The Economics of Desertification, Land Degradation, and Drought

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health, education, security, environment, and sustainability. This report is therefore in line with TEEB (2010, MA (2005a), and Stern (2006), which also advocate the use of a method that takes into account all economic, social, and environmental costs and benefits. The commission’s suggested approach to measure sustainability is of particular relevance for the economics of DLDD (E-DLDD). Two indicators are of particular interest: adjusted net savings and ecological footprint. The former attempts an assessment of the economic component of sustainability, which means keeping a constant stock of extended wealth in a country—with extended wealth comprising natural resources, physical capital, productive capital, and human capital. This approach is reasonable for items that can be assessed using existing economic valuation techniques. However, the concept fails to account for the global nature of sustainability and has a limited applicability for the many environmental goods for which constructing monetary values is still difficult. The commission advised that the “economic” sustainability measure should be complemented by a set of well-chosen physical indicators, which could focus on aspects of environmental goods that remain difficult to measure in monetary terms. It is in this framework that the ecological footprint measure is used. This indicator focuses exclusively on natural resources by calculating the amount of land and water required to maintain a given level of consumption. Aglietta (2010) also tried to address the issue of sustainability and provided a framework in which wealth accounting and social welfare under sustainability are connected. All assets contributing to economic welfare are capitalized. These assets include public services that are produced by tangible and intangible assets 31 owned by society as a whole. The different forms and definitions of capital and assets are depicted in Figure 3.1. It must be noted that the adoption of this approach is hindered by missing data and comprehensive measurement of the state of capital and assets. More effort and coordination must be undertaken to make this concept workable. Figure 3.1—Total wealth and social welfare Source: Based on Aglietta 2010. 31 The term intangible asset describes an asset that is not physical in nature. Corporate intellectual property (such as patents, trademarks, copyrights, business methodologies), brand name, long-established customers, and exclusive supplier agreements are common examples of intangible assets (see Cohen 2005). 60 .
Theoretical Framework for the Economic Valuation of DLDD Impacts This section first presents background information necessary for the economic valuation of land resources. A methodological framework is developed so that a systematic comparison between the costs of action against land degradation and the costs of inaction is possible. Natural resources are often classified as either nonrenewable or renewable. Land is considered to be in between these two categories and is treated as a semirenewable resource. When the rate of depletion is faster than the rate of regeneration, the land resource is degraded. The actual rate of land degradation depends on many factors—some of which are site specific, such as soil type, slope, and climate, whereas others are dependent on land user’s choices (for example, production technology and cropping systems). It is often the case that degradation rates for agricultural land exceed naturally occurring rates (Barbier 1999). Land is a fundamental input in agricultural production, and fertility is one of its most important characteristics. Considerations about land productivity and land degradation are implicitly or explicitly incorporated in the farmers’ decision processes. Although conservation measures often do not erase all the negative effects, they are often capable of mitigating the consequences of degradation. For instance, depending on the degree of substitutability between human-made capital and natural capital, one can restore fertility by increasing the use of inputs, by changing land management, or by changing the cropping system. Actions against degradation are beneficial for the land but usually lead to higher production costs for farmers (in terms of labor or capital requirements or lost productive area). Economic analysis helps address the question arising from these trade-offs, such as whether the benefits due to soil conservation are worth the additional costs (Lutz, Pagiola, and Reiche 1994; Requier-Desjardins 2006). The economic assessment of environmental and climatic problems has received increasing international attention in recent years. The Stern Review on the Economics of Climate Change was released for the British government in October 2006 (Stern 2006). TEEB was launched as a consequence of the G8+5 Environmental Ministers Meeting in Potsdam, Germany, in March 2007. The main outputs of TEEB were an interim report released in May 2008 describing the first phase, and the final reports are targeted at specific end users (policymakers, businesses, administrators, consumers) of the second phase (2008–2010). More details on the Stern Review and TEEB can be found in Box 3.1. We propose following a framework similar to that put forward by those reports: an economic evaluation of the costs of action (that is, the costs of mitigating land degradation) versus the costs of inaction (that is, the costs induced by continued degradation). Because land degradation is a process that takes place over time, intertemporal considerations will characterize farmers’ decisions. This means that the benefits derived from land use (and the value of the land) need to be maximized over time and that farmers must continuously choose between land-degrading and land-conserving practices. From an economic perspective, the current profits of adopting land-degrading practices are continuously compared with the future benefits that derive from the adoption of land conservation practices. A rational farmer will let degradation take place until the benefits from adopting a conservation practice equal the costs of letting additional degradation occur. Each farmer determines his or her own optimal private rate of land degradation. 32 This optimal private rate mainly depends on the costs and benefits that the farmer directly experiences, such as yield declines due to degradation. Typically, productivity losses are referred to as on-site costs (taking place on the farmer’s plot of land). Hence, those ecosystem services that result in lower production levels are considered in the decision, whereas those that do not become measurable in terms of lost production are neglected. In fact, many of the costs related to land degradation do not directly affect an individual farmer. As a consequence, the private rate of degradation is not likely to reflect the optimal rate of degradation from society’s viewpoint. 32 The optimal rate of degradation will thus not lead to zero degradation but will usually include at least some level of land degradation. 61
