A Proposed Framework For Developing Multidisciplinary Wetlands Valuation Model

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A Proposed Framework For Developing Multidisciplinary Wetlands Valuation Model
The Environmental Professional


Subjects / Keywords:
Law -- Florida ( LCSH )
Lawyers -- Florida ( LCSH )
Wetlands ( jstor )
Ecosystems ( jstor )
Ecosystem models ( jstor )
Spatial Coverage:
North America -- United States of America -- Florida


The Environmental Professional Article Vol. 6 1984
General Note:
Box 6, Folder 5 ( Vail Conference 1985 - 1985 ), Item 20
Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.

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[] professional reports 117




Jay A, Leitch
North Dakota State University

K. William Easter
University of Minnesota

William C. Nelson
North Dakota State University

ABSTRACT. Although considerable time, effort, and funding have been devoted to wetlands research, signifi-
cant progress towards wetlands valuation has not been made. Academicians have not communicated among
themselves or with resource managers and administrators. The lack of cooperative research has resulted in critical
gaps in knowledge that have led to inefficient wetlands allocation by the government. A concerted effort must be
made to resolve existing valuation problems. A conceptual framework is presented which guides the researcher from
a physical-biological component, through a user interface, to the policy objectives of economic efficiency, social
well-being, and environmental quality. Management options and a feedback loop (for estimating the conse-
quences of use in one period on outputs in the next period) are considered in -the model. Independent research-
ers may follow the framework presented and contribute to the eventual implementation of the model by identify-
ing the links between the ecosystem and the social system.

Considerable time, effort, and funding have been
devoted to wetlands research. However, academi-
cians have not communicated among themselves
or with resource managers and administrators, and
significant progress towards one goal-wetlands
valuation-has not been made (Whisler, 1974).
This lack of communication and cooperation has
resulted in critical gaps in knowledge that have
led to inefficient wetlands allocation by the gov-
ernment. These gaps exist partially because social
scientists have not effectively communicated their

The authors wish to thank three anonymous reviewers for
their comments. This article is based on North Dakota Ag-
ricultural Experiment Station Journal Article No. 1323.
Requests for reprints may be addressed to Jay A. Leitch.
Dept. of Agricultural Economics, North Dakota State Uni-
versity, Fargo. North Dakota 58105.
117-124, 1984. Printed in the USA. All rights reserved.

data needs to biologists or chemists, so physical
scientists have proceeded with their research un-
aware of the data social scientists need. The re-
sult is that however good individual pieces of re-
search might be, they are not conducive to incorpo-
ration into a single-system model.
In view of the need for wetlands valuation,
both for decision making by private individuals
and as criteria for protection legislation, a con-
certed effort must be made to resolve existing val-
uation problems. The major problem is that nearly
all studies have ignored many wetlands values, re-
sulting in partial measures of value. This task of
wetlands valuation cannot be completed by mem-
bers of any one discipline; it requires the inter-
action of persons in many disciplines, including
nonacademicians. Output measurement and bene-
fit evaluation of wetlands are so complex that a
0191-5396/84 $3.00 + .00
Copyright 1984 Natl. Assoc. of Environ. Professionals


eomprelicisive investigation must he madc of the
myriad io biological. physical, social. and economic
interactiois. Ain ovciall research framework is
needed that will involve input from economists,
anthropologists, hydrologists, botanists, ecologists.
and other specialists who are concerned with wet-
lands ecosystems.
Whislei (1974) argues:

S. .studies such as those of Goldstein (1971) need
to be re-evaluated. Such work, however, should in-
volve a team of scientists and administrators, for the
problems of alternative uses of land and water re-
sources are far beyond the scope of any one disci-
pline. Agriculturalists, economists, mathematicians, com-
puter scientists, and engineers must all be involved in
such studies if the results are to be meaningful and
realistic. (p. 126)

Larson (1976) agrees that "placing a value on these
systems [wetlands] requires an interdisciplinary
approach in developing evaluation models" (p.
13). Such large-scale interdisciplinary research is,
however, relatively new in practice. The need for
it is not new, but ineffective organization and man-
agement have been serious impediments to previ-
ous research attempts. The dynamic, highly inter-
active, and very complex nature of wetlands eco-
systems is likely to be unmanageable or too ex-
pensive for funding as a single research project. To
meet the need for large-scale interdisciplinary re-
search, a framework to model a prairie wetlands1
system from its ecosystem to its social system is
presented in this paper. Its aim is to guide wet-
lands researchers toward a common end.

