cvb attachment 3

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Corey and Dale

I would like to respectfully ask that you review the attached paper from 2004 and reflect on the past

recommendations by the City, to council, to approve the proposed commercial development on the

Salmon River Delta, as these recommendations appear to have been provided without full knowledge of

the value of the wetland or the risks the proposed development may represent. In my opinion, both

the public and council should have been informed as to the value and function of the Salmon River delta

wetlands and the role they play in arresting sediment, cleaning the water, and mitigating flood risks, not

to mention the ecological values.

The Salmon River does have a lot of flood plain, most of which has been cleared, drained and developed

for agricultural use. But the river only has one delta. Understanding the function of the delta is the key

to informed decision making, planning and design to address all of the needs of our community.

If you have any questions or if I can be off assistance from the perspective of a concerned citizen with a

fundamental understanding of the physical aspects of delta dynamics, please feel free to call.

CheersCalvin VanBuskirk, P.Eng., FEC, P.Geo.

744WETLANDS, Vol. 24, No. 4, December 2004, pp. 744755q 2004, The Society ofWetland Scientists

VALUING URBAN WETLANDS: A REVIEW OF NON-MARKET

VALUATION STUDIES

Tracy Boyer1and Stephen Polasky21Department of Agricultural Economics

Oklahoma State UniversityStillwater, Oklahoma, USA 74078

E-mail: [email protected] of Applied Economics

University of MinnesotaSt. Paul, Minnesota, USA 55108

E-mail: [email protected]: Wetlands provide a range ofvaluable ecosystem services from water purificationandnutrientretention to recreationandaesthetics. The value ofthese services is oftendifficult to quantify anddocumentto policy makers and the general public. Economists have developednon-market approaches toaddressdifficult issues related tovaluationofthe environment. This paper reviews recent literature onnon-marketvaluationas applied to wetlands, with a particularfocus on the value ofurban wetlands. Wetlandvaluationstudies have generateda wide range ofvalues, in part due todifferences in what is valuedand in part duetodifferences in methodology. Several studies have shown that property owners value proximity to wetlandsinurbanareas. Inaddition, studies have found positive values for recreation (fishingand hunting), commercialfishing, water purification, andother ecosystem services provided by wetlands, although little ofthis

work has beendone onurban wetlands.Valuation studies can provide useful informationabout relativerankings ofvalue, showing, for example, that certain types ofwetlands or certain services are more highlyvalued thanothers. Whether the absolute magnitude ofvaluation estimates is correct is less clear.Key Words: wetlands, urban wetlands, non-market valuation

INTRODUCTIONMany humandecisions, both ofprivate landownersand public agencies, affect wetlands. Urban wetlands,in particular, are affected by humanactions. It is notclear that those who make decisions that impact uponwetlands have good informationabout the consequences


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oftheirdecisions on these wetlands and the consequentimpact on the provisionofa range ofecosystemservices provided by wetlands. Without such information,inferiordecisions resulting in reducedoverall

benefits to society may result. Tofill theinformationvoid, economists andothers have undertakenresearch to estimate the value ofvarious benefitsto people created by wetlands. In this paper, we reviewrecent literature on non-market valuationas appliedto wetlands, with a particularfocus on the value ofurban wetlands.Untilaround the middle ofthe 20th century, wetlandswere often perceivedas unhealthy, dismal placesthat were impediments to economic development (Vileisis1997). Ditchinganddraining wetlands was encouragedand widespread. Roughly 50 percent ofallwetlands that occurred in the lower 48 states at thetime ofarrivalofEuropean settlers have beendrained.In some areas, such as Californiaand the U.S. MidwestCorn Belt, wetlandlosses are as high as 80 to 90

percent (Mitsch and Gosselink 1993). More recently,attitudes towards wetlands have changed, thanks inlarge part to increasedunderstandingofthe ecologicalrole played by wetlands. Wetlands provide avarietyofvaluable ecosystem services, including water purification,filtration, retentionofnutrients, flood control,ground-water recharge, and providing habitat foravarietyofspecies. Wetlands are alsovaluedfor recreationalandaesthetic reasons.Along with the shift in scientific understandingand

public opinion, there has also beena shift in publicpolicy. Insteadofencouraginglandowners todrainwetlands, policy is now directed toward protecting

wetlands. For example, the Swampbuster provisionintroduced in the Food Security Act of1985 requiresfarmers to protect wetlands on theirland ifthey wishto be eligible for U.S. Department ofAgriculture farm

program benefits. Section 404 ofthe Clean Water Actrequires a permit from the U.S. Army Corps ofEnBoyer& Polasky, VALUING URBAN WETLANDS 745gineers fordischarge ofdredgedorfill material intowetlands. Federalgovernment policy, along with policiesofmany state governments, calls for nonetlossofwetlands. Ifwetlanddestruction is permitted,alandowner may be required to restore wetlands elsewhereto compensate for the loss.

Despite the increasedappreciationofwetlands andgovernment policies directed towards protecting wetlands,loss ofwetlands continues. Wetlandlosses inthe period 1980 to 1990 were estimated to be 23,674hectares annually (Dahl 2000). This figure was downfrom an estimated 117,359 hectares per yearfrom1970 to 1980 and 185,346 hectares per yearfrom 1950to 1970 (Dahl 2000). Changes inagricultural policy,including Swampbuster, have gone along way towardreducingloss ofwetlands toagriculture. Other


