Ecological Economics 35 (2000) 107–118

SPECIAL ISSUE

THE VALUES OF WETLANDS: LANDSCAPE AND INSTITUTIONALPERSPECTIVES

Wetland restoration, collective action and the role of watermanagement institutions

Ian Hodge a,*, Sandra McNally b

a Department of Land Economy, Uni6ersity of Cambridge, 19 Sil6er Street, Cambridge, CB3 9EP, UKb Institute of Terrestrial Ecology, Monks Wood, Abbots Ripton, Huntingdon, Cambridgeshire, PE17 2LS, UK

Abstract

Over the past 50 years, large areas of agricultural land have been drained and put into intensive agriculturalproduction. Increasing attention is now being paid to the issue of restoring wetland areas and promoting environmen-tal benefits. Collective action is important for wetland restoration, both because of the physical interactions amonglandholders and because of the cost saving and enhanced environmental benefit that can be achieved at a larger scale.Policy needs to be geared towards facilitating co-operation among farmers if environmental schemes are to beeffective in enabling wetland restoration. Internal Drainage Boards have been primarily involved with securing ofland drainage for local landholders. They now have a formal responsibility to further nature conservation but couldtake a more proactive role in promoting wetland restoration. They have good information on local watermanagement options and are well placed to co-ordinate actions for restoration. Agri-environment policy could beredirected in order to promote collective action for wetland restoration. © 2000 Elsevier Science B.V. All rightsreserved.

Keywords: Collective action; Institutions; Internal drainage boards; Wetland restoration; Water management

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1. Introduction

In lowland England, active periods of landdrainage in the 19th century, and again between1940 and 1980, resulted in a massive loss ofwetland habitat (Williams and Bowers, 1987).More recently, there have been very few new landdrainage schemes as a result of changing govern-

ment policy (grants are generally no longer paidfor new field drainage), the declining fortunes ofagriculture, a growing awareness of the resultingenvironmental damage and the fact that much ofBritain’s wetland habitat has already been drained(Dunn et al., 1994). The main threat to UKwetlands in recent years has been more intensiveagricultural management on existing grasslands.

In recognition of the threats posed to importantnatural habitat, there have been several agree-* Corresponding author.

0921-8009/00/$ - see front matter © 2000 Elsevier Science B.V. All rights reserved.

PII: S 0921 -8009 (00 )00171 -3

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ments and legislation, nationally and internation-ally, to protect what remains and restore wherepossible. At an international level, the govern-ment signed the Ramsar Convention, which aimsto promote the conservation of wetlands. The ECBirds Directive and the EC Habitats Directiverequire the designation of special protection areasand special areas of conservation, respectively. Ata national level, under the 1981 Wildlife andCountryside Act, wetlands may be notified as sitesof Special Scientific Interest (SSSIs).

The need to curb over-production, while alsorecognising the important role of farmers as man-agers of the countryside, has provided the ratio-nale for the various agri-environment schemesthat have grown in importance since the initialdesignation of Environmentally Sensitive Areas(ESA) in the UK in 1987. Several of the 22 areasnow designated in England and Wales containwetland habitats, where the aim is to maintain orenhance the wetland resource by paying farmersto pursue appropriate agricultural practices.

There has been much debate over the appropri-ate mechanism to ensure that farmers deliver thepublic benefit of nature conservation or enhance-ment at least economic cost (Colman et al., 1992;Whitby and Saunders, 1996; Smith and Colman,1997). However, there has been little discussion ofthe importance of collective action among farmersin delivering this public good and the role watermanagement institutions in facilitating this pro-cess. There has been some attention in the mediagiven to the lack of co-operation among farmers.This is perceived as a significant impediment tothe effective conservation of wet grassland in theSomerset Levels; compulsion has been proposedas an alternative approach (The Times 24/2/98).

