On the Economic Value of Wetlands in the St. John's Bayou-New Madrid Floodway

Author: William L. Weber

Abstract: The paper examines the system of levees for flood control on the Lower Mississippi River that were a consequence of the Jadwin Plan stemming from the 1928 Flood Control Act. Part of the Jadwin plan allows the Army Corps of Engineers to dynamite a fuse-plug levee at Birds Point Missouri allowing floodwaters to flow into the New Madrid Floodway and lower water levels at Cairo, Illinois. A gap between two levees near New Madrid allows floodwaters to back into the lower part of the Floodway, harming agricultural interests but creating important wetlands. A shadow pricing model is used to estimate the environmental benefits of the wetlands formed by the St. John’s Bayou and New Madrid Floodway in Southeast Missouri. The shadow price estimates suggest that closing the gap in the two levees would destroy wetlands that generate $60 to $105 million in value.