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categories ofthreat have not been reducedas much.Infact, for the periodof1980 to 1990, wetlandlossestourbandevelopment outpacedlosses from agriculture.During this period, 30 percent ofwetlandlosseswere tourbandevelopment, while 26 percent ofthelosses were toagriculture (Dahl 2000).Urbanization has become a major cause ofthe lossofwetlandarea. Wetlanddestruction inurbanareasoccurs primarily through commercialand residentialdevelopment and establishment ofroad infrastructure.Inaddition tooutright wetlanddestruction, urbanizationalsoleads to the impairment ofwetlandfunctionin remainingurban wetlands (e.g., see Booth 1991,Knutson et al. 1999, Lehtinen et al. 1999, Azous andHorner 2000). Urbanizationdirectly impacts these remainingwetlands by changing their hydrology, increasingrunoffofnutrients and pollution, increasingexposure to introduced species, and increasingfragmentation.The battle to protect wetlands may face its toughesttest inurbanareas. The stakes inurbanareas are high

because both the benefits generated by wetlands andthe costs ofprotecting wetlands are likely to be high.Urban wetlands are likely to be valuable precisely becausefew wetlands remain inurbanareas. Urbanareashave high (human) populationdensities, dense transportationinfrastructure, and highly developedland.The opportunity toobserve birds andother wildlife istypically limited inurbanareas, as is the existence ofopen space andnatural habitat. Urban wetlands provideaesthetic and recreational benefits close to wherelarge numbers ofpeople live. Similarly, flood-control

protection provided by wetlands is likely to be ofgreatest value inurbanareas where such protection can

limit damage to residential, commercial, and industrialproperties. However, the costs ofpreserving wetlandsinurbanareas are alsolikely to be high. Land is expensiveinurbanareas. Undevelopedland inurbanareasis a scarce andvaluable commodity. A landownercan earnlarge returns by draining wetlands to buildhouses, a shopping center, or some other type ofurbandevelopment. Such profit margins offer powerful incentivesfor individuals to seek permits todestroy wetlandsto make way fordevelopment even ifalargerareaofrestored wetlandoron-site oroff-site mitigationis required.The costs ofwetland protectiondescribed in the previous

paragraph may not show up as adirect expenditureby agovernment agency ora private party. Thecosts ofwetlands protectionare often opportunitycosts, which equal the foregone value ofurbandevelopmentthat could have occurred without wetlands

protection, rather thananactual expense that shows uponaccount ledgers. Despite this, opportunity costs arequite real. High opportunity costs give landowners theincentive tolobby hard to be allowed todrain wetlands,and they generate heavy political pressure on


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agencies responsible for wetlands protection toallowdevelopment.Although wetlands provide important services to society,these services typically are not soldnordo theyhave a market price. Therefore, private landowners donot typically receive a returnon preserving wetlands,even though these wetlands may provide valuable servicesto society. The prospect oflarge returns toalandowner through development and the lackofreturnsfrom protecting wetlands stack the deck towarddevelopment. In the absence ofregulation, most privatelandowners willdecide tofill wetlands becausethe private benefit from development is typically fargreater than the value capturedfrom preserving thewetland. From a social point ofview, however, justthe opposite may be true. Ifone couldaddup allofthe values generated by a wetland, the benefits mightoutweigh the value ofdevelopment. Public policy cancorrect for this bias ofthe market towarddevelopmenteither by regulating the loss ofwetlands, (e.g., the no

net loss policy), or creating subsidy programs forwetland preservation such as the Conservation ReserveProgram, the Wetland Reserve Program, and the WildlifeHabitat Incentive Program. Introduced by the FoodSecurity Act of1985, the Conservation Reserve Program(CRP) was created to protect environmentallysensitive croplandand pastureland. Producers voluntarilyremove landfrom agricultural productionandseed the land toa permanent cover crop or, in somecases, restore and revegetate afarmed wetland. In return,farmers receive annual rental payments from theFarm Service Agency for the retiredlandandassistancefor establishing permanent land coverfora contracted

periodof10 to 15 years. Like the CRP, theWetlands Reserve Program (WRP)and Wildlife EnhancementIncentive Program, both administered bythe Natural Resources Conservation Service, provide746 WETLANDS, Volume 24, No. 4, 2004cost-share agreements for wetland restorationand paymentsfor conservation easements on restored wetlands.The WRP does allow for permanent conservationeasements to retire wetlandoradjacent uplandfrom farmingordevelopment permanently. Landownerscannot enroll their property in multiple programs.Knowing when it is in societys best interest to preventwetlandloss, however, requires having some way

to estimate the values ofwetland preservation inorderto weigh this against the values ofdevelopment. Establishingsuch estimates is adifficult, and some wouldsay impossible, task. Economists have developedanumberofmethods for estimatingnon-market benefitsandapplied these methods to estimate benefits provided

by wetlands. In this paper, we focus onnon-marketvaluationapproaches. We willnot review alternativeapproaches, such as the methodofmeasuring energyembodied innatural resources (Odum 1996). In the


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next section, we discuss the role ofnon-market valuationin makingdecisions to preserve, restore, ordevelopwetlands. In section three, we review the methodsfor estimating benefits and review the applicationofthese methods to estimating the value ofservices

provided by wetlands, with particularattention tourbanwetlands. In the final sectionofthe paper, wediscuss some ofthe continuing controversies overthese valuation methods and theirapplication. We alsodiscuss some ofthe gaps inourunderstandingandourownview ofthe debate overvaluationofecosystemservices in the context ofurban wetlands.

NON-MARKET VALUATION ANDDECISION-MAKING

Non-market valuationarose from the desire to includethe natural environment in the decision-makingcalculus. Goods and services that are sold in marketsare valuedvia market prices. Any policy proposal thataffects the value ofmarketedgoods and services forsome segment ofsociety brings forwardadvocates

with evidence on how much (market)value will begainedorlost should the proposalgoforward. Often,those whofavor protecting the natural worldfindthemselves at adisadvantage in politicaldebates becausethey cannot express the gains orlosses invaluesarisingfrom environmental changes in monetaryterms. Sometimes, the lackofa monetary estimate ofvalue for the natural world is treatedas ifthe naturalworld has zerovalue. To make afair comparisonof

policy alternatives, allofthe consequences ofa proposalshould be weighed, not just those consequencesthat are easily measuredandvalued in monetary terms

because they are bought and sold ina market. Tofill

this void, economists andothers have attempted tosupply monetary estimates ofvalue created by the naturalenvironment, as wellas other things that are not

bought and sold ina market but nonetheless have value.Some analysts object to the whole exercise ofnonmarketvaluationas applied to the environment (e.g.,Sagoff1988, Spash 2000). One objection tovaluationarises because it is a strictly anthropocentric measureanddoes not account fornon-humanvalues andneeds.Analternative toananthropocentric view is a biocentricor ecocentric view in which the source ofvaluemay be other species or ecosystem processes ratherthan how species or ecosystems satisfy human wants

andneeds. Ina practical sense, there may be less tothe distinction betweenanthropocentric views on theone handand bio/ecocentric views on the other thanappears at first glance. Ifsome people decide that naturehas intrinsic value, ananthropocentric valuationexercise ofthese individuals wouldfind similaranswersto questions about relative values oralternative

policies as woulda bio/ecocentric approach. Inotherwords, ifpeople place intrinsic value onother speciesor have desires to see natural processes workunfettered