In this paper, we review the reasons why collec-tive action among farmers may be important forthe purpose of wetland restoration (Section 2).We discuss how the findings in the social scienceliterature can be related to collective action in thiscontext (Section 3). We then ask whether there aresuitable water management institutions in the UKthat could facilitate this process, drawing on thefindings of a survey of Internal Drainage Boardrepresentatives (Sections 4 and 5). We concludewith some potential directions for institutional

reform and policy development more generally.While the emphasis here is on the experience inEngland and Wales, water management in othercountries involves similar institutional issues. Inparticular, the study by White and Runge (1995)on watershed management in Haiti has some rele-vant findings in this regard (Section 3). Institu-tions for the collective management of irrigationare more often discussed in the literature (e.g.Loehman and Dinar, 1994; Ostrom, 1990). How-ever, the principles discussed here will apply in asimilar way to diverse locations and water man-agement issues.

2. The rationale for collective action

The term ‘restoration’ can accommodate vari-ous degrees of reinstatement and may encompassa broad spectrum of activities from minor repara-tion of damage through contrived reassembly ofspecies to de novo regeneration (Wheeler, 1995).There is a growing literature on how to determinewhat to restore as well as the best techniques touse (Treweek et al., 1993; Parker, 1995). Depend-ing on the objectives of restoration and the loca-tion, the technical complexity of restoringwetlands can vary markedly. In some areas, at-taining suitable conditions may just mean reduc-ing the extent to which water is removed from anarea, with little control over water levels. In con-trast, it is possible, especially in areas with highlevels of infrastructure and flat land, to generatespecific water regimes for particular ecologicalrequirements. The former approach is more likelyto be associated with gravity drained areas andless productive land while the latter may be moreoften associated with pump drained areas ofhigher agricultural productivity.

Treweek et al. (1991) argue that in a similarway to ensuring the maintenance of the agricul-tural productivity of farmland, wildlife productiv-ity also requires careful and continuoushydrological control. One of the aims of theirresearch has been to establish conditions requiredto achieve specific restoration objectives. Two ofthe conditions that may give rise to a need forcollective actions are as follows: the costs of water

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management; the relationship between scale ofrestoration and environmental benefits.

2.1. The costs of water management

Whatever the extent of control over conditions,it will often be difficult, if not impossible, forindividual land holders to control the wetness oftheir fields without affecting their neighbours’fields. Furthermore, restoration may require somealteration of regional wetness. Thus in the Somer-set Levels and Moors ESA, Baldock et al. (1990)comment that ‘it is impossible for a farmer indi-vidually to control water levels of holdings with-out introducing a very complex and costly systemof sluices within the Internal Drainage Boardwater courses…’.

There is some anecdotal evidence of economiesof size involved in restoring a larger area if ma-nipulation of the arterial drainage infrastructure isrequired. Raising the water level of a block ofland above an adjacent area leads to some naturaldrawdown. To protect adjacent landowners, waterthat seeps out in this way may have to be pumpedback in. The extent to which this happens ispositively related to the perimeter-area ratio.Since larger areas have a smaller perimeter inrelation to area, there is some marginal cost sav-ing in restoring larger areas (Adrian Armstrong,Agricultural Development and Advisory ServiceLand Research Centre, Gleadthorpe, personalcommunication, 1997). In some locations, thesecosts can become substantial through time as landlevels fall with the oxidation of peat on the sur-rounding intensively farmed land in relation tothe level maintained on a nature reserve by envi-ronmental conservation.

In such cases, whether or not wetland restora-tion is achieved depends not only on how oneindividual farmer reacts to the monetary incen-tives offered through government conservationschemes, but also whether agreement can bereached with neighbouring land holders to takeadvantage of the opportunity to provide wetlandhabitats. From some investigation of what hap-pens in ESAs, it would seem that farmer coali-tions of perhaps 7–12 land holders in the case ofthe Somerset Levels and Moors, and 15–20 land

holders in the Upper Thames tributaries might berequired before raising water tables or a majoralteration in the hydrological regime becomes apractical option.

2.2. En6ironmental benefits and scale ofrestoration

Even in cases where hydrological and topo-graphical conditions permit individual land hold-ers to control field wetness effectively, there areother reasons why collective action may lead to adisproportionate increase in environmental andeconomic benefit.

