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Data and code from: Spatial selection undermines flood protection in U.S. wetland markets

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Oct 07, 2025 version files 5.33 GB
Jan 22, 2026 version files 5.33 GB
Mar 11, 2026 version files 5.46 GB

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Abstract

Wetland mitigation markets aim to offset environmental damage by allowing developers to purchase credits from previously restored wetlands. We test whether wetland credits traded in these markets offer equivalent flood protection benefits. Using newly developed, high-resolution estimates of wetland flood protection for 915 wetland markets within the continental U.S., we document a likely decline in flood-protective value due to wetland loss over the 1985 to 2021 period. Consistent with standard models of urban economic geography, wetlands lost to development exist near prior developed areas and therefore provide relatively high levels of downstream flood protection compared to wetlands created in compensation--on average 4.1 times as much, though in some cases up to 78 times. We document a high concentration of lost flood protection in Florida. While wetland markets may succeed in preserving total wetland acreage, they may systematically fail to preserve downstream flood protection services. More generally, this suggests that designing environmental markets to preserve complex bundles of spatially heterogeneous ecosystem services while still allowing meaningful compliance flexibility may be challenging.