The value of wetlands in reducing riverine flood losses

By Jesse Gourevitch

Wetlands provide several ecosystem services that support human well-being and improve resilience to climate impacts. During flood events, wetlands have the capacity to store floodwaters, reduce rainfall runoff, and resist the flow of water over the landscape, potentially reducing flood losses. As the frequency and severity of flooding increases under climate change in much of the U.S., these functions are expected to become increasingly valuable to households and communities that are exposed to flood risk [1, 2]. 

Despite these benefits, there has been widespread conversion of wetlands for development and agricultural production across the U.S. (Figure 1). Since 1700, the U.S. is estimated to have lost 40% of its wetlands [3]. While state and federal governments have implemented several land use regulations that aim to curb wetland conversion, the rate of loss only continues to accelerate [4]. This persistent loss of wetlands threatens to increase exposure to flood risk and undermines households and communities’ ability to adapt to climate impacts.

Figure 1 | Change in wetland area (hectares) between 1985 and 2023 summarized by HUC12 sub-watershed. Data accessed from the National Land Cover Dataset.

Private landowners often have limited financial incentive to preserve wetlands since many of the benefits of wetland conservation go to people living elsewhere in the watershed. To correct this market failure, government interventions can facilitate pricing mechanisms that internalize the value of wetlands in market prices, thus creating a financial signal for conservation. At the federal level, the National Flood Insurance Program (NFIP) provides a clear opportunity for pricing the flood mitigation benefits provided by wetlands. By incorporating the risk reduction benefits provided by wetlands into its pricing methodology, the NFIP has the potential to improve actuarial soundness and create financial and political incentives for increasing investment in wetland conservation. However, implementing this type of pricing mechanism requires precise and accurate information about how incremental changes in wetlands translate into flood mitigation benefits.

In a recent study published in Nature Water (PDF version available here), my co-authors, Adam Gold and Helena Garcia, and I address this challenge by quantifying the value of wetlands in reducing property losses from riverine flooding across the U.S. (This research did not look at green infrastructure used to manage stormwater flooding in urban areas nor did it look at coastal flooding.) To estimate these values, we identify the effects of changes in wetland area across the conterminous U.S. between 1985 and 2023 on riverine flood insurance claims to individual properties. 

Estimated effects of changes in wetland area

We find that wetland loss significantly increases flood insurance claim payment amounts. In the sub-watershed where a property is located, we estimate that one additional hectare of lost wetlands increases claim payment amounts by an average of 0.033%. For example, fifty hectares of wetlands lost since 1985 would have increased a $100,000 claim by an average of $1,650. Wetland loss in sub-watersheds located upstream of a property also increases claim payment amounts, but the effect sizes diminish as the distance between wetlands and claims increases. 

By contrast, gains in wetland area do not have a statistically significant effect on claim payment amounts . Our null result is consistent with other recent findings [5, 6]; however, this may be due to the limited sample of claims that experience gains in upstream wetland area, resulting in insufficient statistical power to detect an effect. More broadly though, these null results do align with other research on the ecological effects of wetland restoration, which have shown that historical efforts to restore wetlands have been generally ineffective in recovering the original level of wetland ecosystem functions [7]. This suggests that the loss of intact wetlands may pose relatively larger costs compared to the benefits from newly restored wetlands.

Taken together, these results may imply that the loss of ecosystem services from wetland conversion is unlikely to be directly offset by restoration elsewhere. Thus, if wetland degradation is being justified based on the promise that restoration will be fully compensatory, then the flood mitigation benefits provided by wetlands may continue to decline. 

Cumulative effects of wetland loss over time

Based on our empirically estimated effects, we calculate that wetland loss since 1985 has increased flood insurance payments by an average of $5,915 per claim, and a total of $10.1 billion – equal to roughly 9.0% of all payments made on riverine losses. These costs are concentrated in the Houston metropolitan area, southeastern Louisiana, and coastal Florida (see Figure 2), where there is high wetland loss, high flood risk, and high flood insurance uptake. We also find that historical wetland loss has disproportionately increased flood losses in Census tracts with lower household incomes and a higher percentage of non-white population. 

Figure 2 | Total cost of additional claims payments caused by wetland loss since 1985 summarized by HUC12 sub-watershed.

However, it is important to note that only 30% of expected annual flood losses are insured by the NFIP [8]. When considering the other 70% of uninsured (or privately insured) flood losses, which are less easily observed, the total costs of historical wetland loss since 1985 could exceed $33 billion. Lower-income, Black, and Hispanic households are also less likely to be insured, which may also lead us to underestimate disparities across demographic groups. 

Implications for flood insurance pricing

The information from this analysis can be used to support decision-making among a range of actors in local, state, and federal government, and in the private sector. Flood insurance underwriting models in particular could be a potential tool for pricing the flood mitigation benefits provided by wetlands. 

Currently, it is not clear if or how wetlands are incorporated or represented in the proprietary flood hazard models underlying the NFIP’s pricing methodology. Even if wetlands are well represented, these models are updated infrequently, such that a change in wetland area is unlikely to be reflected in NFIP rates. This lag may therefore mute the price signal that could otherwise help to incentivize wetlands protection. 

Apart from the flood hazard models, wetlands are partially accounted for as part of the NFIP’s Community Rating System (CRS). CRS awards points to communities that engage in specific flood risk management activities, such as preservation of open space, which then translate to community-wide premium discounts ranging from 5 to 45%. While CRS technically values the flood mitigation benefits of wetlands via these discounts, this approach is actuarially imprecise and not empirically-grounded. 

As an alternative, the NFIP could use our estimates to adopt a simple pricing structure that adjusts insurance rates for individual properties based on annual losses in upstream wetland area observed by the National Land Cover Dataset. While our study focuses specifically on the role of wetlands in reducing flood losses, our approach could easily be applied to estimate the effects of other types of nature-based solutions (e.g., mangroves, coral reefs, etc.), which could then be similarly incorporated into NFIP pricing.

Note

The study described in this post can be found here: https://www.nature.com/articles/s44221-026-00656-3. Please reach out to Jesse Gourevitch (jgourevitch@rff.org) for access to a full version of the article.

References

1 Bates, P. D., Quinn, N., Sampson, C., Smith, A., Wing, O., Sosa, J., ... & Krajewski, W. F. (2021). Combined modeling of US fluvial, pluvial, and coastal flood hazard under current and future climates. Water Resources Research, 57(2), e2020WR028673.

2. Kim, H., Villarini, G., & Maebius, S. (2025). Changes in the frequency of flood events across the United States detectable by the middle of this century. Earth's Future, 13(12), e2025EF006677.

3. Fluet-Chouinard, E. et al. Extensive global wetland loss over the past three centuries. 

Nature 614, 281-286 (2023). 

4 Lang, M. W., Ingebritsen, J. C. & Griffin, R. K. Status and Trends of Wetlands in the Conterminous United States 2009 and 2019. U.S. Department of the Interior; Fish and Wildlife Service (2024). 

5 Taylor, C. A. & Druckenmiller, H. Wetlands, flooding, and the clean water act. American Economic Review 112, 1334-1363 (2022). 

6 Aronoff, D. & Rafey, W. Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands. American Economic Review (2026). 

7 Moreno-Mateos, D., Power, M. E., Comín, F. A. & Yockteng, R. Structural and functional loss in restored wetland ecosystems. PLoS Biology 10, e1001247 (2012). 

8 Amornsiripanitch, N., Biswas, S., Orellana, J. & Zink, D. Measuring flood underinsurance in the USA. Nature Climate Change (2025). https://doi.org:https://doi.org/10.1038/s41558-025-02396-w