The environmental benefit of a wetland restora-tion scheme will often depend on what is happen-ing in the surrounding area. Wheeler (1995)makes the point that wetlands are far more influ-enced by their surroundings than are drylandsbecause the character of wetlands is often criti-cally dependent on the nature of their water sup-ply. Thus fens may have various water sourcesand a wide catchment, and changes in these maymaterially influence the quantity and quality oftheir water inputs. In the context of restoration oflowland wet grassland, Treweek et al. (1991) com-ment that the weakness of current efforts to pro-tect wetlands lies in the separation of themanagement of protected areas and adjacent land.They discuss the problems of ‘edge effects’ — anywetland that is recreated from agricultural landwill be surrounded by land still under agriculturalmanagement. Impacts might take the form ofdisturbance (from livestock or people), run-off ofthe agro-chemicals which affects water quality,sedimentation, the encroachment of non-wetlandplant species, and, most seriously, the effect ofcontinued drainage.

The theory of island biogeography lends somesupport to the idea that scale is important inwetland restoration. The number of species thatan area, can maintain is directly related to the sizeof the area, but not on an arithmetic basis(MacArthur and Wilson, 1967). An arithmeticdecline in the area of a wetland preserve can resultin a geometric decline in the number of speciesable to use the area. Thus, larger areas will bemore effective as habitats for wildlife than smaller

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ones. O’Brien and Buckingham (1989) commentin the context of the broads ESA that to ensuresuccess in restoring bird populations, such as red-shank, lapwing and oystercatcher, it is importantto have whole river catchments entering tier twoof the ESA scheme (which involves raising waterlevels).1 One more specific example is that a mini-mum of 20 ha of wet reedbed is necessary for thesuccessful breeding of bitterns (Royal Society forthe Protection of Birds research, Jeff Kew, per-sonal communication, 1997). It is very likely thatthe appropriate area for restoration would not fallexclusively within the land owned by one farmer.

3. Relevant findings from social science literature

In the social science literature, wetland benefitswould be regarded as a type of public good sincethey display characteristics of non-excludabilityand non-rivalry in consumption. This provides therationale for government intervention in the formof various agri-environment schemes.

As argued in Section 2, the production of thisgood requires collective action by farmers. Due totechnical constraints and the costs of water man-agement, often wetland restoration will not bepossible unless all producers co-operate (within aspecific location). This is analogous to the exam-ple put forward by Mueller (1980) as the crew ofa sailing boat. He argues that in such cases co-op-erative behaviour will be voluntarily forthcoming;no one can gain from non-co-operation. This is incontrast to other common property situationswhere individual producers have an incentive fornon-co-operation (or ‘free-riding’), given the co-operation of other producers. In the wetlandscontext, ‘free-riding’ is not likely to be an issuebecause it is not clear that the farmer (as aproducer) will gain by non-co-operation, given the

co-operation of other farmers. In this context,Mueller’s argument would suggest that if privateincentives are high enough (i.e. subsidies in agri-environment schemes), adjacent farmers will par-ticipate and co-ordination will be achieved.

However, there are some very practical reasonsfor arguing that even if private incentives arehigh, collective provision will not happen sponta-neously by producers acting independently. Pro-ducers must have the information on the technicalrequirements of wetland restoration and the im-plications for water management in the catch-ment. A level of communication and agreement isneeded between farmers before individuals canparticipate in the scheme (i.e. if wetland restora-tion requires altering water levels in the catch-ment). This process involves acquiringinformation and incurring the transaction costs ofcoming to agreement. It is quite possible that suchfactors might outweigh the effect of governmentincentives, thus preventing wetland restoration.

In this context, the role of an external agent orwater management organisations becomes veryimportant. This is an issue considered by Whiteand Runge (1995) in their analysis of the emer-gence and evolution of collective action in water-shed management in Haiti. In this case study, anon-governmental organisation (NGO) is at-tributed with a major role in initiating collectiveaction among resource users. Among their find-ings is that the NGO acted as a ‘political en-trepreneur’ by facilitating dialogue over watershedinterdependencies and alternative solutions. Italso bore the transaction costs of encouragingco-ordination through the hiring and training ofextension agents. The authors argue that theemergence of collective action is explained by a‘critical mass’ of practical knowledge of potentialbenefits and not by variables indicating physicalscale or social heterogeneity.

