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• I*.CONOMIC PERSPECTIVE • . ~s~~~a~~~~~ ~~s~s of ~Z~s~®r~~i~r~ b ' by Dennis King and Curtis l3ohlen etlands restoration is an important part of any were develo ed r covide an economic and statistical basis strategy to improt•t the quality and qu:ultity of or lm rovin wetland mitigation gilt and for assessins i/ j~ wetlands t'esources in this country.[ And yet, loot- ha~v vet ands restoration mi ht contribute to ttc tcv~n; eateries in frequently quoted cps[ estintatzs for wetland ovtra tetlands, flood plant, and watzcshed noels: restoration inhibit rite development c+F economically soured Sources of the Problem • regulatory suacegies •foc wetlands protection and manage' Tilt cost of wetlands restoration is not uniform-=costs mtnl. Determining effettivt regulatory strategies for con- dtpcrid on what is bring restoct:d: ho~v badly it is damaged; trolling wetland Ioss and malting the bzst use of public Funds and how fast, how eompletc, and how permanent the repairs for wetlands restoration both require a basic understandin, need co be. Records of wetland mitigation costs gathered For of restoration costs. this study, for example, ranged from five dollars per acre to Wetianri restoration is the ptirttary method For developers ~ 1S million ptc acre. It is difficult to make any general and other; to fulfill the mitigation requirements of a Cleau statements about such disparate data. However, differences 1~Vatec Act §404 permit. Without accurate cost information in costs for different projects tend to fellow certain patterns. permit seekers cannot properly evaluate mitigation alterna- Much of the variation in costs can be explained by grouping ' rives. Similarly, regulators have difficulty assessing what is restoration projects according to structural characteristics economically and tcologIcally possible and whether pernnic that affect costs. and by adjusting these baselint cost esti-• seekers caa afford to provide acceptable compensatory miti- maces for each rou rn~ to account for cenain sits-s ecific gatioa. Unfortunately, generally available,~ata.on the cos[ and project-specific conditions (e,g., dry oC wa4 hilly or flat. of.wetland restoration rouantly understate the cost of de- • . urban oc rural, on-site or off site disposal of spoil. union or • signing and implementing restoration projects iha[ have a non-union labor). reasonable chance of replacing lost wetland functions and Most records of wetlands restoration costs that are avail- . .aloes. These unrcalistlcalty law cost estimates often lead able to the public come from one of two sources• fe cal developers and regulators co be overly optimistic in evalu- programs to restore agricultural lands back to wetlands?~nd acing what cart be accomplished and to get Involved with the 20-year record of wetlands creation and restoration tin- mitigation projects that have no hopz of succeeding_ dertaken as miti~aaon under the Army Corps of Engineers' - As .the historical regulatory bias toward on-site, in-kind §404 program. mitigation begins to change, opening up possibilities for off- ptderal projects to restore prior converted agricuicural 51te mitigation and eatreprenturial miagaaon banking. the lands are generally fairly simple operations. They usually need for reliable cgs[ estimates grows: Regulators are working involve restoring original site hydroio?y (e.g., by breaking to develop tactical guidelines for alternatives to tcaditon:tl mitigation. ,neluding banking. By not providing prospecti~z drainage tiles oc filling ditches), which is inexpensive and mitigation suppliers, mitigation bankers. and permit seekers often highly successful..Restorarion of wetlands in anricui- with reliable•infotmaaon about the cost of acceptable mitiga- ~tural land.docs.not•involve any of the complex hydrologic don, regulators are currently fueling Interest and speculation and habitat reconstruction problems associated Kith rescora;_ -about potential fortunes to be made In mitigation markets. I[ lion projects located .in urban and suburban landscapes.:. will be difficult to impose new quality standards and tighten up where demand for wetland mitigation is the greatest. Aga-. mitigation requirements once investments are made in the . cultural conversion projects also involve fewer restoration . . mitigation industry. It Is crucial. thetzfoce, . to provide some tasks than restoring structurally and biologically more ~om- basicguidelinesfoCmi~igationcompensaciontados.ovtofkind Plez wetlands and therefore ace much less ezpensivt_ Thus and off-site trading toles, and cutumstanees under which whsle the cost data associated with agricultural wetland nZiti~ation credits ma be sold. Regulators must use realistic restoration are generally accurate, they significanily_under- y start the costs associated with more comple< micrgation cost estimates m guide these dzcisions. efforts that are the focus of most regulatory attention. .This article summarizes the results of a study that was Little has been repotted about the cost or effectiveness of dtsigned to provide reliable estimates of the cost ofreason- restoration front the second source, records of projects un- nbly successful wetland mitigation. The study involved dertaken as mitigation under the §404 mititraaon ro ram. . •~analyses of costs associated .with nzarly 1000 agricultural What data art available, however. reveal that [hest pro acts eonvtrsioa projects and mitigation projtcu. Results include have generally been underfunded and ineffective and have high, low, average, and median per acre cost estimates for had extraordinary high failure rates. Studies sampling miti- nine types of wetland restoration projects. These estimates gation projects in Florida, California, and the mid-Atlantic states, for example, have found that over SO percent or Dennis King and Curtis Bohlen are with the Uni~erisry of Mary- mitigation projects "failed: '3 These records of higi~ failure • land, Center For Environmental and Esturine Studies. Dr, King is rates ate often cited as evidcnec that mid~ation science is t associate director ai the Center's International Institute for Ecoiogi- failing. There are undoubtedly techalcal limits to .what res- • cal Economics, Dr. Bohlen is a senior fellow there. The authors location science can achieve. However, what is rarely re- ~~ish to thank the Office of Policy Analysis at the U.S. Environ- acted is that the causes of these failures can.almast always mental Protection Agency, and the Environmental Division of the P , U.S. Department of Energy for their monetary support. ~ ~°""t/ .L./ f ~a~i3nu GoY• fi f ~j~~vr~..i~/ af. 7i ~v~ MAY/JU~YE 1994 3