Ecologic-sociologic modeling has several advan-
tages over single-purpose models, such as captur-
ing the complementarity between disciplines. A
well-structured study makes it possible to examine
multiple alternatives and to identify those multi-
purpose plans which maximize the decision maker's
objectives. The model proposed here should help
close the communications gap between specialists
and provide the framework needed to integrate
data contributed from a number of fields.
A hierarchical framework is used to analyze the
complex wetlands system, and the results of many
detailed studies are integrated into policy and man-

I Prairie potholes (wetlands) are one of the most three
ended wetlands types. They are found in a 300,000-squl
mile region in Minnesota, South Dakota, North Daki
and Montana in the United Stutes and in Manitoba.
katchewan and Allberta in Canada (Frayer et al. 1983


agemlent decisions. At each level of the hierarchy,
sulmiodels cuan he developed to describe tlhe inter-
actions being investigated, to indicate how sys-
tems are nested into the overall structure, and to
generalize the results to areas with different char-
Models of complex environmental systems, such
as wetlands, must be manageable, realistic, and
general (Boynton et al., 1979; Intriligator, 1978).
Manageability requires that models yield insights
not directly observable in the system to be mod-
eled and exclude extraneous influences. Realism is
necessary to bridge the gap between experimenta-
tion and the real world. Generality allows results
and conclusions to be extrapolated to other areas
and incorporated into policy statements. The model
should not be overly realistic to the point of be-
coming too complicated, nor should it be so simple
or idealized in the name of manageability that it
loses realism.
A proper balance must be struck between real-
ism, manageability, and generality in the model.
Realism is most closely approximated through an
interdisciplinary research effort within which rep-
resentations of the real world can be analyzed to
identify the effects of individual and combined fac-
tors on wetlands ecosystem components. Only after
these subsystems are adequately modeled can they
be integrated.

Figure 1 is a schematic of the wetlands ecosystem,2
keying on the product-user interface. The wetlands
production-transformation subsystem interacts with
the socioeconomic subsystem in this interface. Prod-
ucts of the wetlands are used or affected by man.
Final products of the wetlands production-trans-
formation subsystems enter the interface from the
ecosystem. From the socioeconomic subsystem,
users make contact with the interface. Institutional
constraints are site-specific and explicit at the in-
terface. They may include property rights, fish
and game laws, water laws, and zoning legislation.
The physical-biological interrelationships that oc-
cur within the wetlands ecosystem and between the
wetlands ecosystem and the rest of the global en-
vironment need to be modeled by scientists in those
fields. Interrelationships requiring modeling could
include prey-predator food chains or soil-water re-
lationships. Once these relationships are modeled,
the consequences of human use or modification of

ota 2 See also Bati.. Shahman, and Cordes (1980); Thomas.
iSa- Lin, and Randall (1979); Martel and IMcLaughlin (1972);
1). and Browder Littlejohn, and Young (1976).



one or more products can be1 estimated, and a level
ol output for the next tine period can be pre-
dicted. Likewise, trade-offs between output sets Can
be estimated.
The task before social scientists is to determine
what transpires above the product-user interface,
how users affect each other, and what mix and level
of uses are optimum. The values to be estimated
depend on from whose point of view they are be-
ing measured. Amenity or aesthetic values, for ex-
ample, do not generate cash flow to wetlands own-
ers; therefore, these values may be of little or no
concern to them. On the other hand, amenity values
may be an important component of societal values.

Individual products and services of wetlands must
be identified, and then the optimal set of compat-
iblh outputs peculiar to the beneficiary can be
chosen. .
Natural functions of wetlands are assumed to be
compatible. However, if a wetlands owner were to
withdraw surface water in amounts sufficient to
dr\ out the wetlands early in the season, natural
output levels may change in that wetlands and in
adjacent wetlands. Exclusive uses of wetlands in-
clude both cultivation for crops and location for
development. Drained wetlands in crop production
are a completely different ecosystem, albeit one
with a new set of products and services. Little

PIOURE 1. Prairie wetlands product-ser iterface al bellt flews.