There is now a substantial body of research inexperimental economics regarding the conditionsunder which individuals will co-operate. For ex-ample, face-to-face communication among re-source users is a critical factor in the resolution ofdilemmas involving common property resources(Hackett et al., 1994). In his review of the litera-ture of experimental research in relation to public

1 Within ESAs, the lower tiers of agreement that a farmermay enter are designated primarily to prevent further damage.Any farmer within the eligible ESA area can volunteer landfor this tier. If farmers wish to enter raised water tiers, this isat the discretion of the Ministry of Agriculture, Fisheries andFood and is limited to those sites where the engineering ofraised water levels is likely to be possible.

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goods, Ledyard (1995) finds that communicationand high marginal payoffs are the two factors thathave a very well-documented effect on contribu-tions to the voluntary provision of public goods.

Thus, it might be expected that some externalagent or water management organisation whichfacilitates communication between farmers, pro-vides information and incurs transactions costs,would help overcome the problems of collectiveaction in a wetlands context. Furthermore, watermanagement within a catchment can involve morecomplex issues beyond serving the collective needsof farmers. Importantly, there are implications ofwater management for flood control in the riverbasin. Water management also has implicationsfor urban and industrial interests. The complexityof managing water levels for multiple interestsmeans that decisions may be taken by some tier oflocal government or formal water managementorganisation with statutory duties. Since theseorganisations, and not just individual farmers (orcollectives), have decision-making powers, it isalso relevant to consider the incentives that theyface.

4. Policy and water management institutions inthe UK

Under the current structure of incentives —within the countryside stewardship scheme and

within several Environmentally Sensitive Areas— there is an opportunity for individual farmers(in addition to organisations that may own landin the area) to enter agreements where wetlandrestoration is the main objective. Collective actionis not explicitly encouraged, although in practice,for the reasons discussed above, this will often benecessary if alteration in the water managementinfrastructure is required. Information on uptakein both the Upper Thames tributaries ESA andthe Somerset Levels and Moors ESA shows thatuptake for the raised water tiers is much less thanfor the lower tiers of agreement (see Table 1). Thissuggests either that the payment for these tiers isnot high enough for the changes in agriculturalpractices that would be required, or that there areother obstacles such as high transactions coststhat prevent farmers from coming to an agree-ment to enter the scheme.

In England and Wales, internal drainageboards (IDBs) usually decide on the feasibility ofraising water levels and may also balance thedrainage requirements of different types of farm-ing and other land uses (Friend and Laffin, 1983).In many cases, IDBs started out as a ‘club’ oflocal landholders who came together to organiseland drainage. IDBs are now more formal institu-tions with statutory responsibilities. As a conse-quence, they have evolved from being landholder‘clubs’ to acting more like a tier of local govern-ment where different interests, such of those of

Table 1

Tiers Description Payment rate per ha (£) Uptake (has)

Somerset Le6els and Moors ESAPermanent grassland1 130 11320

1s Tier one+raised water level area supplement 130+80 26Wet permanent grassland 24152 215Tier two+raised water level area supplement2s 215+80 231

3 Permanent grassland raised water level areas 415 920

Upper Thames tributaries ESAPermanent grassland1a 30 2452

1b Extensive permanent grassland 105 1735155 3832 Wet grassland

Reversion of arable land to extensive permanent grassland3a 290 462Reversion of arable land to wet grassland3b 330 107

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Fig. 1. Food and coastal defense.

local residents, are represented (although in prac-tice, the extent of this change varies among loca-tions). Given their direct role in influencingwhether or not wetland restoration takes place, itis important to consider the way in which theseorganisations have changed and to discusswhether they contribute to the attainment of envi-ronmental goals.

IDBs may also exert an indirect influence overwhether wetland restoration takes place throughtheir role as providers of information and inpotentially reducing transaction costs in enablinggroups of farmers to reach an agreement. In thisway, they are very like the water management

institutions described by Loehman and Dinar(1994) in the context of an irrigation externalityproblem in the Central Valley of California. Os-trom (1990) also provides similar examples withregard to irrigation.

