Incorporating Wetlands in Water Quality Trading: Economic Considerations (Journal Article)
Incorporating the use of wetlands as a technology to enhance water quality trading programs requires consideration of ecological, legal, and economic issues. We explore the case of encouraging the use of wetlands with a focus on the economic considerations. Interestingly, it is the ancillary benefits provided by wetlands that can cause problems for the market (i.e., market failure). In this article, we briefly summarize the economic conditions needed for any successful trading program. Next, we discuss the unique characteristics of wetlands as an approach for pollution control including the ancillary benefits that are typically not accounted for in the market place. After describing the rationale for using wetlands, we propose two solutions that might facilitate the inclusion of wetlands. Finally, we highlight future research needs.