Ecological Economics 35 2000 35 – 45
SPECIAL ISSUE THE VALUES OF WETLANDS: LANDSCAPE AND INSTITUTIONAL
PERSPECTIVES
Economic criteria for using wetlands as nitrogen sinks under uncertainty
Olof Bystro¨m
a,
, Hans Andersson
a
, Ing-Marie Gren
a,b
a
Department of Economics, Swedish Uni6ersity of Agricultural Sciences, Box
7013
, S
75007
Uppsala, Sweden
b
Beijer International Institute of Ecological Economics, The Royal Swedish Academy of Sciences, Box
50005
, S
10405
Stockholm, Sweden
Abstract
If the environmental damages that are caused by excessive nitrogen load to the sea depend on the timing of emissions, then monitoring the stochastic variation of emissions is crucial for controlling eutrophication damages. A
significant problem of nonpoint source NPS nitrogen pollution is that emissions are stochastic and difficult to control. The main purpose of this paper is to examine under what criteria wetlands are economically rational to use
for controlling stochastic NPS pollution. Three criteria are identified using a simplified stochastic watershed model. It is suggested that wetlands are economically rational to use, especially when monitoring the uncertainty of emissions
is a part of the decision problem. The theoretical findings are illustrated with an example from southwestern Sweden. © 2000 Elsevier Science B.V. All rights reserved.
Keywords
:
Chance constraints CCP; Costs; Nitrogen abatement; Swedish wetlands; Stochastic; Uncertainty www.elsevier.comlocateecolecon
1. Introduction
Over the past decade, the use of wetlands for abatement of point and nonpoint source pollution
has received substantial attention in the literature e.g. Folke, 1990; Hammer, 1992; Gren, 1993;
Mitsch and Gosselink, 1993; Jansson et al. 1994. From an economic perspective, wetlands have
been suggested as a low cost measure to reduce point and nonpoint pollution Folke, 1990; Gren,
1993; D’Angelo and Reddy, 1994; Gren, 1995. However, none of the previous studies have ad-
dressed the issue of uncertainty in relation to the economics of wetland restoration. If environmen-
tal damages are created partly by peak loads of pollutants, such as seasonal and annual variations
in nitrogen load to the sea, then it is of vital importance to monitor the uncertainty of emis-
sions. Consequently, addressing the uncertainty of wetlands’ abatement capacity and impact on the
overall uncertainty of nonpoint pollution may
Corresponding author. Fax: + 46-18-673502. E-mail address
:
olof.bystromekon.slu.se O. Bystro¨m. 0921-800900 - see front matter © 2000 Elsevier Science B.V. All rights reserved.
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have implications for the economic relevance of wetlands, and for implementing economic policies
designed to control point and nonpoint source pollution.
In this paper we examine under what conditions wetlands are economically rational to use for
abatement of nonpoint nitrogen pollution, recog- nizing that agricultural run-off as well as the
nitrogen abatement capacity of wetlands are stochastic. Economic criteria for wetlands are es-
tablished using a simplified theoretical model of a watershed. In contrast to previous studies on wet-
lands, we extend the analysis by explicitly model- ing the uncertainty of nonpoint emissions and the
uncertainty of nitrogen abatement in wetlands. The implications of uncertainty on the conditions
for optimal nitrogen abatement in a watershed are discussed, and an example from southwestern
Sweden is used to illustrate and evaluate the theoretical findings.
2. The model