The statutory role of IDBs is set out in the 1976Land Drainage Act. Their links to the Ministry ofAgriculture, Fisheries and Food (MAFF) and tothe Environment Agency are illustrated in Fig. 1.As stipulated by the 1976 Act, the role of IDBs isto take responsibility for land drainage and floodprotection in local areas within the low-lying ar-eas of England and Wales. IDBs exercise a gen-eral supervision of all matters relating to the

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drainage of land within their district, and theyhave powers to carry out drainage work within allwatercourses of the internal drainage district ex-cept the main rivers, which come under the remitof the Environment Agency. However, perhapswater management organisations would better de-scribe their current role. Since 1991, new legisla-tion has given them some conservationresponsibilities. There are about 248 such organi-sations in England and Wales, though they differgreatly in size and structure. The variation in sizepartly reflects topographical differences in localriver catchments and drainage systems and partlyreflects amalgamations (Friend and Laffin, 1983).

Apart from their supervisory role, IDBs alsocarry out many of the practical tasks of watermanagement. This work varies from the regularclearing of weeds and ‘sludging out’ of channels inorder to maintain the required levels of waterflow, to the more complex design, constructionand operation of systems to control water tablesusing pumping stations, sluice gates and otherapparatus.

Board members are elected by the drainageratepayers in their area on a property-based fran-chise in which the number of votes which anelector may cast (up to a maximum of ten) de-pends on the rateable value of his/her property.Thus the system gives more votes to those occu-piers who contribute higher drainage rates. Re-cently, local authorities have been able tonominate members in numbers commensuratewith the proportion of the Board’s total incomethat they contribute. The maximum number ofsuch nominated members provides a bare major-ity of one over the elected members (Institution ofCivil Engineers, 1996).

Although legislation gives IDBs a greater role,they have often been perceived as run by localfarming cliques exclusively serving agricultural in-terests (Baldock et al., 1990). In the 1960s and1970s, IDBs were particularly active in serving thecollective needs of farmers. Agricultural produc-tion subsidies and the generous government grantaid provided for both arterial and in-fielddrainage, gave a powerful incentive for farmersand their representative bodies to lower watertables. IDBs acted as the institution through

which an arterial drainage system could be agreedupon and implemented. According to Morris(1990), IDBs also exerted an important influenceon whether or not farmers chose to take advan-tage of the opportunities presented by landdrainage. He writes that where formal (IDB) orinformal drainage organisations were present,‘Farmers were most aware of the potential ofimproved drainage, they pushed for improve-ments to be carried out, were quick to exploit newopportunities, and the organisations ensured thatnecessary follow-up work, operation or mainte-nance was carried out’. This role as an informa-tion provider and a forum for establishingco-ordination indicates that such organisationswere able to reduce the transactions costs in-volved in coming to an agreement. This is similarto the role of NGOs (described in Section 3)concerning watershed management in Haiti. Thusit may be expected that IDBs could also facilitatecollective action in a conservation context. Thiswould require IDBs to have a positive attitudetowards conservation — which could depend onwho is represented on the Boards and howschemes are financed.

In recent years, there has been some reform ofIDBs. Among the environmental responsibilitiesimposed on IDBs in the Land Drainage Act 1991is to ‘further the conservation and enhancementof natural beauty and the conservation of flora,fauna and geological or physiographical featuresof special interest consistent with any enactmentsrelating to their functions’. MAFF (who have themain policy responsibility for flood and coastaldefence) stress that the use of the term ‘to further’implies a positive obligation and they stronglyadvise operating authorities to consult relevantorganisations such as English Nature or theCountryside Agency, even where it is not a statu-tory requirement to do so, before carrying outany work. Consultations should attempt to ensurethat damage to the environment is minimised orprevented and also to encourage the conservationand enhancement of wildlife and landscape and tocreate new habitats.

Since 1991, MAFF has emphasised to the oper-ating authorities the importance of preparing wa-ter level management plans (WLMPs), especially

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in SSSIs. A WLMP is ‘an agreed schedule ofoperations for each water control structure withina given area, outlining target water levels forspecified periods during the year or agreed re-sponses to certain conditions’ (Swash, 1993). Theoperating authority is responsible for drawing upthe WLMP, and in the case of SSSIs, there mustbe close consultation with English Nature (inEngland) or the Countryside Council for Wales.Since water level management is so important forcertain species, these WLMPs, if implemented, arepotentially important in a wetland restorationcontext.

