When we elect local representatives in our cities and counties, we entrust them with making decisions that will protect the lives and property of everyone living and working in our community. It is not an easy job, and the stakes are high.

In the Lower Meramec Watershed in East-Central Missouri, civic leaders and city staff were facing difficult decisions about how to prevent flooding, loss of life, decreased property values and other community losses while continuing to respect quality of life, property rights and community cohesiveness.

Communities in the Lower Meramec Watershed have experienced repetitive flood damage and three record flood events since 2015. The watershed is highly flood-prone due to increased frequency of heavy rain events, topography and development that has reduced wetland areas and open spaces able to soak-up rainfall.

The United States Army Corps of Engineers (USACE) Silver Jackets initiated a Floodplain Management Plan project, bringing together local, state and federal organizations to reduce flood risk. Initiated by the Urban Waters Federal Partnership, the WSU Environmental Finance Center managed the Healthy Watershed Options for the Meramec River Project, which was developed as a piece of the ongoing risk mitigation effort.

The use of nature-based stormwater solutions was identified as an area of interest. Communities in the watershed identified political, capacity and funding barriers that could impact the implementation of healthy watershed options. The Lower Meramec communities requested that a cost-benefit analysis (CBA) be developed, along with resources and tools that could be used to support decision-making for healthy watershed stormwater projects. 

The WSU Environmental Finance Center developed a cost-benefit analysis and report to help staff and decision-makers make the case for healthy watershed projects that reduce flooding and make a positive impact on the environment, community and economy.  The CBA compares the costs to the benefits, at a community level, for flood-prone property acquisition, floodplain restoration and green open space. 

The first step of the analysis looked at the flood-prone properties identified by USACE. Using public records, a market value cost was assigned to each property. The total cost of purchasing the flood-prone properties, the structures' demolition costs and 20-years of lost property value was compared with the benefit of avoided average yearly flood-insurance payouts.

 

Costs	Benefits
Market Value of Land	Aesthetic Value
20-Years of Property Tax Loss	Air Quality
Demolition Costs	Biological Control
Floodplain Restoration	Climate Regulation
	Erosion Control/Soil Retention
	Flood Hazard Reduction
	Habitat and Biodiversity
	Recreation and Tourism
	Water Quality/Water Filtration

Healthy watershed benefits are quantified, in dollars, and align with FEMA’s CBA, “Final Sustainability Benefits Methodology Report.” In this CBA, environmental and flood hazard reduction benefits are calculated annually, per acre of floodplain restored.

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A cost-benefit analysis (CBA) ratio was determined for each community. CBA ratios for flood-prone property acquisition indicated that the costs did not outweigh the benefits – which was expected. Acquisition alone cannot be the solution for these flood prone properties. There must be some sort of remediation of the land to provide environmental, economic and social benefits. 

When the costs and benefits of floodplain restoration were then laid on top of the acquisition costs/benefits, in most communities, the CBA ratio was higher than 1, which tells us that the benefits outweigh the costs. 

The last portion of the analysis looked at models that included green open space, parks and trails, as well as floodplain restoration. These models also showed that the benefits outweigh the costs. At the 3% discount rate (low-cost model), when a community spends $1,000 on a combination of green open space and floodplain restoration there is a return on investment between $1,530 and $16,670.

When the resiliency impacts of healthy watershed projects are laid on top of the acquisition costs, the CBA ratios begin to increase. This indicates that long-term, community benefits of restoring floodplains or investing in open green space benefits the flood-prone communities in the Lower Meramec Watershed. 

The range of CBA scores for the Lower Meramec communities is mostly due to land use composition. Communities with large numbers of residential properties showed higher CBA ratios than communities with more commercial and industrial land use – depending on the discount rate used. This can be attributed to higher property values for commercial and industrial properties.

When residential and industrial properties are in the floodplain, there is an increased risk of flooding, social burdens, financial hazards and adverse environmental impacts. When the costs are weighed against the benefits, this analysis showed that there is value, sometimes substantial value, in nature-based solutions that convert the land in the floodplain back to its most natural form. While the costs of the project upfront may be large, if protected, the benefits can be enjoyed not only by the current generation but future generations who will live in the watershed. 

To help answer the “How do we pay for healthy watershed projects?” question, the EFC developed the Missouri Watershed Funding Search Tool.

 

 

 

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This project was funded by a grant (AI97756601) from the United States Environmental Protection Agency (EPA) National Nonpoint Source Program to the Wichita State University (WSU) Environmental Finance Center (EFC). The contents of this document do not necessarily reflect the views and policies of the Environmental Protection Agency, nor does the EPA endorse trade names or recommend the use of commercial products mentioned in this document.