Economic Feasibility of a Wetland Certification Program in the Canadian Prairies

Wetland conservation remains a critical concern and challenge for policymakers and the agricultural community. Wetlands are being lost on private lands in the Canadian Prairie Pothole Region (PPR) in part due to the disconnect between the public benefits that accrue to society and the private costs that landowners incur for keeping wetlands. Policies implemented to date have had limited success at achieving wetland conservation goals. This thesis assesses the economic feasibility for a novel market-based instrument for wetland conservation in Canadian Prairies – a wetland certification scheme for agricultural products. We estimate consumer’s willingness-to-pay for a wetland certification scheme and compare the expected price premiums for producers to the costs of conserving wetlands. We designed and administered a stated preference survey to the general public in the three Canadian Prairie provinces of Alberta, Saskatchewan, and Manitoba. The survey included a discrete choice experiment to elicit consumer’s willingness to pay for certified wheat flour produced on fields with restored wetlands. The choice data were analyzed using econometric models that address observed and unobserved preference heterogeneity. We estimate that consumers are willing to pay about 16%-40% more for wheat with a wetland certification label, suggesting potential market demand for a wetland certification scheme. Employing the random parameters and latent class logit models, we find substantial preference heterogeneity in consumer preferences. The price premium for wetland certification label was highest in Manitoba followed by Alberta and lowest in Saskatchewan. We translate the consumer price premiums into expected producer net returns and find that the benefits of adopting the wetland certification scheme outweigh the wetland restoration costs for a typical Saskatchewan field. The results of this thesis will assist policymakers and stakeholders in formulating efficient and sustainable wetland management policies