Wetlands are often described as the "breadbasket of biodiversity". They have considerable biologic, social and economic value. Their uses can be grouped into the following categories: direct extractive uses (such as commercial and recreational fishing, hunting, agriculture and energy); indirect non-extractive uses (such as bird watching, photography, hiking, science, education and research); indirect or biological functions (such as flood, storm and erosion control, groundwater recharge, nutrient cycling, provision of habitat and climate regulation); and non uses such as option, bequest and existence values.
The economic benefits of wetlands are rarely monetized. Consequently, decisionmakers frequently underestimate the full costs of development proposals, and thus encourage wetland destruction. The intent of this study was therefore to update the state of knowledge regarding wetland valuation with particular attention to indirect biological functions, and to assess the utility of benefits transfers for wetlands with preliminary application to Long Point and Luther Marsh.
This report has not reviewed every available wetland valuation study. However, a sufficiently large number were reviewed to develop some observations on the state of our understanding. In short, the science of wetland valuation has evolved only marginally over the last ten to fifteen years. Some techniques have become more refined, although their application is still predominantly on identifying direct commercial and recreational benefits. Valuation is still fragmented in the sense that studies attempt to quantify one or more components of wetland benefits. Consequently, existing studies have captured only a portion of total benefits. With a few exceptions the bulk of research on wetland valuation occurred in the 1970s and early 1980s. Valuation in the Great Lakes is particularly sparse.
On the whole, ecological functions remain poorly addressed and valued. There have been some very positive developments in trying to monetize flood and storm protection, water supply provision, waste assimilation and life-support function benefits. More work is required in this important category.
Most valuation studies focus on direct uses. Typically these include the valuation of extractive uses such as commercial and recreational fishing, hunting and trapping. Even in these instances though, the precise contribution of wetlands for these activities has rarely been isolated. Direct non-extractive uses such as nature viewing, birdwatching and other passive recreational activities has received much less attention.
Valuation of these categories of benefits has been relatively easier and more successful. Travel cost, commercial catch values and willingness to pay approaches were the most frequently used tools. Emphasis on both types of direct benefits is understandable and expected given the availability of information and existing techniques, and ease of application. Nevertheless, methodological challenges remain such as isolating the contribution of wetlands specifically to benefit estimates. Also, the bulk of effort has been undertaken in coastal saltwater wetland locations. There is considerably less information on freshwater wetlands, including primary research in the Great Lakes.
Valuation studies focusing on the economic benefits of indirect or ecological functions are far fewer in number. Flood and storm buffering, water supply provision and waste assimilation benefits of wetlands have been valued. Avoided and replacement costs were used as the tools for arriving at benefit estimates. The life support function that wetlands provide has been approximated using the energy analysis method whereby biomass and gross primary productivity are valued at the market price of a conventional energy source such as fossil fuels. Aside from some earlier work in Lake Michigan, none of these benefit types have received rigorous quantitative attention in the Great Lakes. The most comprehensive study identified in the Great Lakes focused on critiquing valuation techniques rather than generating values for wetland functions.
The economic benefits of a large number of ecological functions appear to remain relatively unaddressed such as low flow augmentation, nutrient recycling, food chain support, habitat, groundwater recharge, erosion control, climate regulation, and genetic and biological diversity. Further, there is only very limited and isolated experience with the non-use or intrinsic values (option, bequest, existence) associated with wetlands.
The need to quantify the benefits of indirect or ecological functions of wetlands will become more acute as the concepts of sustainable development and the ecosystem approach become more entrenched in the land use planning process. This is particularly the case in the Great Lakes, since inland wetland systems often do not have the advantage of large, visible commercial extractive uses (in comparison to saltwater systems that can have, for example, massive shellfishery functions) to rationalise their protection.
The transfer of resource benefit estimates from one study site to the next is receiving more attention, largely because of the potential cost and time savings. Transfer approaches and protocols are being aggressively developed and refined to enhance the accuracy and confidence of transferred estimates. A number of alternatives are discussed with their corresponding data needs and considerations, in the context of wetlands. Ultimately, the degree of accuracy required in the transferred estimates (and therefore the expense and time required to undertake the transfer exercise) should be determined by the magnitude and nature of environmental costs or benefits at stake.
Preliminary economic valuation was undertaken for two wetland areas in the Great Lakes - Long Point and Luther Marsh. This included the transfer of benefits information, by wetland function, in an experimental fashion to highlight data needs, concerns and issues. The benefits transfer exercise in these two study sites proved only marginally successful. In general, there are too-few existing primary valuation studies to build on.
Transferring commercial and recreational direct use values proved somewhat simpler given the existence of previous research. However, transferring indirect or ecological use values is more problematic, principally because of a lack of previous studies. Further, there remains a substantial gap between identifying biophysical characteristics of wetlands and their transcription into goods and services that permit valuation. For example, the Luther Marsh was constructed essentially for low flow augmentation, yet there is a gap between translating wetland hydraulics and its augmentation function into economic terms.
The same can be said for option and passive uses. Only two studies were identified that quantified the willingness of residents to pay for wetland preservation. However, the policy context and nature of questionnaires used in these studies were too narrow and too different to extrapolate to the Luther Marsh and Long Point wetland systems with any degree of confidence.
The environmental valuation reference inventory (EVRI) was assessed as a tool to help conduct benefit transfer exercises for wetlands. Preliminary analysis of the fields contained in the database suggests that it will be a good tool for transferring wetland benefits because it not only provides significant methodological detail of previous studies, but it also takes into account the site specific variables of the study site. This should greatly reduce the time and effort required for transfer exercises. The challenge will be to ensure that the complete detail on previous studies is entered into the database. At a minimum, the EVRI is a good tool for organising existing valuation research.
While it might be early for extensive transfer exercises for wetland valuation, some transfers are possible. As with other resource issues, the magnitude of benefits or costs at stake will likely dictate the attractiveness of transfer exercises, the specific approach used and nature of assumptions embodied.
Towards enhanced wetland protection and restoration, further research is suggested in at least two priority areas - quantifying the value of indirect biological functions (such as flood protection, erosion and storm control, groundwater recharge and habitat) in the Great Lakes; and assessing Ontario residents' willingness to pay for preserving wetlands. In addition, more work is warranted to isolate the benefit of wetlands for nature viewing (e.g. bird watching), waterfowl hunting and fishing.