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by human interference, ananthropocentric viewcan still place high value on protecting the naturalworld. In most democratic countries, outcomes are determined

by the desires ofthe majority ofcitizens. Inthe end, what matters is what the majority ofpeopleina society care about. In policy debates, each sidewillattempt to marshal compelling evidence that their

preferredalternative is in societys best interest, whichis ultimately ananthropocentric exercise.A secondobjection tonon-market valuation is thatthe pricingofthe natural world is a particularly poignantexample ofthe moralfailings ofthe capitalistsystem in which everything is thought ofin terms ofcommodities and money. To some, it just seems wrongto try tolookat nature through this prism. The pointofvaluation, however, is not to think in money ormarket terms but toframe choices and make clear thetradeoffs betweenalternative outcomes. Allowingdrainingofa wetland may increase crop productionorincrease the supply ofdevelopable landfor housing

but does soat the cost ofdecreased habitat, potentialloss ofspecies, potential water quality degradation,and ecosystem processes. Is this tradeoffworthwhile?This is the type ofquestionfor which valuation can

provide useful information.A thirdobjection tonon-market valuation, particularlywhen trying tovalue elements ofthe naturalworld, is raisedon practical rather than philosophicalgrounds. One way to thinkabout the value ofwetlandsorother ecosystems is to thinkabout the value oftherange ofecosystem goods and services produced

by the ecosystem (Daily 1997).Valuing ecosystemsgoods and services requires a) that the complete range

Boyer & Polasky, VALUING URBAN WETLANDS 747Table 1. Classificationoftotal economic value for wetlands.Use ValuesDirect Use Value Indirect Use Value OptionValue

Non-Use-ValuesExistence ValueFisheries Nutrient retention Potentialfuture uses (direct andindirect)Biodiversity (habitat)Agriculture Flood control Future value ofinformation Culture, heritageFuel-wood/Timber Storm protection Bequest valuesRecreationcHunting

cFishingcBirdwatching

cHikingGround water rechargeTransport External ecosystem supportWildlife harvesting Micro-climate stabilizationPeat/energy Shoreline stabilizationWater purification (wetlandscreatedfor sewage treatment)Waterfiltrationfrom pollutants, suchas nitrogenand phosphorus.Adaptedfrom Barbier et al. (1997).

Available at http://www.ramsar.org/libpvalpep1.htm#cap2


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ofgoods and services be identified, b) that these goodsand services can be quantified, and c) that quantitiesofthese goods and services can be valued ina commonmetric, typically in monetary terms. Each ofthesethree steps presents practical challenges for trying tovalue wetlands. Wetlands are complex, dynamic systems.It may be difficult even tolist allofthe services

provided by wetlands, much less quantify the amountofeach service produced. Some ecosystem goods andservices can be readily valued in monetary terms (e.g.,commercially harvestedfish), while others present severechallenges (e.g., existence value fora species orthe aesthetics ofaview). We will have more to sayabout practical concerns about valuationas applied towetlands as we proceed.Market andnon-market valuationofwetlands attemptstoaccount forallofthe values that individuals

place on the goods and services provided by wetlands,such as bird watching, flood control, waterfiltration,andaesthetic value. Some ofthese values are consumptive

use values that accrue from directly exploitingelements ofwetlands (e.g., timber harvestingorduck hunting). Some consumptive use values can beestimatedusing market prices (e.g., timber harvests),while others typically cannot. For example, estimatesofthe value ofduck huntingare typically done usingnon-market valuation (Hammackand Brown 1974,Ganand Luzar 1993, Cooper 2000). There are alsonon-consumptive use values where the activity causesno physical change in the wetlands. A good exampleofanon-consumptive use is bird watching. Individualswholive downstream may benefit from the indirect usevalue ofupstream wetland services for waterfiltration,

water retention, andflood prevention. Both non-consumptiveuse values and indirect use values are typicallymeasuredusingnon-market valuation techniques.Even things for which there is no knownuse at presentmay eventually prove to be useful. For example, forestowners considered the Pacific yew tree (Taxus brevifolia)worthless until the discovery ofadruguseful infighting cancer (Taxol) that could be made from its

bark. The potentialforfuture use value generates anoptionvalue, so-named because there is value only ifthere remains the option touse the resource in thefuture (i.e., only by preserving the resource). Finally,there may also be non-use values when individuals

place value on the existence ofan item, even thoughthey willneveruse it, even indirectly. Almost by definition,non-use values must be measured by non-marketvaluation techniques. Table 1 provides a classificationofuse andnon-use values for wetlandfunctionsand services.Five principal methods are used in the context ofvaluing wetlands: i) the hedonic method, ii) travel cost,iii) production methods, iv) replacement cost, andv)survey-based methodscontingent valuationand conjoint


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analysis. An excellent general treatment and reviewofthese methods is given in Freeman (1993). Inthe next section, we review applications ofthese techniquesto the valuationofwetlands.APPLICATION OF VALUATION METHODSTO WETLANDSEstimating the value ofwetlands in monetary termsgoes backat least as faras 1926 when Percy Viosca,Jr., afisheries biologist, estimated that the value offishing, trapping, and collectingactivities from wet748WETLANDS, Volume 24, No. 4, 2004lands in Louisiana was worth $20 millionannually(Vileisis 1997, p. 162). Economists didnot enter the

business ofestimating the value ofwetlands untilmuch later. A landmark early valuation study by economistswas by Hammackand Brown (1974). Hammackand Brownfocusedon wetlands as waterfowlhabitat and estimated the value that wetlands providedin terms ofhunting. The focus on huntingandfishingvalues directedattention primarily to ruralareas. It has

only beenfairly recently that attempts tovalue wetlandshave moved beyond estimates forfishingandhunting. By now, however, there are agrowingnumberofempirical studies ofthe value ofa wide varietyofservices provided by wetlands. Despite the increasein breadth ofservices studied, it remains the case thatthe vast majority ofwetlands valuation studies aredone for wetlands in ruralareas.Virtually the onlyworks valuingurban wetlands todate are studies usingthe hedonic method (see below).Valuation studies ofwetlands done todate show avery wide range ofestimates. A recent meta-analysiscovering 39 valuation studies by Woodwardand Wui

