Replacement Cost

External costs of environmental degradation are often ignored in economic analysis of projects. The mail goal of the paper is to economically analyze the current alternatives of Meighan wetland utilization including extraction of sodium sulfate، aquaculture of artemia and integrative alternative considering external costs of wetland degradation. In order to detect eventual degradation of wetland، Landsat ETM+ and Google Earth images of the region and hydrologic data have been used during the period 2000-2012. Then، all benefits and costs of current utilization alternatives have been estimated. To do this، all necessary data has been collected using sodium sulfate extraction company، aquaculture investment project and field data. External costs of wetland degradation have been estimated using replacement cost technique (wetland restoration) and the base unit price list of construction activities. Then، all prices have been adjusted to the price level of 2013 using Consumer Price Index (CPI). Finally، all alternatives have been financially evaluated using the equivalent annual net present value (EANPV) criterion with a real discount rate of 3. 5 %. Results showed that due to hydrological deficit (high potential evapo-transpiration)، the wetland area has been decreased with an annual rate of 3. 5 %. As such، the impact of sodium sulfate extraction on the drying trend of the wetland seemed to be minor. However، sodium sulfate extraction deepens the wetland and thus may contribute in the observed drying trend. Results revealed that sodium sulfate extraction impose as such an annual external cost of 6. 4 billion Rials (wetland restoration). Based on results، sodium sulfate extraction and aquaculture of artemia، respectively in 800 and 2550 hectares of the wetland area، generate potentially an annual net present value of 10. 7 and 46. 9 billion Rials. Results also showed that accounting for external costs decreased the annual net present value of sodium sulfate extraction to 4. 3 billion Rials. As scuh، if restoration activities take place at due times and places، this alternative may not be conceived as economically or environmentally unsustainable. Finally، integrative alternative (extraction، restoration and aquaculture) with an annual net present value of 51. 2 billion Rials appeared to be the best current alternative. Further researches are needed to value other benefits of the Meighan wetland including biodiversity conservation and tourism.