The Economics of Desertification, Land Degradation, and Drought

lowest in the region. From a socioeconomic perspective, the NDVI is an indicator that is dissociated
from people and their social and economic relations: It assesses degradation in remote, unpopulated
places equally to NDVI-based degradation that destroys livelihoods in other areas. For this reason,
NDVI studies have so far had little policy impacts.
These and other shortcomings underscore the need to better calibrate the satellite data to
address their shortcomings. For example, there is a need to establish sentinel study sites, 71 where indepth
analysis can be done to better understand and calibrate the relationship between remotely
sensed biophysical and socioeconomic data with the actual land degradation or improvement.
Additional data that cannot be collected using satellite imagery could also be collected from the
sentinel sites—in particular, socioeconomic data to indicate the human relevance of the land
degradation indicators. The results from the sentinel sites could then be extrapolated to the global
level.
Understanding the Underlying Causes of land degradation will Help in the Design of
Appropriate Actions for Preventing or Mitigating Land Degradation
This review showed that understanding the underlying causes of land degradation is important for
designing strategies for taking action to prevent or mitigate land degradation. The study also showed
that the impact of one particular underlying cause of land degradation depends on the other underlying
causes. For example, population density could lead to more severe land degradation if there are no
strong institutions to regulate the behavior of communities or if market forces do not give land users
an incentive to invest in land improvement. This situation suggests that taking action to prevent or
mitigate land degradation requires the design of policies and strategies that will simultaneously
address the multiple underlying causes of land degradation.
Of particular importance is the need to develop strong local institutions for land management
at the community level and to provide incentives for individual land users to invest in land
improvement. This task requires decentralization policies, which provide mandates and which
facilitate the development of local institutions. Studies have shown that countries that have been
investing in land improvement and providing incentives to land users have seen greater improvement,
despite their high population densities. For example, China has provided incentives for farmers in the
western highlands to plant trees, and the Bai et al. (2008b) study showed a significant improvement of
vegetation there. India’s decentralized government also allows communities to form communitybased
watershed management (CBWM) committees. For instance, a switch from centrally managed
watershed to CBWM in Tamil Nadu, India, in 2009) resulted in the water table receding and water
availability increasing in the area. This significant change was largely due to the mandate given to
local communities to manage and benefit from the watershed. Similar success stories have been
observed by the International Forest Research Institute, which has been conducting research on
community-based forest management in developing countries (Gibson, Williams, and Ostrom 2005).
Taking Action to Prevent or Mitigate Land Degradation Requires an Economic
Analysis of the Costs of Land Degradation and the Costs and Benefits of Preventing
or Mitigating Land Degradation
The economic analysis proposed in this study is the well-established concept of measuring the
economic costs and benefits using total economic value of terrestrial ecosystem services, which
comprise the on-site and off-site direct and indirect costs and benefits. Because both land degradation
and action to prevent it have lagged effects, it is necessary to use dynamic modeling to determine the
future costs and benefits, which requires long-term data collection and simulation analysis using wellcalibrated
models.
To analyze off-site costs and benefits requires an association of the benefits to the
beneficiaries and of the costs to those who experience the negative impacts or implement the land
conservation action. Such an analysis will, for instance, enable payment for ecosystem services (PES)
71 Sentinel sites are selected for an in-depth study or data collection such that the sentinel sites are representative of a
larger area or population. Results from the sentinel sites could then be interpolated to the larger area or population they
represent.
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