(2001)found that the meanvalue per hectare per serviceofa wetlandvariedfrom $1.21 per hectare foramenity value toas high as $490 per hectare for birdwatching (1990 dollars). Ina review covering 33 studies,Heimlich et al. (1998)founda range ofempiricalestimates for wetlandvalues between $0.02 and$8,924 per hectare. The wide range ofvalues occurs

because different studies focusedondifferent wetlandservices indifferent areas (mostly rural). Part ofthevariation, however, is also caused by the use ofdifferentmethods. We now turn to individualvaluationstudies that focus on particular wetland services in particularareas. We group these studies by the valuation

method employed.Hedonic MethodThe hedonic methoduses observed market pricesfor composite (multi-attribute)goods with many characteristicsthat contribute to its value touncover thevalue ofparticular characteristics for which there is noreadily available signalofvalue. Many hedonic studiesuse dataon sales prices ofhouses to estimate the valueofvarious aspects ofenvironmental quality. Usingdataon the market sale prices ofhouses, along with structural,


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neighborhood, and environmental characteristicsofthe houses, one can estimate how a change inonecharacteristic, such as proximity toa wetlandor theattributes ofanearby wetland (size or type), is relatedtoa change in property value, holdingother characteristicsofthe property constant. Urbanareas are idealforapplicationofthis approach because there is typicallya wealth ofdataavailable on house sales.Three studies have applied the hedonic method toestimate the value ofwetlands tonearby property ownersinurbanareas (Lupi et al. 1991, Doss and Taff1996, Mahan et al. 2000). All three studies finda positiveimpact from wetlands on property values. Mahanet al. (2000)useddataonover 14,000 home sales inthe Portland, Oregon metropolitanarea, along with detailedinformationabout housing characteristics, GISinformationonlocationofwetlands, lakes, rivers,streams, andother environmentalamenities, as wellasthe locationofindustrial, commercial sites andotherneighborhood characteristics. They found that closer

proximity toa wetland increased property value. Decreasingthe distance to the nearest wetland by 300meters from an initialdistance of1.6 kilometers resultedinan estimated increase in property value of$436 (1994 dollars). They alsofounda $24 increasein house value with an increase in the size ofthe nearestwetland by one hectare. Lupi et al. (1991)useddatafrom Ramsey County, Minnesota, where St. Paulis located. They estimated that an increase in wetlandsacreage in the survey section where the house was locatedincreased housingvalue by $19 per hectare ofincreased wetlands (1989 dollars). The increase invaluefor wetlandarea tended to be greater inareas where

there were few nearby wetlands. Doss and Taff(1996)alsofounda positive value from nearby wetlands usingdatafrom Ramsey County, Minnesota. They founda

preference foropen-water wetlands and scrub-shrubwetland types over emergent-vegetationandforestedwetlands.Hedonic studies ofthe value ofwetlands in ruralareas show a more mixed response. Reynolds and Regalado(2002)found the type ofwetlandlargely determinedwhether the presence ofa wetland positivelyornegatively affectedlandvalues. They found thatforestedand emergent palustrine wetlands in Florida,which accountedfor 94% ofthe wetlands in the study,

hadnegative effects on rurallandvalues. However,scrub-shrub and shallow pond wetlands hada positiveeffect onlandvalues. Shultz and Taff(2004)foundthat farmland prices in North Dakota with wetlandswere lower by $85 per hectare than those without wetlands,almost halfofthe average local croplandvaluesfrom 1995 to 2002. They noted that using rurallandsales can be problematic because there are oftenfewland sales inageographic region. Foragriculturallandvalues, the predominantly negative effect ofwetlands


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was not surprising since the hedonic method measuredthe relative decrease inagricultural productionvalueas reflected inland price received by the private owner,rather than the public values for wildlife and species

protection. Usingdatafrom eastern North Carolina,Binand Polasky (2004)found that proximity toinland wetlands lowered property values.Boyer & Polasky, VALUING URBAN WETLANDS 749The hedonic method is the only approach todatethat has beenapplied in more thana passing mannerto the valuationofurban wetlands. These studies showthat proximity to wetlands increases nearby propertyvalues. The availability ofdataon housing sales andhousing characteristics and the recent increase inavailabilityofGIS dataon environmental characteristicsmake this anattractive approach. The maindrawbackofthe hedonic method is that it only measures thevalue ofwetlands as perceived by nearby propertyowners. Services such as flood control, water-qualityimprovement, habitat provisionfor species, and

ground-water recharge anddischarge may provide valuesthat accrue faraway to individuals other thanlocal

property owners. Inaddition, such services may belargely invisible to the typical property owner. Ifso,the hedonic method willnot accurately capture the fullvalue ofservices provided by wetlands.Travel CostThe travel cost approach uses informationabout thenumberoftrips to particular sites and the cost ofthosetrips to infer how much individuals are willing to payforaccess to the site. Travel cost studies are applied

primarily to studies ofthe value ofrecreation, in whichpeople travel to particular sites to hunt, fish, hike, or

watch wildlife. Although there are numerous travelcost studies in environmental economics, there have

beenvery few applications specifically to wetlands andnone tourban wetlands.VanVuurenand Roy (1993)used travel costs ofindividuals to estimate the benefitsofhuntingandfishing in the Lake St. Clair wetlandsin Ontario. They estimatedanet present value of$271

per hectare forun-diked wetlands and $1,715 to$2,952 per hectare fordiked wetlands (1985 Canadian$, over 50 years, andassumingafour percent discountrate). Cooperand Loomis (1991) estimated the valueofseven wildlife reserves in the San JoaquinValleyin Californiaat $55.41 per waterfowl hunter per season

