UNCCD 2nd Scientific Conference
Economic assessment of desertification, sustainable land management and
resilience of arid, semi-arid and dry sub-humid areas
9-12 April 2013 - Bonn, Germany
DAY 2 – WED 5.1: Economics of Land Degradation (ELD) initiative
Bridging the science-policy-practice divide:
Making a case for land degradation through valuation of
ecosystem services
Session outline
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Why such an initiative?
The ELD approach
Links to complementary initiatives
Identified knowledge and practice gaps
Organisational structure and the three ELD working groups
– Stacey Noel (ELD working group leader on options and pathways for action)
– Makiko Yashiro (UNEP) representing Pushpam Kumar, ELD working group leader
on scenarios
• Panel discussion
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Mark Schauer (ELD Secretariat, GIZ)
Richard Thomas (ELD Scientific coordinator, UNU-INWEH)
Emma Quillérou (ELD Scientific coordination, UNU-INWEH)
Stacey Noel (SEI, ELD working group leader on options and pathways for action)
Ephraim Nkonya (IFPRI, ELD scientific partner)
Simone Quatrini (Global Mechanism of the UNCCD)
Why such an initiative?
• ELD movie
• Not much action so far despite well-known technical solutions,
hence economic approach
• Three types of problems faced by land managers that economics
can help solve:
– Decide which option benefits the most to society as a whole (eg
Development vs Conservation)
– set “fairer” compensation levels and reduce social unrest
(redistribution from winners to losers)
– assess further opportunities for development and set up new
markets
The ELD approach
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Cost-benefit analysis
based on the total economic value
of ecosystem services derived from land
to compare the costs of action to the benefits from action
• If benefits > costs, we should take action
Categorisation of economic values:
Total Economic Value framework
Total Economic Value
of Land and Land-based services
Use Value
Direct
Use Value
Indirect
Use Value
Non-Use Value
Option
Value
Existence
Value
Bequest
Value
Stewardship
Value
Categorisation of ecosystems services:
Millennium Ecosystem Assessment framework
• The economic value of an ecosystem is the sum of economic values
derived from individual services flows
– Provisioning services, e.g. food, timber and fresh water
– Regulating services, e.g. pollution reduction
– Cultural services, e.g. aesthetic and spiritual values
– Supporting services, e.g. soil formation and nutrient cycling*
• A framework which excludes the value of natural resource stocks for
future benefits (so far)
– If the flow of services is maintained but the stock decreases over
time, then the system will not be sustainable in the long run!
– Stock value can be estimated by complementary methods, e.g.
green accounting
* Risk of double-counting
Examples of valuation of ecosystem services
for improved land management
• Provisioning services
– Estimation of costs of soil erosion (productivity loss,
replacement costs and participatory contingent
valuation) for investment in erosion reduction
• Regulating services
– Estimation of non-agricultural and non-timber values
to set up carbon payments
– Estimation of costs of pollution to set up payments
for maintenance
• Cultural services
– Estimation of recreational values to develop the
tourism industry
– Estimation of aesthetic and spiritual values to protect
cultural and spiritual assets
Combining the two frameworks:
Millennium Ecosystem Assessment and Total Economic
Value
Components of Total
Economic Value
Use value
Direct use
Regulating
services
Cultural
services
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
Indirect use
Option
Non-Use
value
Provisioning
services
Existence
(Bequest)

Supporting
services*
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
* Risk of double-counting
Intuitively, our objective is to ‘sum’ all the ticks to derive the total
economic value of land services
Cost of inaction or benefits from action
Fully functioning (restored) land
(100% crop yields /timber /biodiversity/…)
100%
Action 1
70%
1
2
Action 2
3
40%
0%
Land under consideration
Fully degraded land, no economic activity
(0% crop yields /timber /biodiversity/…)
Cost of inaction = benefits from action
only if action means 100% land restoration (action 1)
Cost of inaction > benefits from action otherwise (action 2)
Decision-making framework
A given piece of land, for a
given legal, political and
economic context
Starting point:
3 options for
action:
Improved productivity
Do nothing
(business as usual)