The domination of IDBs by farmers, especiallyin this historic context of their role in landdrainage and the ensuing environmental damage,provides a reason why they have been severelycriticised by those representing environmental in-terests. For example, Buisson (1991) called for theabolition of IDBs and transfer of their responsi-bilities to the National Rivers Authority (now theEnvironment Agency). A decision-making pro-cess, which places power in the hands of thefarmers and landowners, led to a ‘vociferous callfor reform from the nature conservation move-ment’. Baldock et al. (1990) also explained thenegative influence that IDBs had in the SomersetLevels and Moors. They were described as being‘a law unto themselves’ and ‘at the heart’ of theprevailing conservation problems on the Levelsand Moors.

However, not all reports of the actions of IDBshave been so negative. George (1992) notes howthe Lower Bure, Halvergate Fleet and AcleMarshes IDB altered water levels in some of itsarterial drains so that graziers could take advan-tage of the ESA’s provision, enabling 942 ha ofmarsh qualifying for tier one payments in 1988 to

meet the tier two criteria. This suggests that atleast some IDBs do help facilitate farmer involve-ment in schemes and that they can respond to thecollective needs of farmers in a conservationcontext.

5. Summary of the findings from a survey of IDBrepresentatives

Given these changes, a survey was undertakenof IDBs to investigate the extent to which theyhave taken up their conservation responsibilitiesand to examine their potential role in wetlandrestoration (Dunn et al., 1994). The survey was of62 boards across the country (25% of the total). Itwas decided to concentrate on IDBs within Eng-land. A wide geographical mix of IDBs wasachieved, covering the counties of Yorkshire,Nottinghamshire, Lincolnshire, Norfolk, Suffolk,Cambridgeshire, Kent and Somerset (see Table 2).The survey was in the form of semi-structuredface-to-face interviews. We will summarise someof the main findings.

All of the boards that were visited were awareof their obligations to further conservation underthe 1991 Drainage Act. Although very few had awritten conservation policy, all said that they didhave a strategy within which they worked andthat conservation was considered in everyday op-erations and decisions taken. There were varyingdegrees of enthusiasm among different boardsranging from those who were very pro-active andwanted to take the initiative in creating new habi-tats and enhancing the environment to those whowere more reactive and wanted to be seen to bedoing something purely from a public relationspoint of view.

Table 2Coverage of the total area of internal drainage districts

Agricultural area (ha)a Number of SSSIsPRIVATE Number of IDBs Total area (ha) Area pumpeda

623 9302231 135 907 1 030 693Total in England 24862 338 027 100 238 658Sample 380 06425% 32% 44% 38%% of total 33%

a Estimates.

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Most of the IDBs felt that their managementpractices had changed in recent years to incorpo-rate conservation measures, although the type andextent of measures varied considerably acrossboards. Several boards had extended the use ofenvironmental management practices, which wereinitially introduced in SSSIs to cover the rest oftheir districts. In general, the smaller, more tradi-tional boards, which had fewer staff, were lessinvolved in environmental practices. The largerboards (which covered a broader area) were moreoften involved in activities such as creating newhabitat, planting trees and hedges and drawing upagreements with local wildlife trusts. Since largerboards were more likely to contain land owned byconservation bodies or SSSIs, it is not surprisingto see a relationship between size of board andconservation interest. Perhaps what matters hereis not the size of the board per se, but ratherwhether conservation bodies own land in the loca-tion and are therefore represented on the board.

One of the larger boards, the Kings Lynn Con-sortium, had a separate conservation committee.This comprised seven people and included aboard member who worked for English Nature,another who was a trustee of the Norfolk Natu-ralists Trust, two academic ecologists and thechief conservation officer of the Broads Author-ity. This board is working with English Nature tocreate a GIS system which will help show whatareas should be conserved. Another group ofboards had a full-time conservation officer whosepost was grant-aided by English Nature. It is hisjob to liase with the environmental bodies and setout the IDBs’ conservation strategy. Many of theother boards had a conservation committee, andwith only one exception, the representatives inter-viewed indicated a good working relationshipwith conservation bodies.

