The Economics of Desertification, Land Degradation, and Drought

year (Diao and Sarpong 2007). Sonneveld (2002) assessed the effects on food security in Ethiopia
based on scenarios: Food availability per capita dropped from 1971 kilocalories per day in 2000 to
685 kilocalories per day in 2003 due to water erosion, assuming no additional conservation activities
(Scenario 1). To assess the impact of DLDD on migration and the resulting costs, CSFD (2006)
proposed a methodology for its valuation. They differentiated between direct costs and indirect costs
as a function of the places of origin and arrival and accounted for the costs and benefits (in receiving
country) of migration in order to give a complete inventory of the costs and benefits associated with
migration. However, they did not calculate the actual costs of land-related migration.
Estimation of the Costs of Droughts
In this section, we have focused mostly on land degradation. However, an economic valuation of the
costs associated with droughts is also necessary. The economic costs of drought and other natural
hazards depend on the severity of the hazard, the vulnerability of the people affected by it, and their
exposure to it. Economic costs are the result of crop and livestock productivity losses, decreased
tourism, and declines in other ecosystem services provided by the environment. Deaths and long-term
losses of livelihoods are also included in computing the economic losses from drought. The economic
costs of droughts are also determined by the onset, duration, location, and severity of the drought
(Below, Grover-Kopec, and Dilley 2007).
Drought affects most developing countries dependent on rainfed agriculture that has little
resilience (Conway 2008). The relationship between drought and famine, as a key representation of
the human impacts and suffering caused by drought, was addressed extensively in the literature of the
1980s and 1990s. 55 It is estimated that in Africa alone, drought and the consequent famine killed 4,453
people and affected about 111 million people in 1993–2003 (Conway 2008), or an average of 11
million affected by drought each year. Yet, as exemplified in von Braun, Teklu, and Webb (1998),
drought does not necessarily lead to famine, as countries like Zimbabwe successfully avoided famine
during the drought of 1991/92. The relationship between drought and famine, as a particular example
of its human impacts, is strongest where people live from a thin resource base, poverty is endemic,
and the public institutions have a low capacity to prevent and mitigate the effects of the drought (von
Braun, Teklu, and Webb 1998). The notion of drought as a main driver of “vulnerability to hunger”
(Downing 1991) is particularly relevant here as an illustration of a long-lasting human impact
resulting from the combination of chronic environmental shocks.
Climate shocks—and drought, in particular—have direct impacts on agricultural production.
Moreover, such shocks also have indirect (secondary and tertiary) effects, which, when transferred
through space and time to society as a whole, are difficult to model and track. These shocks include
impacts on farm profitability, on regional production costs, on comparative advantages, and on world
prices (Downing 1991). Drought episodes can have a significant impact, measured, for example, as a
loss in countries’ GDP. A study in Kenya showed that the 1999/2000 drought led to a 1.4 percent
decrease in GDP and that inflation rose by 2.2 percentage points, from 7.6 percent in August 1999 to
9.8 percent a year later (Davies 2007). Globally, the average annual economic cost of meteorological
disasters—including drought, extreme temperatures, and wildfires—between 2000 and 2008 was
$9.39 billion (Figure 3.8). Drought has high costs, even in countries with higher resilience. A study in
the United States estimated that the annual cost of drought was about $6–8 billion (Wilhite and
Buchanan-Smith 2005). Sectors severely affected by drought were agriculture, recreation and tourism,
forests (due to forest fires), energy production, and transportation (Wilhite and Buchanan-Smith
2005).
The global study done by Below, Grover-Kopec, and Dilley (2007), which covered a 104year
period from 1900 to 2004, showed that a total of 392 drought events occurred, or an average of
four droughts each year, with Africa contributing about 36 percent of the total number of drought
events globally (Table 3.2). About 12 million died as a result of droughts, or 0.11 million people each
year. However, the number of deaths from drought and other natural hazards has been declining due
to adaptation. The global total economic loss over the 104-year period was about $79 billion, or $0.76
billion each year.
55 See, for instance, Downing (1991) and von Braun, Teklu, and Webb (1998).
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