AUGUSTA – State officials celebrated the completion of two major land conservation projects Tuesday, including an unprecedented alliance negotiated four years ago that kept two Millinocket-area mills working while preserving 195,000 acres of forestland.

The Maine Department of Conservation recently took over management of more than 200,000 acres in Down East and north-central Maine near Baxter State Park. Both projects have been under way for several years and involved a mix of private, state and federal funds.

The Virginia-based group The Conservation Fund recently transferred ownership of 7,700 acres at the headwaters of the Machias River in Washington County to the Department of Conservation.

The Nature Conservancy, meanwhile, ceded to the DOC easements on 195,000 acres known as the “Katahdin Forest” because of its proximity to Maine’s highest peak. The group also created a $500,000 endowment to help the state Bureau of Parks and Lands manage the tracts.

Gov. John Baldacci, speaking at a morning press conference in the State House, called the completion of the two projects major accomplishments that prove that “recreation and the economy can go hand in hand together.”

Sustainable timber harvesting will continue on all of the Nature Conservancy land and a portion of the Machias River land. The lands also will remain open to recreational uses.

“We didn’t have all of the resources in the world, but what we did have was Yankee ingenuity and the ability to cooperate and to partner,” Baldacci said.

At the time it was announced in the summer of 2002, the Katahdin Forest project was called either an unprecedented, innovative partnership or an unholy alliance between a major environmental organization and one of Maine’s historic timber giants, Great Northern Paper.

Those gathered Tuesday said the project still serves as a national model.

The Nature Conservancy acquired permanent conservation easements on 195,000 acres, as well as ownership of 46,000 acres in the Debsconeag lakes wilderness area, from Great Northern Paper. In return, The Nature Conservancy purchased $50 million of the faltering company’s debt in an effort to keep two local mills and their 1,100 employees working.

Some residents were highly skeptical of the deal, which they feared was another step closer to the creation of a national park in Maine’s North Woods.

GNP still went bankrupt soon after the $50 million deal. But The Nature Conservancy worked with a Wiscasset company, Coastal Enterprises Inc., to use federal tax credits to attract a new investor. The mills in Millinocket and East Millinocket now are operated by Katahdin Paper.

Tom Rumpf, associate director of The Nature Conservancy in Maine, said he believes this was the first time a conservation group ever financed a paper mill.

“We have always seen the Katahdin Forest project as an effort to protect both trees and jobs,” Rumpf said.

Both of the projects received state and federal dollars. The U.S. Forest Service’s Forest Legacy Program provided $4.4 million to the Katahdin Forest project and $1.5 million to the Machias River project.

The Land for Maine’s Future Program also contributed money to both projects, including $2 million to the Katahdin Forest project.

The Machias River project is part of a larger effort that has protected more than 32,000 acres and 250 miles of shoreline in the area, which is famous for its canoe paddling route.

The 7,700-acre tract transferred to state ownership includes 47 miles of lake shorelines, 13 miles of stream frontage, and critical habitat for the endangered Atlantic salmon.

The Nature Conservancy now is working to protect another 27,000 acres through a third phase of the Machias River project.