The contribution of coherent wiggler radiation (CWR) to the microwave instability threshold in wiggler-dominated storage rings such as damping rings for colliders is discussed in detail. Three different coherent wiggler radiation impedance models are considered: the free-space steady-state model, the parallel-plates shielding steady-state model, and the rectangular-chamber shielding model. The field dynamics of CWR are compared, showing that the broad-band unshielded CWR becomes dominated by resonant structures when chamber shielding is considered. To suppress the narrow-band impedance in damping wigglers with chamber shielding, we propose employing a detuned damping wiggler. A new, simple, analytical method of solving the dispersion relation and detecting the CWR-driven microwave instability threshold is presented. The theory is compared with the numerical simulations of a Vlasov-Fokker-Planck solver for the Electron Ion Collider backup storage ring cooler and confirms that the microwave instability threshold gets higher for negative momentum compaction.