Cost-Efficient Spatial Placement of Water Retention Sites (WRS) to Reduce Sediment in Le Sueur River Watershed,MN

Thesis (Master's)--University of Washington, 2016-06

Since the widespread European settlement, the Minnesota River Basin has undergone dramatic changes in hydrology. The resulting increases in streamflows and the erosion of near-channel features contribute a large amount of sediment to the downstream rivers. In spite of some hydrologic alterations caused by climate change, researchers like Schottler et al.(2014) indicated that it was the local land-use effect, such as artificial drainage, that mainly increase the streamflow in most of Minnesota River tributaries. A recent study by Mitchell (2015) showed that the establishment of Water Retention Sites (WRS) had significant effects on reducing peak flows and sediment loading rates in Le Sueur River Watershed, a subbasin of Minnesota River Basin, and therefore could be a feasible and effective strategy for sediment management. However, implementing WRS at all of the identified potential sites is obviously a cost-inefficient proposition. Ninety percent of areas of the Le Sueur River Watershed locate in the Western Corn Belt Plains Ecoregion with 82% under agricultural cultivation, which indicates significant opportunity costs associated with agricultural revenue. In addition, the negotiation with landowners to convert their land into wetlands can be encumbered and time-consuming. For the purpose of reducing the conflicts between sediment reduction and economic development in the Le Sueur River Watershed, this study focused on the cost-effective implementation of WRS by optimizing both the spatial distributions of WRS and the timing to switch land-use from agricultural cultivation to WRS, from the perspective of landowners facing uncertainty in agricultural net returns. The methods applied in this study include real options analysis and optimization. To better illustrate the opportunity costs of land conversion from agricultural cultivation to WRS, we utilized the real options model to examine the critical easement payment that would induce farmers to sign the leasing contract. Then we used the results of real options analysis to modify Hansen et al.(2015) wetland costs model to estimate the variable costs of WRS implementation. Two optimization models applied in the study were benefit-to-cost ratio ranking and spatial optimization. Based on the costs estimations and the sediment reduction coefficients, which are the meta-modelling results from Mitchell's (2015) simplified the hydrological model, we ranked all WRS according to their benefits (sediment reduction) relative to costs ratio for cost-efficient sites selection. In aware of the significance of the transaction costs, we built a spatial optimization model by developing “landowner clusters” for WRS cost-efficient spatial placement. Both of the benefit-to-cost ratio ranking model and the spatial optimization model displayed advantages in achieving economic and environmental objectives, compared with WRS strategies not paying careful attention to the implementation costs. But the spatial optimization could save the total costs more significantly than the benefit-to-cost ratio ranking. Our study would assist local stakeholders in designing sediment management policies cost-efficiently and achieving better results both economically and environmentally.