Peatland Rewetting for Climate Change Mitigation

Dewy Verhoeven, Deniz Kilic, Suphi Sen and Hans-Peter Weikard

No 12838, CESifo Working Paper Series from CESifo

Abstract: Draining peatlands to allow agricultural production causes subsidence through peat oxidation, which is a major source of greenhouse gas emissions. Addressing this tradeoff, we develop an optimal control model of peat subsidence accounting for emissions, water management costs, and agricultural productivity. We apply this model to the Dutch peat meadows by constructing a new dataset at the parcel level using a geospatial model of land subsidence. We find that immediate rewetting or strong drainage reduction is socially optimal for most of the parcels. The optimal policy reduces subsidence and emissions by about 55 percent, saving about 1 Mt of CO2 annually. Relative to maintaining current drainage practices, accounting for climate costs increases net social benefits by 4 to 12.3 billion Euros depending on the carbon price.

Keywords: optimal control; peatlands; land subsidence; greenhouse gas emissions; groundwater management; rewetting; peatland restoration (search for similar items in EconPapers)
JEL-codes: C61 Q15 Q24 Q25 Q50 Q54 Q57 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12838

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