Phweeyn mPs Cam Cye. seow
TepegWaBpy 0 i4gY

PMAg .n, C te.
e-de "o"Moy CIlwty



needs to be said about the ecologic effect of con-
verting wetlands to a parking lot or shopping mall.
Usually, private market forces dictate which use is
made of wetlands. Quantitative information on nat-
ural function values has heretofore been absent,
and past wetlands allocation decisions may have
been based on incomplete information.
The potential of an individual wetlands to pro-
vide different benefits depends on a variety of fac-
tors. The physical characteristics of the wetlands in
conjunction with the social and political environ-
ment determine which combinations) of products
and services can be produced. A significant chal-
lenge facing natural scientists is to quantify the
flows of multiple outputs from wetlands as a
function of physical characteristics of that eco-
system. Natural scientists have investigated these
types of production functions (e.g., food chains)
for years. However, these researchers have never
been so comprehensive as to try to quantify the
outputs of a complete wetlands ecosystem. Further-
more, most ecologic production functions are pre-
sented in a vernacular that social scientists do not
understand. (Conversely, most socioeconomic pro-
duction functions are presented in a vernacular that
natural scientists do not understand.)
After physical processes, beneficiaries, and perti-
nent benefits are specified, each output must be
valued. The demand for goods and services to sat-
isfy human want represents the derived demand for
wetlands resources. The values of these goods and
services are derived from demand functions. or in-
dividuals' contingent valuations (e.g., responses to
questions regarding willingness to pay or sell). The
conceptual model can be summarized as follows:
Scarce inputs umder man's control combine with
other scarce inputs, which are not controlled by man.
to produce habitat attributes. These attributes then
combine in predetermined ways to produce habitat
services. Habitat services are demanded for direct con-
sumption as goods and amenities, and indirectly as in-
puts in the production of other gools and amenities.
These goods and amenities are demanded by in-
dividuals, and are thus valued. Habitats are valued
as capital resources which produce goxds and ameni-
ties (Randall, 1978, cited in Thomas et al., 1979).
Three kinds of value measures may be identified:
actual cash flows or market values, imputed values,
and intangible values.3
Cash flows include lease income to farm oper-
ators, expenditures by recreationists, crop sales
from drained wetlands, and sales of furbearer pelts,
to name but a few of the Jx)tential market values.
Imputed values are those assigned to products
and services that are inot directly priced in the

values can be estimated. These nonmarket, but
quantifiable. values include the value of a recrea-
tion experience, the value of water in an agricul-
tural use (i.e., the imputed value of irrigation wa-
ter), and the value of sediment trapping, for ex-
Values for which economists have not yet de-
veloped an acceptable estimation method remain
intangible. The value of wetlands for atmospheric
maintenance may be real but difficult to satisfac-
torily quantify. Ecological diversity contributes to
global stability, but its dollar value is not condu-
cive to quantification. Because the value of intan-
gibles may exceed the cash flow and imputed value,
development of methods to incorporate them in
the model should be encouraged.
A systematic way to determine compatible sets
of products and services and estimate values for the
four beneficiary groups-owner, user, region, and
society-is proposed. This framework is one which
will allow a characterization of the interface be-
tween the human user and the ecological produc-
tion relationships, including feedback relations re-
flecting the consequences of product use. It is de-
veloped around the interface between two subsys.
teams, socioeconomic and ecologic.
The model proposed is a comprehensive method
to value the components of a wetlands, while con-
sidering the interactions, trade-offs, and user per-
spectives. Products of the natural wetlands system
available to the consumer are depicted in the lower
right of Figure 1. Two ripple effects occur each
time the user chooses one of these. The use of
one of the products may alter the wetlands eco-
system, and the effects of this change ripple back
through the system to affect the ecological bal-
ance in the next time period. Some uses, though.
may have negligible effects. Birdwatching, for ex-
ample, would have little effect on the availability
of outputs in the next time period, unless the area
were overrun with birders. Harvesting native hay
may bring about significant short-run changes in
nesting habitat but less significant impacts in the
long run.
A second ripple effect is upward through the

