Financial analysis

To make parts of projects financially viable, they need to generate tangible revenue streams that can be captured by a stakeholder. However, aside from potential biodiversity credits, there are no tangible revenue streams resulting from the projects. Ecotourism may contribute to funding the project at some of the wetlands, though it is unlikely that it could fund a substantial part of the project. Revenues from ecotourism will go directly to the households and private sector companies as they sell their services, and only for instance an entrance fee or license fee paid by households and private sector companies could provide funding for the projects.

Biodiversity credits and carbon credits are a form of Payment for Ecosystem Services (PES). PES could provide a viable avenue for large-scale wetland restoration and conservation, though there are many challenges in setting up such schemes.^[1] One of the challenges is financial viability: financial viability requires sufficient, stable, and sustained payments for project investment and operational costs and acceptable rates of return for project investors (including public financers seeking societal benefits). Reconnecting wetlands is unlikely to generate a large volume of carbon credits and while biodiversity credits could contribute to the overall funding of the projects, this is still a largely undeveloped market. Other ecosystem services, including the most important one – an increase in fisheries – are difficult to capture under a (privately funded) PES scheme.

Hence, public funding would need to cover the majority of the expenses.

Regarding the financial costs of projects, it should be noted that some sites would likely have lower project costs than others, for instance, if gates would not be required, as these make-up more than half of the project costs, or if they are located close to the main river with a smaller distance to connect. From a financial perspective, it would make sense to start with these less expensive projects. 

[1] See Canning, A. D., Jarvis, D., Costanza, R., Hasan, S., Smart, J. C., Finisdore, J., ... & Waltham, N. J. (2021). Financial incentives for large-scale wetland restoration: Beyond markets to common asset trusts. One Earth, 4(7), 937-950.