usingdataon the 1987 and 1988 seasons. The totalconsumer surplus from hunting in the seven refugeswas estimated to be over $3 millionannually (1989dollars).The travel cost method can be used tovalue recreationalfishing, hunting, and birdwatchingassociatedwith wetlands. Todate, however, there has beenverylimitedapplicationofthis approach to wetlands. Aswith the hedonic method, travel cost studies only evaluate

part ofthe totalvalue ofwetlands and cannot be


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used tovalue public goods aspects ofwetlands, suchas flood controlorground-water recharge anddischargethat are unrelated to recreation. Unlike the hedonicmethod, there seems to be limitedapplicabilityofthe travel cost method to the valuationurban wetlands.Production MethodsProduction methods can be used to estimate the valueofincreased economic productivity attributable towetlands. There is along history ofusing estimates offish and wildlife productionfrom wetlands going backto workofViosca in 1926 (as cited inVileisis 1997,

p. 162), Hammackand Brown (1974)andothers.Coastal wetlands are recognizedas being importantnurseries for commercially harvestedfish species(Boesch and Turner 1984, NRC 1995, Beck et al.2001). The majority ofapplications ofthe productionapproach to wetlands have estimated the value ofcoastal wetlands for increasedfishery productivity.Lynne et al. (1981) estimated that a hectare ofestuarinemarsh in Floridas GulfCoast would yieldanadditional

2.3 pounds ofcrab per yeargeneratinganannualvalue ofabout $0.10 to $0.12 per hectare (1971dollars). By itself, this value wouldnot add much evidenceinfavorofpreservationofFlorida GulfCoastmarshes. Swallow (1994) estimated the value ofcoastalwetlands in North Carolinafor commercialfisheries

productionandfoundvalues that were low in comparisontoalternative landuse inagriculture. In contrast,Batie and Wilson (1978)found that the marginalvalue ofoyster productionon the Virginia coast rangedfrom $0.46 per hectare toas high as $57.25 per hectare

per year (1969 dollars), dependingon the salinity,physical characteristics, and capital invested inoyster

harvesting by site. Other studies estimating the valueofwetlandfor commercialand recreationalfisheriesinclude Ellis and Fisher (1987), Farberand Costanza(1987), Bell (1989, 1997), and Freeman (1991). Thesestudies assume simple relationships betweenareaofwetlands andfishery productivity.Recent papers by Barbierand colleagues have incorporated

populationdynamics as wellas area to estimatethe value ofmangrove systems and coastal wetlandsforfisheries production in Thailand, Mexico, andother countries. Barbier (2000) contains auseful reviewofmany papers valuing mangrove-fishery relationships.Barbier et al. (2002)found that the value of

remaining mangrove hectares forfisheries productionin Thailandas mangroves continue todecline wasquite sensitive toassumptions about the elasticity ofdemandforfisheries output (i.e., how responsive thequantity demanded is to changes in price). The estimatedmarginalvalue ofa hectare ofmangrove forfishand shellfish production was $135.44 per hectare peryear, with highly inelastic demand (demand changedlittle with changes in price) but only $3.98 per hectare

per year whendemand is highly responsive (elastic) to


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750 WETLANDS, Volume 24, No. 4, 2004price changes (1993 dollars). Mangrove degradationandlosses cause adecline in productionoffish andshellfish. Whendemand is inelastic, decreases inoutput

bringforth alarge increase in price and, hence, ahigh value per hectare for remaining mangroves. Asimilar study by Barbierand Strand (1998) modeledmangrove-shrimp fishery linkages in Campeche, Mexico.They found that the decrease in productivity ofharvest effort was only partially due to mangrove destruction.An increase in the numberoffishingvesselsand consequent over-fishing were also partially to

blame. Both the Mexicoand Thailand studies illustratethe importance oflookingat the interactions among

property rights andfishing regulations, wetlands loss,and biological productionon the valuationofwetlandservices infishery production, a point also emphasized

by Freeman (1991)and King (1998).The productionapproach has also beenused to estimatethe value ofwetlands inother contexts. Acharya

and Barbier (2000, 2002)and Acharya (2000)usedproduction methods to estimate the value ofthe hydrologicservices (ground water recharge)ofthe Hadejia-

Nguru wetlands innorthern Nigeria. Acharyaand Barbier estimated the loss in productive capacitywith a reduction inground wateravailable fordry seasonagriculture anddomestic use as a result ofreducedrecharge to the aquiferfrom wetlands. The loss ofground wateraffected welfare through decreased production,increased marginal cost ofpumping, and increasedcosts ofwater provisionfor the household.The value ofrecharge by wetlands inagriculture wasestimated to be $40.50 per hectare (1996 dollars) per

season, or 6 percent ofyearly income perfarmer(Acharya 2000).The productionapproach can be useful to estimatea partialvalue ofwetlands when there is a clearlink

between wetlands and the productionofan economicallyvaluable commodity. The existence ofmarket

prices for commodities produced (e.g., commerciallyharvestedfish) makes production-basedvaluationofuse values for wetlands less controversial than mostnon-market methods. There are, however, anumberofdifficulties in regard tovaluingurban wetlands. First,

because this approach is usually applied to the valueoffisheries oragricultural production, production

method studies typically occur in rural settings. Weare not aware ofany application todate ofthis approachtourban wetlands. Second, the approach typicallycaptures only one aspect ofvalue ofwetlands(e.g., increasedfishery productivity)and shouldnot beconfused with an estimate oftotalvalue created bywetlands. Third, property rights and regulatory issuescan heavily influence the estimates ofvalue (Freeman1991, King 1998, Barbier et al. 2002). For example,anopenaccess fishery willgenerate farlowervalue