3 et .l. (197!)) delineate three basic classes of
Imtenltial ecm.ooinic ooititdts from wildlife habitat: ( 1) tra-
ditional olmtpts ( recreation, coimiiwircial fislhries); (2)
nontraditional outlputs srih .as floodl control, land stabiliza-
tion, or erosion control; and (3) even nore nontrailitional
utpuits such ais waterfowl habitat. groillmlwater recharge.
or wast, assimilation. Tfhis clasifivation is from the perrspc-
tive of , r-c'lolicflot development; it has mllcihI leass
iigilinaittce for -onaini"c .al tii .iiia ti ons ait imali id al
.ind I .gioniaal ls 'Is Tihe o tilpls .iare ilalp rtan. t 1,14 their
ai(comiilitii is r'iord.i i this model.




socio(enooic sulbsstem. Figure 2 deplic(ts a
hunter's use of a wetlands product-mallaid diw-s.
The primary use is of the game bird pr(onict, buti
secondary uses may be enjoyment of nonganlme sixe-
S cies and the natural environment. Thec value of the
wetlands to the hunter would Iw estimated through
recreation valuation techniques. The wetlands
owner may be able to elicit some payment from the
hunter as indicated by a lease payment. The re-
gional economy may benefit from the expenditures
made by the hunter, including the lease payment
to the owner. A social value in terms of duck hunt-


e.g., Duck
e.g.. Sales





ing can IH estimated by summing the economic
values of all duck hunters while also considering
the intangible values. The value of duck hunting
in other locations that is partially attributable to
the presence of prairie potholes should be included
as well if it can be estimated.
A similar procedure would be used for valuing
crop production, another output of wetlands. The
activities of each individual or set of users can be
evaluated in this general step-by-step process:
1. characterize the wetlands or wetlands complex
to be valued;

PtIURE 2. Welands predect 0e0: waerfewl hding.


2. spedih the purpose of valuation;
3. idenhlll) the beneficiaries;
4. select the product or product sets applicable;
5. use applicable subsets of the interactive model
to value the output sets.
There will not be a unique value but instead
a series of dollar values for the different possible
output sets and beneficiary types. However, cer-
tain sets of uses will likely have larger values than
other feasible sets. The dollar values and intangible
values of each feasible output set will have to be
compared with all other feasible sets to choose the
optimal set of uses.

The discussion of a wetlands valuation systems
model has thus far concentrated on generalities and
conceptual issues. It has been kept general by ne-
cessity, since specificity would result in a model of
huge proportions replete with unknown coefficients
and parameters and hypothesized relationships
based on sketchy information. Social scientists can-
not do their mart-tchich iv the final stage in the
model-until the groundwork has been firmly es-
tablished by natural scientists. Some attempts to
devise alternative valuation methods have not been
satisfactory (Cosselink, Odum, and Pope, 1974),
while others have contributed useful first approxi-
mations (Cupta, 1973; Jaworski and Raphael.
What can be done at this juncture is to work
through a hypothesized valuation process. First, set
up the system as depicted in Figure 2, including:
1. all the production, transformation, and ecologic
relationships within the natural ecosystem:
2. the socioeconomic, institutional relationships in
the upper half of the diagram;
3. the interface relationships; and
4. external and internal perturbations of the sys-
Next. develop a mathematical programming
(linear. nonlinear, or dynamic) or simulation frame-
work incorporating the input-output relationships
and physical production functions of the wetlands
as a producer of multiple outputs. Hill (1976)
modeled tidal wetlands using a linear program.
ming approach. Although a linear program may be
too constraining for this type of dynamic, complex
system, it is useful to think in these terms for de-
Stermininig compatible output sets.
Thelre are two Ipossibilities if our objective is to
identilt tIhe( wetlands owner's Iwnefit stream from
Inatlual wettlanls-thtloretical olutimunm Ilhfits and

