Natural Assets

Wetlands and other waterfowl habitats provide many vital economic benefits

Kloberdanz water decoys

By Dawn Browne

We often take them for granted—flood control, clean water, outdoor recreation, and many other benefits provided by wetlands and natural landscapes. Collectively, these natural assets are often referred to as ecological goods and services—the processes by which the environment produces resources that benefit society.

Today, the widespread loss of wetlands and other wildlife habitats to development is rapidly diminishing our natural capital and the ability of future generations to derive benefits from the earth's ecosystems. In fact, the eroding capacity of ecosystems to provide goods and services has many negative economic impacts, including more frequent and severe flooding and other natural disasters, increased insurance premiums, reduced agricultural yields, and disruption in the supply of natural resources that depend on functioning ecosystems.

How much are these eco-assets really worth? Putting a dollar value on the goods and services provided by ecosystems is difficult because they are rarely included in conventional accounting systems and decision-making processes. For example, while it may be easy to put a price tag on timber harvested from a forest or copper mined from the ground, putting an economic value on less tangible services like water purification and flood control is more complicated. As a result, the wetlands that support complex ecosystems are often taken for granted. Economists refer to this as market failure—the inability of markets to reflect the full social costs or benefits of particular goods or services. For a truly accurate assessment, all of an ecosystem's natural assets should be evaluated to determine how future development will affect society. Ultimately, this will provide us with a greater understanding and recognition of the full extent and impacts of wetland gains and losses.

Public awareness of the real value of ecosystems is also essential to support government policies that protect wetlands and other ecosystems. New environmental markets are developing in response to existing regulations and pending policies. But establishing clear units of measure for ecological goods and services is challenging. When attempting to compensate for ecological losses, regulators often rely on coarse units of trade, such as acres of wetlands, pounds of nitrogen, or equivalent habitats. These units are considered coarse because they bundle multiple goods and services together and don't individually recognize the many public benefits ecosystems provide.

Despite these challenges, trading programs have been established or are emerging for ecological goods and services such as mitigation of greenhouse gas emissions, water purification, wetlands protection, and habitat banking. Within these programs, waterfowl habitats conserved by Ducks Unlimited provide many ecological benefits that may qualify for environmental credits. These credits could then be sold in a voluntary or regulatory trading market to raise funds to conserve more waterfowl habitat. For example, restoring and protecting grasslands and bottomland hardwood forest on agricultural lands can offset greenhouse gas emissions through carbon sequestration. Biological carbon sequestration occurs when carbon dioxide is absorbed from the atmosphere and stored in vegetation and soil.

The need for emissions reduction and carbon sequestration projects has grown. Increasing levels of atmospheric carbon dioxide over the last century have been scientifically linked to the warming of the planet and climate change. Voluntary carbon trading in the United States grew 200 percent between 2005 and 2006, and market analysts predict voluntary trading worldwide will reach $4 billion in the next five years. With adequate public policy addressing climate change and emissions reductions, this market could provide alternative sources of funding for conservation programs, while providing compensation to landowners who plant trees or restore grassland on their property.

Another example of a critical ecosystem service is water filtration provided by wetlands and riparian vegetation. A case in point is New York City's water quality dilemma. Before it was overwhelmed by agricultural runoff and sewage, the watershed of the Catskill Mountains provided New York City with some of the best water in the nation. When water quality declined below Environmental Protection Agency (EPA) standards, the city investigated what it would cost to build an artificial filtration plant. The estimated price tag for this new facility was $6-8 billion, plus annual operating costs of $300 million. New York City decided instead to invest a fraction of that cost ($1.5 billion) in restoring the natural capital that once existed in the Catskills watershed.

The city raised an environmental bond in 1997 and is presently using these funds to acquire sensitive lands to protect reservoirs and waterways, compensate property owners for development restrictions on their land, and subsidize the improvement of septic systems. Following a recent review by the EPA, New York City was granted a 10-year extension to continue its watershed enhancement program. Thus, New York City was able to convince its taxpaying customers that the investment was worthwhile by demonstrating the cost-effectiveness of restoring and protecting watershed health north of the city. The success of these efforts has also helped New Yorkers gain a better understanding and appreciation for conserving wetlands and other wildlife habitat.

To enjoy sustainable economic growth in the future, the real value of the many goods and services provided by ecosystems must be recognized and reflected in land-use planning, development policies, and financial regulations. Toward this end, DU is working to promote more favorable public policies and emerging markets for ecological goods and services in high-priority waterfowl areas. These efforts have great potential to garner more support for conserving wetlands, grasslands, and other habitats that benefit not only ducks and geese but society as a whole.