ECONOMIC ANALYSIS OF WETLAND RESTORATION ALONG THE ILLINOIS RIVER1

Abstract

ABSTRACT:Creating and restoring wetland and riparian ecosystems between farms and adjacent streams and rivers in the Upper Mississippi River Basin would reduce nitrogen loads and hypoxia in the Gulf of Mexico and increase local environmental benefits. Economic efficiency and economic impacts of the Hennepin and Hopper Lakes Restoration Project in Illinois were evaluated. The project converted 999 ha of cropland to bottomland forest, backwater lakes, and flood‐plain wetland habitat. Project benefits were estimated by summing the economic values of wetlands estimated in other studies. Project costs were estimated by the loss in the gross value of agricultural production from the conversion of corn and soybean acreage to wetlands. Estimated annual net benefit of wetland restoration in the project area amounted to US$1,827 per ha of restored wetland or US$1.83 million for the project area, indicating that the project is economically efficient. Impacts of the project on the regional economy were estimated (using IMPLAN) in terms of changes in total output, household income, and employment. The project is estimated to increase total output by US$2,028,576, household income by US$1,379,676, and employment by 56 persons, indicating that it has positive net economic impacts on the regional economy.