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The coast of Louisiana is sinking. Here’s a billion-dollar plan to save it.

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With the 10th anniversary of Hurricane Katrina on the horizon next summer, the federal and local governments, which got everything desperately wrong—to the tune of 1,833 lives and $108 billion lost—now have a chance to get something right. If they do, Louisiana could become a leading exporter of science and engineering
skills desperately needed by coastal communities from the Jersey Shore to the Mekong Delta. If they don’t, millions of Gulf residents, the bulk of the nation’s offshore oil and gas production, most of our seafood production, and a shipping corridor ferrying half of all U.S. imports will be at risk of drowning in storm surges.

It’s a multibillion-dollar bet—and it’s being placed thanks to the troubles of an international oil company. Here’s the audacious plan: Restore disappearing Gulf wetlands, a strategy that’s not just about protecting fish and birds but also about rebuilding natural storm barriers. Unless engineers can stop southern Louisiana from sinking into the Gulf—the Mississippi Delta is the fastest-disappearing land on the planet—even post-Katrina’s modernized levees will be overwhelmed. In this grim future “it won’t take a Katrina to cause Katrina-size damage,” warns Nick Speyrer, planning director for the nonprofit Water Institute of the Gulf.

When I visited the Water Institute’s Baton Rouge offices overlooking the Mississippi River, I couldn’t find a drop of the charged politics that drives so many environmental conversations in Washington. The founding partners are Republican Gov. Bobby Jindal and Democratic Sen. Mary Landrieu. CEO Chip Groat is a scientist who ran the U.S. Geological Survey for Presidents Bill Clinton and George W. Bush.

And get this: The Jindal aide who helped launch the Water Institute was a Republican congressional candidate in 2014 who managed to attract campaign financing from the oil-friendly Koch brothers—and the liberal Environmental Defense Fund.

While oil companies have contributed to the disappearance of wetlands, the Water Institute doesn’t point fingers at an industry that is the region’s economic lifeline. Instead, Groat and Speyrer say they want industry to step up to the community table with participation and funding—rather than rely on Band-Aid solutions to protect their own facilities from rising waters.

Indeed, the main culprit behind the disappearance of the delta wetlands dates back eight decades—to the killer Great Mississippi Flood of 1927, after which the federal government built the world’s longest system of levees and floodways. But those same protections also prevented sediment from pouring into the Mississippi and feeding the Gulf’s wetlands.

As a result, 1,900 square miles of land have disappeared since the 1930s, and the Water Institute predicts that another 1,750 square miles will be lost in the next 50 years—potentially producing $23.4 billion in annual damages as water drowns factories and refineries, communities, and roads. “We cannot rebuild the coast of 1930 or 1950, or even 1995,” says Speyrer. “But we can stop the bleeding and hold on to what we have.”

DISAPPEARING BAYOU A combination of badly designed levees, oil company development, and hurricansDISAPPEARING BAYOU A combination of badly designed levees, oil company development, and hurricans

A major element of the state’s master plan is to cut holes in levees and install massive gates that can be opened in the spring to feed river sediment to adjacent wetlands. It’s complex—and expensive. This multibillion-dollar project will get off the ground thanks to federal fines levied on BP after the 2010 Deepwater Horizon oil spill. That’s an irony not lost on Speyrer: “Yes,” he says, “the BP oil spill provided the opportunity to do these things.”

The dollar amounts and the plans are still in play, and Water Institute officials say far more resources will be needed even after that money comes through.

But if the Water Institute can persuade government, industry, and philanthropy to take up the cause, the Gulf Coast could become a pioneer innovator on controlling encroaching seawaters around the globe. “Sea levels are rising,” says Speyrer. “We are the canary in the coal mine. It’s a field of innovation that’s exportable.” From southern Louisiana, no less.

This story is from the December 1, 2014 issue of Fortune.