Private vs public economics of prairie wetland allocation

Abstract This paper examines the nature of the divergence between private and social net benefits of wetland drainage. To the extent wetlands have social value not considered by landowners, the private development of wetland for use as cropland exceeds the optimum unless the transactions cost of overcoming the externality exceeds social value. For a three-county area in north central Minnesota, data on the private incentive to drain prairie potholes are presented based upon estimates of the private costs and returns to wetland development. A survey provides data on landowner attitudes toward wetland preservation and their willingness to participate in fee simple and easement incentive programs.