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IFPRI Discussion Paper 01086 May 20
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Contents Abstract vii Acknowledgmen
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List of Figures 1.1—Conceptual fr
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ABSTRACT Attention to land degradat
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ABBREVIATIONS AND ACRONYMS ADB Asia
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SCAR Soil Conservation in Agricultu
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In the present report, the conceptu
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Framework: Confronting Action versu
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understand these arrangements in or
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Figure 1.3—Prevention, mitigation
Page 22 and 23: on assessments at the micro level (
Page 24 and 25: does not clearly distinguish betwee
Page 26 and 27: Figure 2.1—GLASOD (1991) global a
Page 28 and 29: International Earth Science Informa
Page 30 and 31: Box 2.1—Continued Normalized Diff
Page 32 and 33: Figure 2.4—Loss of annual NPP, GL
Page 34 and 35: Figure 2.7—Annual loss of NPP in
Page 36 and 37: Table 2.2—Nitrogen application ra
Page 38 and 39: Figure 2.12—Areas affected by hum
Page 40 and 41: output—which is a selection of su
Page 42 and 43: GLADIS also underlines the linkage
Page 44 and 45: Box 2.2—Continued A map on global
Page 46 and 47: Table 2.3—Global land degradation
Page 48 and 49: Table 2.3—Continued Project and d
Page 50 and 51: Table 2.4—Continued Location 10 2
Page 52 and 53: Table 2.6—Extent and severity of
Page 54 and 55: National Level Policies As discusse
Page 56 and 57: Such support has also been directed
Page 58 and 59: Migration, either as outmigration o
Page 60 and 61: The preceding discussion shows the
Page 62 and 63: Results Correlation Analysis Consis
Page 64 and 65: Figure 2.23—Relationship between
Page 66 and 67: Effects of Land Degradation On-Site
Page 68 and 69: soils and higher land productivity.
Page 70 and 71: Acknowledging the work of GLADIS, a
Page 74 and 75: Box 3.1—Recent major economic ass
Page 76 and 77: An appropriate economic tool for a
Page 78 and 79: Figure 3.4—Cost of action and cos
Page 80 and 81: enefit—for example, income. This
Page 82 and 83: Figure 3.6—Ecosystem services fra
Page 84 and 85: Replacement Cost Approaches The rep
Page 86 and 87: Box 3.2—Measuring land degradatio
Page 88 and 89: land degradation and conservation m
Page 90 and 91: Flooding and Aquifer Recharge Richa
Page 92 and 93: year (Diao and Sarpong 2007). Sonne
Page 94 and 95: Bringing together the different cos
Page 96 and 97: This section discusses the most imp
Page 98 and 99: governing land use patterns (Leeman
Page 100 and 101: promotion of community forest manag
Page 102 and 103: Box 4.3—Reducing emissions from d
Page 104 and 105: Soil Nutrient Depletion Soil nutrie
Page 106 and 107: that the yields of salt-tolerant wh
Page 108 and 109: Figure 5.3—Forest area as a perce
Page 110 and 111: Figure 5.5—Per capita water stora
Page 112 and 113: Introduction 6. CASE STUDIES Five c
Page 114 and 115: Salinity The effects of salinity on
Page 116 and 117: Third, to correctly decide which ac
Page 118 and 119: Costs of Action and Inaction We eva
Page 120 and 121: The NGOs and religious organization
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have a strong influence on NRM (And
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We estimated the cost of action (de
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Figure 6.15—Costs of action and i
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Of interest to us is the strategy t
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7. PARTNERSHIP CONCEPT The review o
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degradation. All this should be don
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Finally, the global assessment of D
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the experience of and lessons learn
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Table 7.3—Example of E-DLDD resea
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8. CONCLUSIONS Since the publicatio
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lowest in the region. From a socioe
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Table A.1—Land degradation assess
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Table A.2—Continued Author Region
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Table A.3—Continued Author Countr
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Table A.5—Costs of land degradati
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Figure B.1—Land use systems of th
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REFERENCES Abelson, P. 1979. Cost B
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Benin S., E. Nkonya, G. Okecho, J.
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Clark, E. H. 1985. The Off-Site Cos
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De Jager a., D. Onduru and C. Walag
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Foster, V., and C. Briceño-Garmend
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Holden, S. and H. Lofgren. 2005. As
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Lapar, M. L., and S. Pandey. 1999.
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Nachtergaele, F., M. Petri, R. Bian
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Pender, J. L. 2009. “Food Crisis
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Sauer, J., and H. Tchale. 2006. Alt
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Tan, Z. X., R. Lal, and K. D. Wiebe
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———. 2010. “Assessment of L
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