We develop a positive mathematical programming model to investigate the impact of climate change on land use in the prairie pothole region of western Canada, with particular focus on wetlands retention. We examine the effect of climate change and biofuel policies that are implemented to mitigate climate change on wetlands retention. Simulation results indicate that a drier climate could decrease wetlands by as much as 38% if the externality benefits of wetlands are considered, but by nearly 80% if they are not. Reductions in wetlands are most pronounced in the south-central areas of the region.