Does encouraging the use of wetlands in water quality trading programs make economic sense?

Matthew Heberling, Jorge García and Hale W. Thurston

Ecological Economics, 2010, vol. 69, issue 10, 1988-1994

Abstract: This paper examines a proposal to incorporate the use of wetlands in water quality trading (WQT) programs in order to meet national wetlands goals and advance WQT. It develops a competitive WQT model wherein wetland services are explicitly considered. To participate in a WQT program, an agricultural producer could employ wetlands as his nutrient management practice. Unlike most other management practices, wetlands not only remove nutrients from agricultural runoff but also provide ancillary benefits like wildlife habitat and flood control that do not exclusively accrue to the farmer. Thus, when appropriate, a WQT program should be coupled with additional incentives for wetland creation and restoration, such as using a wetland subsidy. Despite the water quality enhancement properties of wetlands, the model reveals that implementing a wetland subsidy will not necessarily translate into water quality improvements. While wetland creation is externally incentivized, the farm's opportunity cost of fertilizer usage in the WQT market is also reduced. In this sense, a wetland subsidy acts like a fertilizer subsidy. Conditions under which a wetland subsidy will help expand WQT include some degree of farmland area fixity, which is resembled in some, but not all, watersheds, and high efficiency of the wetland abatement technology.

Keywords: Water; quality; trading; Wetlands; Ecosystem; services; Incentives (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0921-8009(10)00220-X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:69:y:2010:i:10:p:1988-1994

Access Statistics for this article

Ecological Economics is currently edited by C. J. Cleveland

More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().