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estimates thananoptimally regulatedfishery. Finally,estimatinga quantitative link between wetlands and

productivity is often quite difficult. In the case offisheryproductivity, naturalvariations infish populationdue to changes in salinity or currents, abundance of

prey or predator species, anddisease may make it difficulttodecipher the impact ofwetlands onfish productivity.The productionapproach cannot be appliedwithout a clearly establishedand quantifiable link between

productivity and wetlands.Replacement CostAnother way tovalue a service provided by a wetlandis to estimate the replacement cost ofprovidingthat service should the wetlandnolongerfunction

properly ornolonger exist. The most famous exampleofvaluing ecosystem services involves pricing the costofreplacing the waterfiltration services provided byundeveloped watersheds with adrinking waterfiltration

plant. The high replacement cost ($68 billion in1996)led public officials to protect the watersheds in

the Catskills as a cheaper means ofproviding cleandrinking waterfor New York City (Chichilnisky andHeal 1998). Wetlands, both naturaland constructed,are also effective at treatment ofsewage. Kazmierczak(2001) provides a summary ofa halfdozen studiesusing cost savings for tertiary municipal wastewatertreatment in Louisianaand Florida. The replacementcost estimates for wetlandvalues rangedfrom $1.15to $1,087.67 per hectare in 2000 dollars (Kazmierczak2001). Breaux et al. (1995) estimated cost savings forwastewater treatment by wetlands at fifteen Louisianaseafood processing plants of$2,522 to $3,899 per year

per hectare in 1992 dollars.

Replacement cost can be usedas a measure ofvalueofwetlands only in restricted circumstances. Two conditionsmust be satisfiedfor replacement costs to be avalid measure ofwetlands value: a) the same servicemust be supplied by wetlands andanotheralternative,and b) the service must be ofgreatervalue than thereplacement cost. It does not follow that services provided

by wetlands are highly valuablejust because humanengineeredalternatives to provide services are expensive.For example, buildingan expensive hatcherydoes not guarantee that the fish produced will be valuable.Ifreplacement oflost wetland services wouldnot

be chosen should the wetland be destroyed, then replacement

cost will exceed the value ofthe service andusing replacement cost willoverestimate value ofthatservice. On the other hand, as with the productionapproach,replacement cost typically focuses onone service

provided by a wetland (e.g., wastewater treatment)rather than the complete range ofvalues assoBoyer& Polasky, VALUING URBAN WETLANDS 751ciated with a wetlandand shouldnot be confused withthe totalvalue ofthe wetland.Survey-Based Methods: Contingent Valuationand


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Conjoint AnalysisIn some cases, there is noobservable behavior, suchas the purchase ofa house ora trip toa recreationalsite, direct productionlinks to commodities, or replacementalternatives that can be used togenerate estimatesofvalue. For such cases, the only approachescapable ofgenerating estimates ofvalue are surveybased(stated preference) methods. The most commonlyused stated preference method is contingent valuation,in which respondents are asked whether theywould be willing to pay a specifiedamount for someenvironmentalamenity. By varying the size ofthe paymentamount across different respondents, one cantrace out the demand curve for the environmentalamenityand estimate the mean willingness to pay ofpeoplein the sample for that amenity. Contingent valuationstudies have beenapplied to estimate the value ofvirtually every type ofenvironmentalamenity (seeCarson 2004 fora thorough bibliography). Conjointanalysis alsouses surveys togather information but,

unlike contingent valuation, is not exclusively focusedongenerating estimates ofwillingness to pay. Conjointanalysis asks people what tradeoffs they are willing tomake betweendifferent sets ofchoice attributes. In thecontext ofwetlands, a survey may ask whethera wetlandthat provided better habitat forfish was preferabletoa wetland that offered more bird habitat and betterflood control. Ifone ofthe choice attributes is cost,then willingness-to-pay estimates canalso be generated.A numberofcontingent valuation studies haveasked respondents the value they place onvarious servicesfrom wetlands (Woodwardand Wui 2001 containsreferences toanumberofsuch studies). Lant and

Roberts (1990) estimated that the mean willingness topay for increases in water quality attributable to riverinewetlands in 14 towns on the Illinois-Iowa borderrangedfrom $15.22 to $19.09 per hectare per year(1987 dollars). Stevens et al. (1995) estimated that themean willingness to pay forflood control, water supply

protection, and pollution controlfrom wetlands inNew England was $31.22 per hectare per year (1993dollars).Estimates ofwillingness to pay for protectingor restoringwetlands are sensitive to what is beingvalued,which is to be expected, but also to how questions areasked, which is troublesome. Mullarkey and Bishop

(1999) tested the sensitivity ofrespondents to informationabout mitigationactivities. The mean willingnessto pay toavoid wetland impacts was $8.41$23.40 per hectare per person in the group that wastold that no mitigation wouldoccurand $5.54$15.13

per hectare for the group that was told that mitigationwouldoccur (1993 dollars). Pate and Loomis (1997)found that willingness to pay for wetland quality andsalmonfishing in the San JoaquinValley was $87 perhectare per yearfor California residents who were


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closerandonly $27.52 per hectare per yearfor Oregonresidents (1989 dollars). Both Pate and Loomis (1997)and Mullarkey and Bishop (1999)find results that aresensitive to changes in ways that are expected. Weexpect individuals to be willing to pay more toavoidimpacts whenvalues will be lost foreveror willnot

be restoredandfor wetland quality in their home state.The California study also illustrates that total willingnessto pay candependon the scale orgroup that isincluded in the survey design. However, other studieshave found that survey responses about an identicalenvironmentalamenity can be quite different dependingon how the question is asked. For example, Hammitet al. (2001)founda mean household willingnessto pay of$21 (1993 U.S.dollars) to preserve the Kuantuwetland in Taiwan when respondents were askeddirectly how much they were willing to pay. Whenasked whether they would be willing to pay a specifiedamount, and thena higherfollow-up amount iftheysaid yes andaloweramount ifthey saidno (doublebounded

format), the mean household willingness topay was $65 U.S. per household, more than three timesthe mean whenaskeddirectly for willingness to pay.Critics ofcontingent valuationalso point out that

because the choice is hypotheticalanddoes not requireactual payment, respondents may say they are willingto pay more than they would ifthey were faced withanactual choice (e.g., Diamondand Hausman 1994).One way to test the degree to which survey responsesto hypothetical situations andactualdecisions in realsituations are the same is to compare the twofor thesame issue. Earnhart (2001) combineddiscrete-choicehedonic analysis and survey responses to estimate the

