Monitoring Stream and Watershed Restoration

Chapter 12: The Economic Evaluation of Stream and Watershed Restoration Projects

Mark L. Plummer


Evaluation of aquatic restoration typically focuses on examining physical and biological responses to single or multiple restoration actions. Efforts to restore streams and watersheds, however, are always constrained by budgets or other limitations on resources. These constraints force entities ranging from local watershed groups to the federal government to set priorities and to make choices among competing projects. Economics often is characterized as the “science of making choices,” and, as such, provides insights into how to set priorities. In this chapter, I present and discuss several economic concepts that can be used to evaluate stream and watershed restoration projects.

Not all projects warrant a full exploration of economic benefits and costs. And in many cases, data on project costs and benefits, particularly the latter, are difficult to obtain. Nevertheless, familiarity with these concepts still can provide practical assistance in developing and evaluating a restoration program. In particular, economic evaluations can help set priorities for implementing projects.

The chapter begins with an overview of several economic concepts useful for an economic evaluation. I then discuss two frameworks for applying these concepts. Finally, I provide three examples from the Pacific Northwest that apply these frameworks to stream and watershed restoration projects.

The use of economics for evaluating an individual project generally focuses on efficiency or the extent to which a project’s benefits exceed its costs. This approach encounters resistance for many environmental projects, in part, because their benefits (and sometimes costs) are difficult to quantify. Even after acknowledging these difficulties, however, the traditional framework of economic efficiency can still contribute to the planning and evaluation of such projects, even if the entire framework is not always applicable (Huppert 2001).

Below, I discuss several economic concepts and how they apply to stream and watershed restoration projects. These concepts include

• Economic benefits and costs
• Benefit and cost metrics
• Total and marginal values

Applying these concepts prospectively to a restoration project can be difficult, often because data are not readily available. In all cases, however, some data can be gleaned from the project planning process (for costs) and the monitoring effort (for benefits), which will at least allow ongoing or retrospective evaluations.