Designing Incentives for Private Maintenance and Restoration of Coastal Wetlands

EPA Grant Number: R831776
Title: Designing Incentives for Private Maintenance and Restoration of Coastal Wetlands
Investigators: Kazmierczak, Richard F. , Caffey, Rex H. , Hoagland, Porter , Keithly, Walter R.
Institution: Louisiana State University - Baton Rouge , Woods Hole Oceanographic Institution
EPA Project Officer: Hahn, Intaek
Project Period: January 1, 2005 through December 31, 2006
Project Amount: $287,108
RFA: Market Mechanisms and Incentives for Environmental Management (2003) RFA Text |  Recipients Lists
Research Category: Economics and Decision Sciences

Description:

This project will develop a comprehensive framework for understanding private investment decisions concerning coastal wetlands maintenance and restoration. Information obtained from personal interview and mail surveys of landowners will be analyzed within the context of a theoretical model of private decision making in the face of uncertainty, maintenance costs, destination driven costs, technological change, and spatial heterogeneity to examine the relationship between the levels of private investment and economic, property, and landowner characteristics. This analysis will allow assessment of general categories of traditional and new policy instruments designed to encourage private landowners to restore and maintain their coastal wetland holdings.

Objective:

1) Integrate existing, but isolated, theoretical research to develop a socioeconomic framework that allows investigation of the impact of potential incentive structures on private maintenance and restoration of coastal wetland property; 2) determine the characteristics of coastal Louisiana landowners, including their attitudes toward private restoration activities, actual wetland use, attitudes towards potential incentive structures, and their socioeconomic profile; 3) combine the information collected in objective (2) with the biophysical characteristics of the wetland properties contained in existing data sets; 4) estimate the importance of characteristics on the current and potential levels of investment; and 5) assess the potential impact of policy instruments designed to encourage private restoration.

Approach:

To examine the impact of various potential incentive structures on the private maintenance and restoration of coastal wetlands, a theoretical model will be developed based on the related real options theory and conservation practice adoption literature, with extensions incorporated to account for the non-convexity of fixed and destination driven costs, spatial heterogeneity in property and landowner characteristics, and uncertain technological development and restoration efficacy in coastal areas. To determine wetland property and landowner characteristics, initial data will be obtained from tax assessor offices in each of the coastal parishes in the state, to be followed by a stratified random sample survey of wetland owners. This sample data will be merged within an existing geographic information system (GIS) for the coast of Louisiana and details of the land characteristics and vegetative types, as well as past land development, extracted for the sample properties. A subsequent empirical model will be based on a double-hurdle with sample selection framework, adapted within a Tobit estimator to account for landowners that make no investments in coastal property maintenance or restoration. Estimation of the empirical model will determine the importance of economic versus other criteria in the private restoration investment decision process. The final part of the study will assess the usefulness of potential policy instruments designed to encourage private landowners to restore and maintain their coastal wetland holdings. This will be done with the aim of finding ways to tailor these instruments to the specific activities, environments, and characteristics of coastal landowners.

Expected Results:

The expected results of this research include: 1) an improved understanding of the role of spatial economic and biophysical factors on private investment in coastal wetland maintenance and restoration; 2) an understanding of the influence of resource extraction activities on coastal wetland maintenance and restoration investments in Louisiana; 3) a framework for assessing the potential use of various policy instruments for encouraging private and joint public-private wetland maintenance and restoration activities; and 4) an analysis of the practical limits of private investments in coastal wetland maintenance and restoration.

Supplemental Keywords:

water, watersheds, estuary, ecosystem, scaling, public policy, public good, social science, modeling, analytical, south central, Louisiana, LA, EPA Region 6, agriculture, petroleum, RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Geographic Area, State, Economics, decision-making, Ecology and Ecosystems, Social Science, Economics & Decision Making, policy analysis, surveys, deliberative policy, coastal wetlands, private investment, decision analysis, web-based methods, environmental values, environmental policy, Louisiana (LA), aquatic ecosystems, public values, public policy, stated preference, wetlands preservation, economic tradeoffs

Progress and Final Reports:

  • 2005
  • Final