ANALYSIS
The economic value of wetland services: a meta-analysis

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Abstract

The number of studies quantify the value of wetlands and the services provided by these ecosystems is rapidly expanding. The time is ripe for an assessment of what has been learned from this literature. Using results from 39 studies, we evaluate the relative value of different wetland services, the sources of bias in wetland valuation and the returns to scale exhibited in wetland values. While some general trends are beginning to emerge, the prediction of a wetland's value based on previous studies remains highly uncertain and the need for site-specific valuation efforts remains large.

Introduction

The valuation of wetlands’ ecological services is a relatively recent phenomenon. Historically, wetlands were viewed as a waste of valuable land that could only be ‘improved’ through drainage and destruction of the wetland (Mitsch and Gosselink, 1986). Today, while there is now widespread recognition that wetlands provide valuable ecological services, there remain substantial debates over whether particular areas are in their highest economic use as wetlands, and to what extent public and private resources should be used for their protection and restoration. Hence, there is a growing need to quantify the value of wetland services.

The services provided by wetlands include habitat for species, protection against floods, water purification, amenities and recreational opportunities. Because these services typically have no market price, a measure of their values can only be obtained through non-market valuation techniques. Many wetland valuation studies have been conducted and the range of the estimates is remarkable. A recent review by Heimlich et al. (1998) lists 33 studies over the last 26 years with per acre values ranging from US$0.06 to US$22050. Even within the same study looking at a single ecosystem function, Batie and Wilson (1978) find values per acre that differ by two orders of magnitude from one site to another.

The purpose of this paper is to assess whether any systematic trends can be distilled from the breadth of wetland valuation studies conducted to date, and to shed light on what factors determine a wetland's value. We maintain an assumption that there exists an unobserved valuation function that determines a wetland's value given its physical, economic and geographic characteristics. After reviewing 46 studies, data from 39 wetland valuation studies were identified that had sufficient commonalties to allow inter-study comparisons. We used two techniques to learn about the valuation function, both of which can be broadly described as meta-analysis since many studies are used to identify general relationships. The first method that we employ uses bivariate graphical and standard techniques. This gives us both an indication of the extent to which particular characteristics influence wetland values while also portraying the full distribution of the data. The second technique is more standard, using a multivariate regression of wetland values on the characteristics of both the wetlands and the studies. Together, these two techniques provide a richer basis from which we can draw lessons on the factors determining wetland value.

There are numerous reasons why understanding the value of wetland services might be useful. The most obvious is that if the value of these services were known, benefits transfer efforts could be substantially improved. As Deck and Chestnut (1993) point out, benefits transfer may play a variety of different roles, ranging from an attempt to place a precise value on a particular resource to providing information that feeds into the process of building support for projects already implemented. While benefits transfer is rarely suitable for the former case, it might often be appropriate for the latter. Another form of benefits transfer is the use of estimated values to predict the aggregate value of similar systems nationally or globally. Such estimates can be useful in setting national priorities or the evaluation of policies with impacts that are national or global. Costanza et al. (1997), for example, placed a value on the entire globe's ecosystems. While such expansive efforts may be overambitious, the aggregate numbers do help to get the attention of policy makers and the public.

Estimates of the value of a wetland can also influence site-specific valuation efforts in two ways. First, they might provide Bayesian priors that might be formally incorporated into the valuation exercise. Secondly, they may give researchers a sense of where the values at stake are likely to be of greatest social importance and might, therefore, influence where detailed studies are carried out.

The paper is organized as follows. In the next section we provide a brief overview of the economics of wetland valuation. We survey the ecological functions and economic services provided by these areas, the basis for their valuation and the techniques that are used to place an economic value on wetlands. Section 3 provides a brief summary of meta-analysis as a tool. In Sections 5 and 6 we explore the trends in the data, identifying the sources of variability in wetland values. We conclude by reflecting on the implications of our analysis both for our understanding of wetland values and for future research.

Section snippets

Wetland functions and services

While an inclusive definition of wetlands is difficult to state, they are generally characterized as being moist during an extended period each year with soils, plants and animals that are distinct from their aquatic and terrestrial neighbors. These transition areas are highly diverse, ranging from coastal mangroves that are inundated with water most of the year to areas that are moist for only a few months during the year. Partly because they share features of both terrestrial and aquatic

Meta-analysis as a tool in understanding non-market valuation

First used by psychologists (Glass, 1976, Schmidt and Hunter, 1977), meta-analysis has proved to be a useful tool for synthesizing the results of numerous studies. The method has recently gained attention in economics as a way to appreciate numerous studies that have placed economic values on environmental goods and services (see Brouwer (2000) for a review). The central advantage of meta-analysis is that it provides a rigorous statistical synthesis of the literature that cannot be achieved

The wetland valuation data

After a lengthy review of the literature, we identified 39 studies that contained sufficient data to allow inter-study comparisons. Many other studies were identified but could not be used. The values are taken from published reports, ‘gray’ literature, and theses.2

Bivariate meta-analysis

Using the available data, we now evaluate the sources of variation in estimates of wetland value. Two complementary techniques are used. In this section we explore some of the relationships in the data using graphical presentation and bivariate statistics. The advantage of this analysis is that it allows us to present the full data set graphically, making possible a richer appreciation of the data. However, the bivariate analysis ignores interactions between explanatory variables. Hence, a

Multivariate meta-analysis of wetland values

In this section we estimate a parametric specification of the valuation function using the data discussed above. After excluding incomplete observations and values based on either energy analysis or the market value methods, the 65 observations of wetland values were obtained.

Conclusions

We have seen that wetland valuation studies are remarkably diverse in terms of the values obtained, the wetlands evaluated, and the characteristics of the studies. Our goal in this study was to isolate the sources of the variability in the wetland value.

There is some evidence that the method employed affects the value obtained. Relative to the HP or RC methods, using the CV method tends to yield a lower estimated value while there is no statistically significant difference between the CV and

Acknowledgements

This research was funded in part by a grant from the Texas Water Resources Institute to the Center for Public Leadership Studies, George Bush School of Government and Public Service, Texas A&M University, and by the Texas Agricultural Experiment Station. Helpful comments were provided by Letitia Alston, April Henry, Thomas Lacher, R. Douglas Slack, Arnold Vedlitz, an anonymous reviewer and, especially Roy Brouwer. Valuable editorial assistance was provided by Michele Zinn.

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