The Value of Wetlands for Flood Mitigation
36 Pages Posted: 19 Jul 2014
Date Written: June 1, 2014
Floods cause billions of dollars in property damages each year in the United States. While programs like flood insurance and disaster relief help to lessen the burden on those harmed, they do nothing to mitigate the severity of floods. Wetlands have a natural ability to mitigate the impacts of flooding through the slowing of runoff and absorption of excess rainwater. For this purpose they are inherently valuable. This study implements a hedonic analysis to study the complicated interactions between property values, wetlands, and flood risk using detailed property transaction data in the Hudson River Valley of New York State. We augment this analysis with GIS data including FEMA flood risk maps, the location of wetlands and other land uses, and various geographic layers. We find, as expected, that higher levels of flood risk, as well as the realization of actual flooding events, negatively impact property values. We also find that the presence of wetlands mitigates the negative effect of floods to properties in flood zones, which is likely due to a reduced severity of damages. The magnitudes of these effects suggest that wetlands provide considerable benefits to property owners and the results provide a partial benefit measure for policymakers, especially to state and federal programs, such as the USDA’s wetlands and conservation reserve programs whose primary aim is to preserve and restore these natural buffers.
Keywords: Wetlands, Hedonic Analysis, Ecosystem Services, Flooding, Natural Disasters
JEL Classification: Q5
Suggested Citation: Suggested Citation