Costs and Benefits of Policies to Protect Water Quality through Wetland Protection

Background

National environmental policy has two major goals related to agriculture: reducing nonpoint source pollution (NSP) and preventing further losses in wetlands. Agricultural NSP is a major cause of decreased water quality in 6 of 10 EPA regions. Dramatic losses in wetlands led the President to adopt a no-net-loss policy for wetlands in 1990 as recommended by the National Wetlands Policy Forum. Missouri has lost more than 90 percent of its original 4.5 million acres of wetlands. Agriculture and wetlands are linked two ways. First, drainage of wetlands for agricultural activities accounts for 87 percent of national wetland losses and two-thirds of the remaining wetlands are in agricultural areas. Second, agricultural NSP can be reduced by headwater wetlands that are upstream of rivers, lakes, estuaries or fringe wetlands adjacent to such water bodies. There are many economic benefits associated with the restoration of wetland ecosystems, including flood protection, water quality improvement, shoreline erosion control, fish and wildlife habitat, and recreation and aesthetics.

Objectives

1. Demonstrate how a geographic information system (GIS) can be used to identify hydric cropland sites suitable for conversion to wetlands.
2. Estimate the social costs and benefits of restoring hydric cropland to wetlands.
3. Determine how the Wetland Reserve Program (WRP) influences landowners' willingness to convert hydric cropland sites to wetlands.
4. Investigate the feasibility of developing an integrated watershed management system for identifying, designing and evaluating constructed wetlands and conservation practices that would reduce nonpoint source pollution (NSP) in the Fountain Grove Wildlife Area and the Swan Lake National Wildlife Refuge.

Methods

• Data development. NRCS soil surveys for Linn and Livingston counties were digitized along with the their associated attributes. A screening process was used to delineate potential wetland sites based solely on their soil characteristics. Land cover and land ownership boundary layers were digitized from plat maps and ASCS aerial slide photographs, respectively.
• Site assessment. The suitability of hydric cropland for wetland restoration was evaluated. While the overall site assessment covered both counties, detailed site assessment procedures and maps focused on a portion of the northwestern quarter of Linn County.
• Economic assessment. Potential social and private (landowner) benefits and costs were estimated for 25 sites in Livingston County and 23 sites in Linn County. Social benefits accrue to society and private benefits to landowners. Social and private net benefits (benefits minus costs) differ because some of the benefits of converting hydric cropland to wetland are typically not considered by the landowner. Four social benefit-cost scenarios were evaluated which represented combinations of high and low benefits and costs from wetland restoration.

Major Findings

Social net benefits are highest and positive when benefits are high and costs are low and lowest and negative when benefits are low and costs are high. Private net benefits are evaluated for high and low benefits with fully subsidized wetland construction costs and easement payments equal to the opportunity cost of wetland restoration. It would be economically rational for a landowner to convert hydric cropland to wetland if the easement payment provided by the government is greater than or equal to the opportunity cost of wetland restoration, the cost of wetland construction is fully subsidized, and the income earned from the wetland equal or exceeds maintenance cost of the wetland. The first condition is likely to be satisfied for landowners who bid eligible cropland into the WRP. The second condition would be satisfied under current cost-sharing provisions for wetlands. The third condition may or may not be satisfied.

Publications

Prato, Tony, Yun Wang, Chris Fulcher, Tim Haithcoat and Chris Barnett. Costs and Benefits of Wetland Restoration of Hydric Cropland in Missouri: A Preliminary Assessment. Report No. G-2029, U.S. Geological Survey, U.S. Department of the Interior and Missouri Water Resources Research Center, University of Missouri-Columbia, August 1992.

Prato, Tony, Chris Barnett and Chris Fulcher. Converting Hydric Cropland to Wetlands in Missouri: A Geoeconomic Analysis. Proceedings: Third Annual Water Quality Conference, Center for Water Quality, University of Missouri-Columbia, MO, February 4-5, 1993.

Prato, Tony, Chris Barnett and Chris Fulcher. Converting Hydric Cropland to Wetlands in Missouri: A Geoeconomic Analysis. Research Report No. 6, Center for Agricultural, Resource and Environmental Systems, University of Missouri-Columbia, March 1993.

Prato, Tony, Yun Wang, Tim Haithcoat, Chris Barnett and Chris Fulcher.. Converting Hydric Cropland to Wetland in Missouri: A Geoeconomic Analysis. J. Soil and Water Cons. 50(1995):101-106.

Presentations

Prato, Tony. Converting Hydric Cropland to Wetlands in Missouri: A Geoeconomic Analysis. Third Annual Water Quality Conference, Center for Water Quality, University of Missouri-Columbia, MO, February 4-5, 1993.

Prato, Tony, Chris Barnett and Chris Fulcher. Converting Hydric Cropland to Wetland in Missouri: A Geoeconomic Analysis. Riparian Ecosystems in the Humid U.S.: Function, Values and Management, Atlanta, GA, March 15-18, 1993.

Investigators: Tony Prato, Yun Wang and Chris Fulcher

Funding Amount: $24,000

Funding Source: Missouri Water Resources Research Center and Missouri Agricultural Experiment Station

Project Duration: May 1991 - August 1992