The value of restoring urban drains to living streams

Maksym Polyakov, James Fogarty, Fan Zhang, Ram Pandit and David Pannell

No 206300, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: Many urban streams have been cleared of native vegetation and converted to open drains resulting in a loss of ecological and aesthetic function. There is a growing recognition of the importance of these functions and work is being done to restore urban drains and create fully functioning wetland ecosystems (“living streams”). Such restoration work involves substantial cost, and it is important to know if the benefits generated from “living streams” are greater than restoration costs. This paper presents a detailed economic analysis of an urban drain restoration project in Perth, Western Australia. Controlling for other factors, we find homes within 200m of the restoration site increased in value by 4.4% once the restored area became fully established. When we compare benefits to cost we find that, with real discount rates of 5%, 7%, and 9%, project benefit−cost ratios are 2.6, 2.5, and 2.2, respectively. We then show that current institutional arrangements in Western Australia make it difficult to implement urban drain restoration projects, even when project benefits are greater than project costs. The paper concludes by identifying changes to governance arrangements that would allow value enhancing restoration projects to be undertaken.

Keywords: Environmental Economics and Policy; Land Economics/Use (search for similar items in EconPapers)
Pages: 26
Date: 2015-06-02
New Economics Papers: this item is included in nep-env, nep-ppm and nep-ure
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwauwp:206300

DOI: 10.22004/ag.econ.206300

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