Most of the IDB respondents could identify atleast one area where it would be possible tore-create wetland, although the size of the areavaried considerably. In East Anglia, most of theboards had certain pockets of land, usually on theextreme edges of the catchment, which were self-contained and which, with the owner’s consent,could practicably be turned into wetland areaswith minimum risk of flooding to the surrounding

area. Those interviewed emphasised feasibility is-sues in identifying suitable land: that the areashould be at the upstream end of the pumpingsystem, that it is a self-contained area independentof the adjoining drainage systems and that there isa fresh water supply to keep the levels high. Theability to manage the raising and maintenance ofhigh water levels precisely often depends on thepresence of considerable water management in-frastructure. Ironically, in the absence of furtherinvestment in infrastructure, this criterion wouldmake wetland restoration more feasible on flat orgently sloping land, which also tends to be mostprofitable for agriculture. In fact the areas whichthe clerks or engineers identified as being mostsuitable for wetland restoration were often on thehighly productive agricultural land, rather thanon the areas of lower grade land in the district.This highlights the complexity involved in balanc-ing the opportunity cost and environmentalbenefits in identifying land suitable for wetlandrestoration.

All of the IDB respondents stated that theywould be willing to help in any scheme thatinvolved water level management as long as thatwas what rate-payers required. They would haveto undertake substantial feasibility work to ensurethat raising water levels in one area would allow asafe level of flood protection for other land users.The larger IDBs in particular were keen to have avery pro-active role. This suggests the potentialresponsiveness of IDBs to economic opportuni-ties, as opposed to their having a narrow preoccu-pation with agricultural production.

6. Potential of the new water managementinstitutions and the need for reform

6.1. The role of IDBs

From the survey of IDB representatives, wehave seen that most of the IDBs surveyed do atleast claim to take their new conservation dutiesseriously. Some of the larger boards have formalconservation representation, and the Kings Lynnconsortium even use their detailed knowledge oflocal areas to suggest to policy makers where

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conservation could take place. IDBs in generalhave detailed local knowledge of water tables andflows, soil characteristics and variations in farm-ing practice (Friend and Laffin, 1983). This makesexisting organisations a potentially a rich sourceof information for policy makers interested intargeting areas for wetland restoration, or conser-vation more generally. However, although someof the larger IDBs appear very constructive inefforts to restore habitat, there are other smallerIDBs that have no formal conservation represen-tation on their boards and appear to give littleattention to conservation issues and opportuni-ties. There are some aspects of how these institu-tions are constituted that may impede thedevelopment of any new role they might have asmore general water management institutions.

Within many IDBs, representation is still veryhighly skewed in favour of agricultural landhold-ers. The voting procedure, as discussed above,gives farmers with higher value (and thereforemore productive) agricultural land greater weightin the voting procedure. This is due to the factthat rates, the IDBs’ main source of income, arecalculated on the basis of the value of land andbuildings. This voting procedure for IDBs haslong ago been considered as outdated (Ministry ofAgriculture Fisheries and Food, 1985). Given thestatutory remit of IDBs and their role asproviders of public goods, there is a case forallowing for more formal representation of con-servation interests on boards, even in districtswhere conservation organisations are not impor-tant landholders. Such a move would not beunprecedented in the light of recent changes tolocal authority representation.

Similarly, one could argue that if IDBs areproviding public goods, there needs to be somechange in the way activities are financed. There isa general argument for central contributions tolocal spending in cases where the central govern-ment or residents of other localities have an inter-est in particular aspects of an authority’s spending(Helm and Smith, 1987). However, there is cur-rently no mechanism by which IDBs can fullyrecover costs for work they undertake specificallyfor environmental reasons. Although, they areeligible for a capital grant of 25% from MAFF

for specific projects (rising to 50% in special pro-tected areas), the implication is that ratepayersmust pay at least half of the proposed costs.Unless affected ratepayers increase their contribu-tion, this would reduce the revenue available toIDBs to carry out other types of work within thecatchment. Hence this system of financing reducesthe incentive for such organisations to considermore ambitious projects — even where the publicbenefit could be very high. On this basis, it couldbe argued that where projects are carried out witha ‘public good’ objective, organisations should beeligible for full compensation for technical workthat is directly related to the scale of the publicgood provided. This would follow the ‘ProviderGets’ principle (OECD, 1994; Hanley et al., 1998).

