A dynamic hydro-economic model to assess the effectiveness and economic benefits and costs of wetland restoration and creation

• Integrated hydro-economic model developed for dynamic wetland-agriculture trade-off analysis. • Costs and benefits of wetlands restoration and creation quantified under nonstationary climate conditions in NE Spain. • Uncertainty analysis introduced for robust decision-making in wetlands management across climate scenarios. • Wetlands restoration and creation sustains ecosystem services under various climate change scenarios. • Wetland benefits consistently exceed costs, even under severe climate change scenarios. This paper studies the environmental and socioeconomic performance and sustainability of wetland creation/restoration in agricultural watersheds under nonstationary climatic conditions. To this end, we develop a dynamic hydroeconomic modeling framework that integrates the Soil and Water Assessment Tool Plus (SWAT+), Positive Mathematical Programming (PMP), and economic valuation via the benefit transfer method to calculate the effectiveness (wetland area), benefits (economic value of wetland expansion) and costs (foregone agricultural profit) of wetland creation/restoration. Methods are illustrated with an application to the Flumen Watershed wetland restoration and construction project in NE Spain. Results highlight significant tradeoffs between environmental (wetland) and economic (agriculture) water uses, which aggravate over time and are particularly relevant under more severe climate change scenarios. Despite the growing costs and decreasing benefits of wetland creation/restoration due to reduced water availability and wetland surface under climate change, our results show that total wetland benefits over the series offset total wetland costs under all simulations and scenarios. Only during the last years of the series and for the most pessimistic climate change scenarios and combinations of models, costs start exceeding benefits. These results suggest a positive and robust performance of the wetland restoration and creation project in the Flumen Watershed.