Saturday, January 31, 2015

The Economic Value of Wetlands as Storm Buffers

Communities along the US coast are highly vulnerable to coastal storms. Trends in population growth, climatic events and land use are likely to exacerbate future damages. Coastal management entities are faced with decisions about how to manage resources in a manner that improves environmental quality and provides the maximum benefit for coastal populations. This is particularly true along the coast of the Gulf of Mexico, where coastal storms are common, land loss is rapid and billions of dollars are allotted for coastal restoration projects. Many of these projects are intended to mitigate hurricane damages by using wetlands as storm buffers. The physical science literature shows that wetlands do provide situational protection from storm surge. However, little economic analysis has explored the effect of wetlands on economic losses. This analysis uses hurricane simulation data to estimate county-or parish-level damages based on observed damages from coastal storms making landfall in Louisiana from 1995-2008. A model describing these damages as a function of wetland  area, socio-economic conditions and storm intensity allows the estimation of the value of wetlands for their protective ecosystem services under various contexts and future scenarios. Potential sources of error are discussed and examples are analyzed. The implications of these finding are significant for coastal restoration decisions in a changing environment.
[For Model 1 (which includes the entire dataset and the estuarine classification)] all variables have  coefficient estimates that are statistically different from zero. Notably, the wetlands coefficient is negative, implying that increases in relative wetland area can be expected to reduce damages. The coefficient estimate corresponds to a marginal value (MV) estimate of approximately $7,420/ha/km (2010 USD) for a single storm.... [For Model 2] (which is the same as Model 1, but includes both classification of wetlands in the relative wetland size variable). The coefficient estimates are roughly equivalent with the exception of the wetland coefficient, which has a larger standard error and is not statistically different from zero. While the coefficient estimate for the wetland variable was larger in Model 2, it cannot be stated that wetlands, as defined by the wetland variable used here, are valuable for damage mitigation because the t-statistic [is not statistically significant].  For Model 3 (which is the same as model 1, but includes only Louisiana storm impacts). The coefficient estimate for the wetland variable is not statistically significant. The results from Model 4 (which is the same as Model 3, but includes both wetland classifications) [show that] all coefficients are highly significant for this model, including the wetland coefficient. The monetized marginal effect for this model yields a MV of  approximately $320/ha/km for a single storm.

by J. Luke Boutwell 1 and John V. Westra 2
1. Graduate Research Fellow; Louisiana State University; Center for Natural Resource Economics and Policy; Baton Rouge LA 70803; Email:
2. Associate Professor; Louisiana State University Agricultural Center;Baton Rouge LA 70803; Email:
Selected Paper prepared for presentation at the Southern Agricultural Economics Association’s 2015 Annual Meeting, Atlanta, Georgia, January 31- February 3, 2015
via REPEC EconPapers
Copyright 2015 by J. Luke Boutwell and John V. Westra
Keywords: wetlands, hurricanes, economic damage, resilience, adaptation

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