values fordisturbedand restored wetlands in Fairfield,Connecticut. He foundvery high willingness to payfor both restoredanddisturbed wetlands in his surveyresults (over $200,000). He foundnegative willingnessto pay fordisturbed wetlands (2$32,000)and positive

but somewhat smaller willingness to pay for restoredwetlands ($40,000) in his hedonic discrete choice analysis(1996 dollars). The magnitudes ofthe estimatesofwillingness to pay (both positive andnegative) inthis study are far higher than inother contingent valuationor hedonic studies.Azevedo et al. (2000) tested potential sources of

bias invaluing recreational trips to wetlands by comparing

actual travel costs versus survey responses tohypothetical changes in costs for recreational trips to752 WETLANDS, Volume 24, No. 4, 2004wetlands in Iowa. In the survey, respondents wereasked how many trips they would have taken that yearifthe price ofvisiting certain wetlands changedduetoanaccess fee. They found that the measure ofwillingnessto pay for wetlandvisits per yearfrom thesurvey was more than twoand halftimes the willingnessto pay derivedfrom residents actualvisits and


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travel costs ($264.65 versus $99.61 in 1997). It is notclear which ofthe two estimates is closer to reality.The hypotheticalnature ofsurveys cast doubt on thehigher estimate, while incorrect perceptions ofthetravel cost may cast doubt on the lower estimate.Azevedo et al. (2000) recommend that both methods

be usedjointly to estimate values. Using the same1997 dataon recreationalvisits to Iowa wetlands, vonHaefenand Phaneuf(2003) explored technical refinementsfor estimating willingness to pay with continuousand count data travel cost models to provide moreaccurate predictions ofrecreationusers behavior (i.e.,changes invisits toa recreation sites given changes inquality or trip costs).For sensitive environmental issues, survey respondentsmay be unwilling to compare environmentalquality and money. For example, Steven et al. (1991)found many people unwilling to respond to questionsabout tradeoffs between money and species existence.Conjoint analysis canavoidforcing respondents to

make tradeoffs between money and environmentalquality while stillgaining informationabout preferencesofrespondents. Morrison et al. (1999)used statedchoice conjoint analysis to study tradeoffs betweenagricultural employment and the presence ofwetlandsand endangered species for the Macquarie Marshes, alarge wetland in New South Wales, Australia. Theyfound higher willingness to pay foranadditional endangeredspecies present ina wetland, roughly $4,thanforan irrigation-relatedjob, for which willingnessto pay was about $0.13 (1997 Australiandollars). Althoughthe willingness to pay for improving quality to

protect endangered species was greater than existence

values for rural employment, the inclusionofemploymentin the choice models lowered the overall willingnessto pay for environmental improvements (e.g.,increased bird breedingfrequency, wetlandarea, andspecies presence) by 2030 percent in the scenariosused. Johnston et al. (2002) examined the value ofsaltmarshes to residents ofRhode Island. Survey respondents

placedgreatest value on mosquito controlandprotectionofshellfish habitat, followed by protectionoffish and bird habitat. Hoehn et al. (2002)analyzedhow Michigan residents would trade offcharacteristicsofa restored wetland, including type ofwetland, thequality ofhabitat for categories ofspecies, and their

likelihoodofseeingananimal while visiting, versusdrainingan existing wetland. Hoehn et al. (2002)found that in terms ofarea, 1.64 hectares ofrestoredwetlands were needed to compensate for the destructionofan equivalent hectare oforiginal wetland,showing that people place an intrinsically highervalueonin-situ wetlands regardless ofquality. Higher mitigationratios were required when the quality oftherestored wetland characteristics was not as high. Amitigation ratioof2.14 to 1 was required when the


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restored wetland was ofgood rather than excellentquality. Hoehn et al. (2002)laidout the choiceexperiment designand survey administration processfor the Michigan study, providing insight into the potential

pitfalls ofparticipant misperceptions and sourcesofbias when conducting conjoint choice valuationsurveys.There has beenalengthy, andat times, intense debateover the validity and reliability ofresults fromsurvey-based methods, particularly contingent valuation(see, for example, articles by Diamondand Hausman(1994)and Hanemann (1994). Proponents ofsurvey-

based methods claim that useful empiricalfindingscan be foundfrom carefully crafted surveys, whilesome critics are skepticalofany results from responsesto hypothetical situations. For some situations, however,there is noalternative to survey-based methodsforascertainingattitudes about environmentalamenities.Recent workon conjoint analysis has generatedinteresting results on what attributes ofwetlands are

ofgreatest interest to survey respondents without askingpeople difficult willing-to-pay questions. However,these methods tooare sensitive to how the survey isconducted. While, in principle, surveys canaskaboutthe value ofurban wetlands, most surveys todate havenot focusedonurban wetlands (with the exceptionofEarnhart 2002). It would be interesting to comparestated preferences forurban wetlands versus rural wetlands.Inaddition, it wouldalso be interesting to compareattitudes toward wetlands as expressedon surveysofthe general public andattitudes ofwetlands scientiststo see ifthere is significant agreement ordisagreement.DISCUSSION

There is at this point afairly substantialandgrowingliterature that attempts tovalue wetlands. However,only avery small portionofthis literature addressesquestions ofvaluingurban wetlands.Virtuallyallofthe workonurbanareas has used hedonic analysis,which is usefulfor estimating readily observablevalues tonearby property owners but is not very usefulfor measuring the value ofservices that are more indirectand therefore harderfor property owners to see,and services that accrue to the larger public. Morework that can estimate the value ofwaterfiltration,Boyer & Polasky, VALUING URBAN WETLANDS 753flood control, habitat, andother public goodaspects of

wetlands is needed. Production methods, which requireclose collaboration betweennatural scientists andeconomists, provide a promisingline ofresearch toestimate such values. These methods have been relativelyunder-utilized todate. Results from the hedonicstudies that have beendone todate seem to show thaturban wetlands are more highly valued by nearby

property owners thanare rural wetlands. These resultsare consistent with reasons laidout in the Introductionfor why urban wetlands should be ofgreat value; however,


