New research led by Montana State University economist Nicole Karwowski examines the economic effects of wetland restoration on local communities. The study, published in the Journal of the Association of Environmental and Resource Economists, analyzes how restored wetlands can help reduce water purification costs for municipalities.
Wetlands are known to filter chemicals from watersheds, maintaining water quality and ecosystem balance, according to Karwowski, who is an assistant professor in MSU’s Department of Agricultural Economics and Economics. However, development and agricultural activities have diminished these benefits in many areas.
Karwowski’s research focuses on the federal Natural Resources Conservation Service’s Agricultural Conservation Easement Program, specifically its Wetland Reserve Easement (WRE) component. This program offers financial incentives to landowners to convert agricultural land back into wetlands permanently.
The paper, co-authored with Marin Skidmore from the University of Illinois at Urbana-Champaign, found that wetland easements lower ammonia and nitrogen levels in nearby waterways. These improvements extend downstream and lead to reduced community spending on water purification.
“There were not a lot of studies done on this program, especially in the economic space, and there were so many interesting policy questions,” Karwowski said. “The scientific literature has for a long time known about how magical these wetlands are, and economists haven’t taken as big of a role in quantifying some of those ecosystem services. That’s where I saw myself contributing to the literature.”
Through WRE, producers receive between $1,000 and $3,000 per acre to restore wetlands instead of using them for agriculture. This shift eliminates the need for fertilizers like nitrogen and reduces strain on local water treatment systems. In some larger communities studied by Karwowski’s team, annual savings reached up to $17,000 due to decreased purification requirements.
“That can be meaningful, especially for smaller rural towns,” Karwowski said. “The cool thing is, we’re seeing that federal dollars are going toward this program, and it’s local municipalities that are benefiting.”
Montana currently has about 30,000 acres under wetland easements. Karwowski noted that MSU is well-positioned to study such programs because of Montana’s large agricultural sector and interest in outdoor recreation.
She collaborated with hydrologists, geologists, water quality experts as well as organizations like the Bozeman office of the Natural Resources Conservation Service and Ducks Unlimited to understand all aspects of wetland restoration.
“Agricultural producers are known as stewards of the land, so how can we support them in the best ways to keep doing that, benefiting from these ecosystem services that their agricultural best management practices are providing?” she said.
“Protecting these unique ecosystems is something that is very valued in Montana given the love of outdoors and the abundant recreational opportunities. My hope would be that in the future, we continue funding programs like this, because we realize that there are valuable effects going toward our communities, especially our rural communities.”