tie actual benefits. The actual benefits are what
the wetlands owner is now receiving from his wet-
lands. The theoretical optimum is what that owner
could receive if he managed his wetlands to maxi-
mize their eInefits.
Empirical research will tell us what benefits the
owner is receiving, and the calibrated model will
estimate his theoretical optimum benefits. The op-
tions available to the wetlands owner might be to
maintain the status quo (if he has no interest in
changing management to achieve the theoretical
optimum). to drain the wetlands and produce mar-
ketable outputs, or to enhance the productivity of
the natural s stem. The model can tell us the net
benefit from crop production. If the difference be-
tween cropping and the status quo is large enough
to induce the landowner to choose the former, the
social benefits of natural wetlands will be for-
feited. Policy makers then have the option of of-
fering a monetary incentive equal to (or greater
than) the wetlands owner's opportunity cost of
preserving the wetlands. However, we now only
know the dollar value of the owner's options and
not society's.
To derive society's benefits, we first need to
look at user and regional benefits. User benefits
were briefly exemplified above in the case of the
duck hunter, where benefits arise from game bird
production and complementary outdoor amenities.
Many user benefits remain unquantified, but when
they are to be compared-as in this framework-
to other benefits, all should be measured with a
common denominator and under similar assump-
The maximum aggregate dollar values of user
benefits can be approximated using the program-
ming or simulation formulation, as can values of
specific user types under alternative management
schemes. As with owner benefits, an actual level
and a theoretical optimum exist. Policy makers are
left with the choice of what level to use in their
decision making.
Regional benefits stem from regional economic
interdependenlcies and functions of wetlands bene-
ficial to the region. Recreationists' expenditures in
local businesses may generate personal income and
support enmplo mienit in the region. Regional bene-
ficial functions of wetlands include flood damage
prevention and groundwater recharge.
The ultimate and most perplexing task is to com-
bine( owner, user, and regional benefits, together
with any social benefits per se (e.g.. ecological di-
versity ) to estimate a total social value. This value
can tlheln Ie compared with the owner's oppolr-
tuniity 'ot of preservation to (deterniili if society
(citizcln) luhould t i i(hue preservatiil tihrmigh reg-




ul.atii, (1 itciintli4. 'h1' basic" economlicVs of this
a;utitiiln11 alle ill II L itc'l ( 191). WSJ
At fast obwlrvatilon. this nlli\ seen' like a for- if not insurmountable task. And it is. given
thai state of the art. However, the structure pre-
sented here calln he used piecemeal. progressively
filling the data gaps. The rationale for wetlands
valuation is to suggest to policy makers and the
public the optimal allocation and management of
these sensitive natural resources. The process is
analogous to an auction, where bidders raise their
hids in turn, until only the highest bidder remains.
The highest bidder need only outbid all others, not
bid his or her maximum willingness-to-pay. In de-
termining the optimum wetlands allocation, we
need only ordinal relationships. As long as one al-
location can be shown to represent an aggregate
benefit that is greater than all others, the differ-
ence need not be quantified.
Wetlands benefits should be estimated in order
of the ease and reliability of measurement; once
the benefits of all feasible alternative uses have
been outbid, there is no need to continue estima-
tion. For example, if the flood control benefits of
maintaining a wetlands can be shown to exceed the
benefits of competing uses, then preservation is
economically warranted. In some areas recreational
benefits may be easy to estimate. while in others it
may be easy to estimate water storage benefits. In
many cases, the alternative-use benefits may be ex-
ceeded without including values for hard-to-meas-
ure benefits. However, benefit estimation must
continue in light of the dynamic nature of natural
systems and the propensities of human beings for
reordering their preferences.