6.2. Incenti6es for collecti6e action

If IDBs were reformed, they might also be moreeffective in identifying opportunities for wetlandrestoration and there might be more examples ofboards undertaking similar activities to those ofthe Kings Lynn consortium. They might also bemore enthusiastic about providing information tofarmers about possible environmental schemesand reducing the transactions costs of farmerco-operation where this is an issue.

However, even with institutional reform, collec-tive action will not be forthcoming unless privateincentives are sufficiently high to encourage adja-cent farmers into schemes. One option is simplyto increase payments that are currently available.Alternatively one could think of revising the wayin which current schemes operate explicitly toencourage collective action. The present system ofoffering standardised contracts to individual land-holders limits the flexibility of schemes and thecapacity to search for new co-operative arrange-ments among landholders. An alternative wouldbe to offer grants to groups of landholders whoare prepared to undertake wetland restoration ata larger scale. The arguments made earlier con-cerning the higher net benefits of restoring largerareas could justify higher rates of payment tosuch proposals. This would establish an explicitrole and incentive for IDBs (using the high qualityof information available) to identify feasible

I. Hodge, S. McNally / Ecological Economics 35 (2000) 107–118 117

schemes within their area and to sound out poten-tial participation among local landholders. Advicefrom local conservation bodies could help in iden-tifying potential conservation outputs appropriatein local circumstances.

A major disadvantage of the existing approachis that the rate of compensation is the same foreach landholder despite the inevitable variationsin costs between farmers. Introducing more flex-ible agreements would allow scope for levels ofcompensation to be varied between group mem-bers and perhaps reduce the problem of one ortwo high cost landholders holding out against thelocal scheme. On the other hand, bargaining be-tween landholders could introduce its own incen-tive problems and inefficiencies. However,neighbouring farmers involved in similar produc-tion operations are in a good position to judgewhat costs are reasonable in assessing fair com-pensation — unlike the government agency,where often a problem of ‘asymmetric informa-tion’ is experienced (Moxey et al., 1999).

The incentive for cost-effectiveness could bepromoted through competitive tendering (see e.g.Latacz-Lohmann and Van der Hamsvoort, 1998)whereby tenders for contracts from differentgroups of farmers would be scored by the govern-ment in terms of the environmental benefits of-fered and the payment levels demanded. Thisprovides an incentive for landholders not to statean excessive cost for the proposed action. Thisprocess of competitive tendering would also en-hance the efficiency and transparency of the deci-sion-making process in that projects could beevaluated in relation to each other, and projectswith highest net benefit could be funded. Incorpo-ration of environmental assessment or cost–benefit appraisal techniques into the process ofassessing competitive tenders would allow moreexplicit consideration of the potential environ-mental and economic benefits of increased size.

7. Conclusion

There is a clear rationale for collective action inrestoring wetland areas. More could be done toencourage farmers to act collectively by introduc-

ing more flexibility into the agreements offered tofarmers. This offers a more equitable and costeffective alternative to suggestions that schemesshould be made compulsory. However, since wa-ter management institutions (IDBs) may also ex-ert an influence on whether wetland restorationproposals are accepted, it is important to considerwhether the current institutional structure is ap-propriate for the multiple objectives such organi-sations have to consider.

In many IDBs, there is still a strong bias to-wards agricultural interests. Although there havebeen some positive changes in how IDBs operate,questions need to be asked about representationon the boards and how they are financed. Perhapsif IDBs were not already present in localities, itwould not be a good idea to create them in theirpresent form. There may be a conflict betweenkeeping the institutional capital that has beendeveloped over the years and reorienting incen-tives towards a more open attitude to environ-mental conservation. To farmers, IDBs have anestablished role in providing information aboutpossible schemes and reducing the transactioncosts of farmer co-operation. Friend and Laffin(1983) recognised the strength of the IDBs in theirregular contact with farmers and their perceivedaccessibility. To policy makers, IDBs are poten-tially an important source of information aboutwhere wetland restoration schemes could be un-dertaken. It may be easier to change the structureof existing institutions than to create new ones.

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