Water banking and restoration of endangered species habitat: An application to the Snake River

Most river basins have experienced development of water projects to promote flood control, recreation, and hydropower and agricultural production. Though the projects helped establish stable economies, there have been adverse impacts to the natural environment and wildlife that reside in these river basins. One of the key policy tools for habitat restoration is management of instream flows. Alternative water banking policies for restoring habitat are compared using a spatial optimization model to identify, which policies work best to augment instream flows for habitat restoration. Results indicate that policy goals dictate what type of water bank is preferred. (JEL Q25, Q18, D61)