Private Market Alternatives for Maintaining Wetland Viability in Coastal Louisiana: A Double-Hurdle Approach

Abstract

The coastal zone of Louisiana contains more than three million wetland acres, or about 40 percent of the nation’s total. Since 1930, Louisiana has experienced a net loss of over 1,900 square miles of coastal wetlands. Currently at risk are the remaining coastal wetlands, 80 percent of which are under private ownership. The acceptance of private wetland owners to restoration programs and their participation in these programs are critical if future coastal restoration efforts are to be successful. Gaining the cooperation by the coastal landowners, however, is complicated by the fact that while the public benefits accruing from wetland protection and restoration projects are likely to be large, private benefits are likely to be small and, potentially, negative. The primary goal of this research is to examine the factors that motivate private coastal landowners to participate in income-generating activities and the level of income derived from their coastal wetland parcels and with this understanding to assess current and potential policy instruments that might provide incentives for private coastal wetlands stewardship. Using data collected from a sample of coastal wetland owners, a double-hurdle model was used to econometrically identify the determinants on the participation and level of participation in income-generating activities. The results based on the estimated parameters and marginal effects confirmed that decisions to participate in income-generating activities and the level of participation are related to physical characteristics of the property and socioeconomic characteristics of the landowner.