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more work is needed before such claims can bemade conclusively.At present, the range ofestimates ofvalue for wetlandsis quite large. Some ofthis variation is to beexpected. The value ofwetlands depends on the circumstancesand the services provided. Wetlands that

provide flood controlnearurbanareas, waterfiltrationnear sources ofurbandrinking water, bird watchingorother wildlife watchingopportunities nearurban centers,nursery grounds for commercialor sport fisheries,or habitat for endangered species are likely to be quitevaluable. Other wetlands that donot provide these servicesmay not be highly valued. However, much ofthecurrently measuredvariation invalues is due to imprecisionofthe measurement techniques themselves.Despite advances in the state ofthe art innon-marketvaluation, there remain questions about reliability ofestimates derivedfrom non-market valuation methods.Some degree ofskepticism is warranted indealingwith such estimates. Ourview is that valuation studies

can provide useful informationabout the relative rankingsofvalue (e.g., showing that certain types ofwetlandsor certain services are more highly valued thanothers). These studies canalso be useful in policy contextwhen estimates ofvalues from conserved wetlandsfar exceed costs ofpreservation, similar to the case ofwatershed preservation in the Catskills. However, at

present, it does not seem that one cangenerate reliableprecise estimates ofthe values ofwetlands.Some critics ofusing economic valuationofwetlandsgofurtherandargue that the whole valuationapproach is fundamentally flawedand shouldnot be

pursued (see, for example, Sagoff1988). King (1998)

argued that the reductionofwetlandvalues to monetaryterms often results in smallor indefensiblenumbers. Defensible numbers may be generatedforonly a small range or ecosystem services from wetlands,which will be only afractionofthe totalvalueofwetlands. Attempts toderive more holistic estimatesoftotalvalue sufferfrom severe dataand modellimitationsthat opponents can easily exploit. King presentedanumberofexamples where poorly conductedor inappropriately scaled studies have backfired in the

politicalor regulatory arena.The key question inour minds is not whethervaluationmethods can yield complete accurate answers

(they cannot), but whether properly conductedanalysesyielduseful information todecision-making. Wethink there are cases where such information will behelpful. For example, evidence about the value offlood reductionor waterfiltration may well be determinativefor public policy decision-making. Inothercases, where values are more etherealand subjective(e.g., existence values), non-market valuation may besuggestive but is unlikely to be conclusive. Even here,valuation can be useful in providing insights on what


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types ofwetlands are ofgreatest value to society andon how conservation priorities should be directed(Hoehn et al. 2002).A numberofchallenges remainfor improving theutility ofvaluation exercises fordecision-makers concernedwith wetlands inurbanareas. There are largegaps inourunderstandingofwetland ecosystems andhow perturbations ofsuch systems will result in changesin the productionofvarious valued ecosystem services,despite advances in classification systems andthe use ofreference wetlands forassessment (Brinson1993, Brinsonand Rheinhart 1996). For example, wetlandecosystems may have thresholds. Stress may betolerated with little damage untila threshold isreached, at which point system function may changeradically, giving rise toalarge change in ecosystemservices. Linking humanactions in the surroundinglandscape to changes in wetland ecosystem function isnot well-understood but is crucial to evaluating whichamonga set ofalternative choices are preferable.

Second, ifthe values ofwetlands are uncertainandwetlanddestruction is to some degree irreversible,there will be an optionvaluefor conserving wetlands(Arrow and Fisher 1974). Optionvalue is thevalue toavoiding irreversible outcomes (i.e., preservingflexibility)untilafter some uncertainty is resolved.We are likely tolearn more about wetlandfunctionsandanthropogenic values through time. Inaddition,although it seems possible to restore some wetlandfunctions at some cost, it is not clear that the full rangeofecologicalfunctions or ecosystem services can berestored evenforany cost. The restorationofthe Everglades

provides a case in point (Centraland South

Florida Project 1999). The demandfor predictionofrestoration success has outstripped scientific knowledge(Zedler 2000). Just measuring the expected costsand benefits ofwetland protection is difficult. Yet,even ifexpected costs and benefits could be calculated,there is additionaloptionvalue toavoiding irreversibleloss ofwetlands. While the theory ofoptionvalues iswellunderstood, estimating the size ofsuch optionvalues is relatively uncharted territory.Third, most studies ofthe value ofwetlands are754 WETLANDS, Volume 24, No. 4, 2004done ona small scale that evaluates individual wetlandsor wetlands onan individualorlocal rather than

landscape or regional scale.Valuationofwetland benefitsat the locallevel will result inafailure toaccountfor the benefits tootherusers outside the areaforfloodcontrol, water quality, habitat, and soon. Hey and Philippi(1995) estimated that inorder to reduce seasonalfloodingand improve water quality in the Upper MississippiRiver basin, it would be sufficient to restore 3

percent ofthe watershed to wetland (approximately5.38 million hectares). Restorationofwetlands in theUpper Mississippi watershed, in turn, would help to


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reduce the hypoxiaordead zone problem at the mouthofthe Mississippi River. When wetlands are treatedaslocal concerns, rather than regional, national, or internationalconcerns, then some wetlandvalues are ignoredordiscounted. However, evaluatingall wetlandsat alandscape, regional, national, or internationallevelmay be anoverwhelming task.Given that detailedvaluation estimates ofspecificwetlands projects are extremely costly and time-consuming,it is tempting touse estimatedvalues generatedat one locationandapply them toanotherlocation,a process called benefits transfer. However, theuse ofbenefits transfer methods for wetlands is questionablegiven the range ofvalues for ecosystem andhuman services shown in the literature and the sitespecificnature ofmany values. There remains aneedfor well-implemented, site-specific research todetermine

both functions andvalues ofwetland systems.This paper has discussedvaluation issues, yet it isofprimary importance that regulatory and incentives

issues are not overlooked. Private landowners may notsee much value in protecting wetlands, even thoughthere may be great socialvalue indoing so. Without

proper regulations or incentives in place, even wetlandsthat have been shown togenerate high value forsociety may be lost. Further, even with rules and regulationsin place that, in theory, protect wetlands, suchas provisions for nonet loss, wetlandlosses willcontinue unless these rules and regulations are adequatelyenforcedand monitored. In the finalanalysis,understanding the incentives ofprivate landowners andotherdecision-makers whose decisions affect wetlands,anddesigningadequate institutions and regulatory

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