Recent scientific discoveries and a changing political landscape have radically altered the status of wetlands in the marketplace. Wetlands have been transformed from an undesirable land form to an important natural resource, and are highly regulated types of real estate. Wetlands bring to mind distinct images of swamps, bogs, marshes, and other areas where wet, mucky bottoms are filled with fish, wildlife, and insects. However, some are disguised and during the dry season aren’t wet at all, so properly identifying them is difficult. Wetland identification and boundary delineation is best left to certified specialists, as five basic types of wetland systems are known. Their general characteristics are:
(1) Rain System, which consists of ocean and extends to the high watermark along the shoreline.
(2) Estuarine System, such as salt marshes and mangrove swamps, are located in tidal areas.
(3) Riverine System, associated with rivers, creeks, channels, and channelized waterways.
(4) Lacustrine System, associated with lakes and reservoirs.
(5) Palustrine System, associated with swamps and bogs, separate from other wetland systems.
The three traditional approaches to value, Sales Comparison, Cost, and Income, are developed to estimate the market value of real property and should all be used as data permits when appraising wetlands.
There are different ways in appraising wetlands in the Sales Comparison Approach.
(a) Hole to Hole Analysis: sales having wetland ratios similar to the property being appraised are identified, and their sales prices are adjusted for differences in wetland ratios based on market-extracted data.
(b) Sum of the Parts Analysis: the market values of wetlands and the uplands are estimated separately then added together to estimate a market value as the property has evolved.
(c) Residual Analysis: if sales of only one component part are available, then a mixture of the Hole to Hole and Sum of the Parts methods can be combined to come up with Residual Analysis.
The Cost Approach is like the Sales Comparison Approach, but is based on the economic principle of substitution. The Income Approach is very seldom used in the appraisal of wetlands except when the wetland is encumbered by a lease.
Some special considerations should be taken into account when appraising the market value interest of wetland properties: when it includes the presence of timber or mercantile agriculture, endangered or threatened species of plants and animals, or restricting easements and reservations are involved.