The proposed wetlands valuation model attempts
to simulate the dynamic and highly interactive na-
ture of the system to provide estimates of value
to peculiar beneficiary groups. A multidisciplinary
approach is proposed that allows detailed analysis
of components of the ecosystem that in turn lead
to analyses of product outputs and subsequent es-
timation of socioeconomic values on a broad scale.
Much work needs to be done to estimate wet-
lands values that are verifiable, comparable, and
acceptable to all parties involved in wetlands al-
location disputes. It is not so much that intra-
disciplinary techniques need to be developed, but
that interdisciplinary cooperation needs to be im-
proved so that researchers with different interests
can work together toward a common end. The
model depicted in Figure 1 represents a frame-
work for practitioners from all involved disciplines

to (lsitdn .ii l conduct comple'nc ntflary pi''ees of re
The successful iionetar% valuation of prairie
wetlands will hinge on:
1. successful simulation of the ecosystem and its
2. identification of those members of society who
derive benefits from wetlands products and
services, and
3. the ability to estimate those values.
Each is a formidable task.
In addition, we must not forget that there will
always be noneconomic influences on policy mak-
ing. The economic guideposts that would evolve
from valuation models (such as the model pro-
posed here) are but a part of the system of ac-
counts necessary for decision making. Individual
preferences, as reflected through the political sys-
tem. certainly play a role. as do the influences of
a host of social and environmental organizations.

Batic, S. S.. Shabman, L. A.. and Cordes. C. L. 1980.
Economic Valuation of Natural Habitats: An Intro-
duction to Analytical Approaches and Environmental
Information Needs. FVS/OBS-80 (photocopy). U.S.
Department of the Interior, Fish and Wildlife Service,
Office of Biological Services. Washington. D.C.
Boynton. W. R.. Kemp, W. M.. and Stevenson. J. C. 1979.
A research design for understanding and managing com-
plex environmental resource systems. In Strategies for
Protection of Flood Plain Wetlands and Other Riparian
Ecosystems, R. Johnson and J. F. McCormick. Techni-
cal Coordinators. pp. 189-177. GTR-WO-12. U.S. De-
partment of Agriculture, Forest Service, Washington, D.C.
Browder, J.. Littlejohn. C.. and Young, D. 1976. South
Florida: Seeking a Balance of Man and Nature. Univer-
sity of Florida Center for Wetlands. Gainesville.
Fraver, W. E.. Monahan. T. J., Bowden. D. C., and Gray-
bill. F. A. 1983. Status and Trends of Wetlands and
Deepwater Habitats in the Conterminous United States:
1950s to 1970s. U.S. Department of the Interior, Fish
and Wildlife Service, Office of Biological Services, Wash-
ington. D.C.
Goldstein, J. H. 1971. Competition for Wetlands in the
MAidcwst: An Ectonomic Analysi.. Resources for the Fu-
ture. Washington, D.C.
Gosselink. J. (.. Odum, E. P., and Pope. R. M. 1974. The
Value of the Tidal Marsh. Louisiana State University
Center for Wetlands Resources Report No. LSU-SC-74-
03. Baton Rouge.
Gupta, T. R. 1973. Economic criteria for decisions on
preservation and alteration of natural resources with
special reference to freshwater wetlands in Massachu-
setts. Ph.D. dissertation. University of Massachusetts.
Hill. D. 1976. A modeling approach to evaluate tidal wet-
lands. Transactions of the Forty-first North American
A'ildlife aid Natural Resourcrs Comferencr 41: 105-117.

a I


Intriligator. M. D. 1978. Econometric Models, Techniques,
and Application. Prentice-Hal, Inc.. Englewood Cliffs,
Jaworski, E. and Raphael. C. N. 1978. Fish. Wildlife, and
Recreational Values of Michigan's Coastal Wetlands:
Wetlands Value Study, Phase 1. Eastern Michigan Uni-
versity, Department of Geography and Geology, Ypsi-
Larson, J. S., Ed. 1976. Models for Evaluation of Fresh-
water Wetlands. Publication 32. University of Massa-
chusetts Water Resources Research Center, Amherst.
Leitch, J. A. 1981. Valuation of Prairie Wetlands. Ph.D.
dissertation, University of Minnesota, St. Paul.

Martel. R. J. and McLaughlin. D. 1971. Analyzing Organi-
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Department of the Interior. Office of Water Resources
Research, Washington, D.C.
Thomas, M.. Liu, B. C., and Randall, A. 1979. Economic
Aspects of Wildlife and Wetlands. Midwest Research
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ment, pp. 107-129. Fort Valley State College, Fort Val-
ley. GA.


October 1 & 2, 1984
J. W. Marriott Hotel
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For further information about the conference, please contact:
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