal of “no net loss.” In Maron’s words: “If you’re getting credits that you can exchange for a loss simply by protecting something that’s already there, it means there will be less afterward than before, but that can still qualify as ‘no net loss.’”

Government agencies are studying these problems, but few experts believe we should do away with offsets altogether. “They could work in quite a number of ways,” says Maron, including as a disincentive for certain projects, if the offsets are prohibitively expensive. “This is the way that a market-type mechanism is meant to work,” she says: not just as a way to make up for environmental damage, but as a way to include its true cost in the equation.

Yarchoan is well-versed in the criticisms around offsets, and notes that Magnolia stays away from projects that require the creation of brand-new wetlands. But, like others in his field, he believes that making up for the damage in some way, even if it’s not a full reimbursement, is better than not. “These projects would occur,” he says, “whether or not the government required this offsetting.”

Mark Bernstein, who co-founded 
Magnolia with Yarchoan, adds that generally Magnolia restores an acreage that is several times larger than what was lost or damaged. The company tries to account for the time it will take for restored habitat to become mature, and for the inherent uncertainty involved in ecological restoration. “Those are things that we factor in and think about deeply,” Bernstein says, “to make sure the mitigation is adequate.”

Yarchoan majored in economics and political science at Amherst, and he spent summers at the National Oceanic and Atmospheric Administration. After graduating, he received a fellowship from Venture For America, the entrepreneurial training program founded by Andrew Yang. That’s where he met Bernstein in 2014; their work on coastal restoration in Louisiana was part of that fellowship. “Through that work, I started to piece together how federal, state and local environmental regulations are creating the demand for a new class of 
ecosystem services that today we call mitigation,” Yarchoan says. Magnolia got its big break early on, when the U.S. Department of Agriculture awarded them a grant to start a farm-focused mitigation program in Illinois. “I don’t think either of us really thought we had a chance,” Yarchoan recalls. “That was the moment where we were like, ‘OK, well, we haven’t figured out everything, but at least we’re not going to be broke.’” Fast-forward to December 2021, when the USDA awarded Magnolia almost $1.5 million to continue their work in Illinois, as well as in Nebraska.

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Part of Yarchoan’s job is to protect this endangered Indiana bat and others in its colony.

Today, Magnolia is a team of nine full-time employees, one of a handful of U.S. companies that specialize exclusively in environmental offsets. Magnolia’s employees include scientists and regulatory experts, as well as college student interns such as Julie Rebh, whom Yarchoan also picked up on the drive out here to Oley.

In the shade of a large sycamore tree, the three of us meet up with Larry Lloyd, 
senior ecologist at the local nonprofit that will hold the conservation easement. He has advice about how best to stabilize the banks of the stream; logs that Magnolia installed to try to slow down water flow around some of the bends were swept away by recent heavy rains. In addition to the 1,800 or so trees that Magnolia has already planted—at the moment, they’re no more than a foot or two tall, each marked by a small pink flag—Lloyd recommends a seed mat, which is a mesh of coconut fibers that allows fast-growing grasses to sprout, providing a roothold for shrubs to further stabilize the soil.

Later, Yarchoan tells me with a laugh that he sometimes feels like Brad Pitt’s character from Moneyball, who puts countless hours into building a winning baseball team but doesn’t stay to watch the games. Yarchoan’s job is to do the coordinating and organizing that makes the 
restoration happen, which means that he’s only occasionally on site, and when he is, he can feel a little out of his depth. But he gamely leads Rebh and me deeper into the wetlands. We peer up into black bat boxes mounted on wooden posts, installed by the U.S. Fish and Wildlife Service. It’s dark 
inside the boxes, but we can make out faint, fuzzy shapes of the endangered bats, and we can hear them shuffling and squeaking to each other; 
they sound like the sucking of air through teeth.

We move on, crossing over small creeks that appear suddenly in the tall grasses, which make for ideal bog turtle habitat. The rough grasses and trees vanish at the property’s border, replaced by the neighbor’s mowed grasses between fenced-in pastures: what the wetlands we’d just explored could eventually have 
become, if not for the work of Magnolia
and its partners. Then we cross a winding, shallow, rocky stream and enter woods that are dense with brambles and poison ivy. There are remarkably few bugs—thanks, perhaps, to the bats that spend the summer here.

After our meander, Yarchoan brings us back up the slope and across the road to Judy Angstadt’s house; she meets us outside her front door. I ask about her experience with the mitigation work, and Yarchoan jokingly asks if he should leave. “You don’t have to leave,” she says with a smile, before offering her frank assessment: “I love conservation. I think it’s a wonderful thing. But I don’t appreciate the way it looks.”

She explains that her late husband used to mow the pasture. “And the meadow, it looked like the lawn—and it was beautiful. And now, because we’re conserving it for the animals—which I get—I don’t appreciate the looks of it. But I understand it. And I wouldn’t switch it back.”

After a pause, she adds, “I didn’t think it would look so… scruffy.”

Yarchoan suggests that when the trees they’ve planted start to come up, it should help with the appearance.

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Magnolia has received grants from the District of Columbia for green infrastructure, including this rain garden project.

Angstadt looks across the property and points out the gap in the trees along the stream. That gap used to reveal her husband’s memorial site. Now, with the grasses coming up around it, it’s impossible to pick out at this distance.

I remember something Yarchoan had said in the car a few hours earlier. Driving through Philadelphia, he’d pointed out historical highlights of the city where he’s lived for five years; then, as we approached the valley where Oley lies, he began to detail how the area was an important source of food during the Revolutionary War and told me about the Pennsylvania Dutch dialect spoken only here. It occurred to me that his keen sense of local lore and history may help him navigate his role as a middleman between rural landowners, who are sometimes distrustful of outsiders, and the companies that seek offset credits—especially when state and federal regulations come into the mix.

“These markets can be a major force for good, in that they typically fold in rural communities that are historically reticent toward modern environmental policies,” Yarchoan had said on the drive. “People like us, who are millennials, who live in cities, can have a misunderstanding of people in rural communities as being anti-environment.”

The truth is that there are plenty of economic and tax incentives to cut down trees or bring in more cattle. Yarchoan created Magnolia as a way to leverage a different kind of incentive—one that still benefits landowners and farmers, but not at the expense of the environment. Those benefits may still have a cost—in Angstadt’s case, the loss of a treasured view; for others, land that can no longer be farmed or used for recreation. And yet, the eagerness of people in these communities to partner with Magnolia shows that, if they’re presented with the right framework, those are sacrifices they’re willing to make.

Geoffrey Giller ’10 has been a science and environmental writer for most of the past decade, with articles published in The New York Times, Discover, Scientific American, Smithsonian and elsewhere. He is currently pursuing an M.F.A. in creative writing at Columbia University.