Alternative livelihoods
(economic activities)
Estimate total
economic value
of economic
costs and
benefits:
Net economic
benefit from
Improved productivity
Net economic
benefit from
business as usual
Net economic
benefit from
Alternative livelihoods
Choose option with greatest net economic benefit for action (or inaction)
and adapt legal, political and economic context
to enable adoption of chosen option
Links to complementary initiatives
• Micro-economics approaches based on the total economic value of ecosystem
services (multiple geographical levels)
– Cost of actions vs cost of inaction
• Stern Review on Climate Change
• The Economics of Ecosystems and Biodiversity (TEEB)
• UK National Ecosystem Assessment (UK NEA)
• Germany Centre for Development Research (ZEF)’s Economics of Land
Degradation research project
– Cost of actions vs benefits from action
• Offering Sustainable Land Use Options (OSLO) consortium
• Currently considered for the Economics of Land Degradation (ELD) initiative
• Macro-economics approaches (mostly national level):
• System of Environmental-Economic Accounting (SEEA): describing stocks
and changes in stocks of environmental assets
• Wealth Accounting and the Valuation of Ecosystem Services (WAVES):
natural capital and ecosystem accounting for national accounts
Identified gaps
Technological
1. Overall costs/benefits of different land
management interventions (trade offs
with focus on livestock and rangelands)
2. Understanding of drivers of changes
(case studies)
3. Relationship between population
density and land degradation
4. Identify system tipping points for land
degradation
Environmental evaluation
5. Lack of harmonized methodology
(scales, discount rate)
6. Lack of information on social costs of
land degradation
7. Lack of information on mapping
ecosystem services
8. Lack of information on non-market
values of ecosystem services
9.
Lack of robust low cost methods
applicable by affected countries in
short term
10. Limited understanding of value of
ecosystem services to local livelihoods
10+. Lack of consideration of stock
evolutions as well as flows
Policy gaps
11. Lack of plausible scenarios
12. Lack of monitoring and evaluation for
total ecosystem assessments
13. How can policies promote sustainable
land management
Institutional and private sector
14. Lack of incentives for sustainable land
management
15. Greater interdisciplinary approaches
(incentives)
16. Lack of (appropriate) knowledge
management
ELD initiative organisational structure
ELD working group on data and methodology
• Leader: Bob Costanza, Australian National University
• Objectives
1. assess both existing data, knowledge and methods to identify
good methodological practices
2. design an integrated tool for assessment for policy-makers which
will use scenarios and options for action established by the other
two working groups
ELD working group on options and pathways for action
• Leader: Stacey Noel, Stockholm Environment Institute
• OBJECTIVE OF ELD: to enable decision-makers in politics and business
to take the necessary measures
• UNDERSTAND BETTER HOW LAND USERS TAKE DECISIONS
• TARGET AUDIENCES
– Political and Local Decision-Makers
– Private Sector
– Scientific communities
ELD working group on options and pathways for action
• Engagement of stakeholders
– Initial meetings with national policymakers and private sector
through regional and/or national meetings
– Deeper interactions during case study work
– Presentation of final result through diverse methods
• Personal interaction with government decision makers
• Training courses for decision-makers and practitioners
• Policy briefs, website and other outreach materials
• Participation in regional and international conferences
ELD working group on economic evaluation of options
(scenarios)
• (see dedicated presentation)
Expected working group contributions to each of the ELD
output reports
Working group
Working group
“Options and
“Economic
pathways for
evaluation of
action”
options (scenarios)”
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Working group
“Data and
Methodology”
Report to Scientific
Communities
Report to Decision
Makers
Report to the
Private Sector
Take home message
• Economics can be used for improved decision-making
• in relation to land management
• for increased political stability and economic growth
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Most importantly, we need your inputs!
– existing case studies
– new inputs and participants to provide content for the ELD
reports
– additional funding for case studies
Please come and join us
http://eld-initiative.org/