Economics of Land Degradation
Initiative
Richard J. Thomas
ELD Scientific coordinator
United Nations University Institute for Water,
Environment and Health
‘The nation that destroys its soil
destroys itself ‘.
Franklin D. Roosevelt, 1937
ELD Business Forum:
23 September, 2013
11.30-11.50
Windhoek, Namibia
Purpose of the Economics of Land Degradation Initiative
• To raise political and public awareness of the impacts of
land degradation and benefits of Sustainable Land
Management from an economic perspective.
• To develop a harmonized cost-benefit analysis tool box for
use in decision making on rural development and food
security via promotion of SLM
Why an initiative on the Economics of Land Degradation?
• Food security crisis and increased competition for land
• Not much action on reversing/preventing land degradation so far
despite well-known technical solutions
• Socio-economic consequences of land degradation:
– Social tensions; social unrest
– Lack of development of existing economic activities
– Lack of development and establishment of new economic
activities & investment opportunities
• Associated growing unemployment, reduced economic wealth,
reduced social progress
The initiative considers the gaps for better decision making
for Sustainable Land Management
1. Need for robust cost effective economic valuation methods
2. Understand better how land users take decisions
3. How to reverse the ‘investment deserts’ of degrading land
The ELD can help decision makers:
• Assess true costs and benefits of investments and policies by
quantifying the impact of changes on provision of environmental
goods and services
• Provide a rationale to choose between options for economic
benefits
• Support policy by providing information to correct market failures
• Raise awareness of investment opportunities for the private sector
• Reduce social tensions eg., between development & conservation by
aiding equitable redistribution processes
• Identify conditions for success and non-economic barriers to correct
policy and institutional failures
The ELD approach
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!
Total Economic Value
of Land And Land-based Services
Use Value
Direct
Use Value
Indirect
Use Value
Non demand based
methods
Market price, replacement
costs, dose-response
methods, damage cost
avoided, mitigation costs,
opportunity costs
Non-use Value
Option
Value
Existence
Value
Revealed preference
methods
(demand-based)
Hedonic price
method
Travel cost
method
Benefit transfer
Bequest
Value
Stewardship
Value
Stated preference
methods
(demand-based)
Contingent
valuation
Choice
experiment
Decision-making framework
A given piece of land, for a given
legal, political and economic
context
Starting point:
3 options for
action:
Improved productivity
Change 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
Targeting the poor as a priority
Scaling up SLM practices that are adopted by the poor and
establishing an enabling environment could bring the greatest and most
efficient rewards in achieving food security and global land restoration
Why?
Most of the world’s 1 billion poor are fed by hundreds of millions of
small holders (<2ha) using mixed crop-livestock systems
What is needed at the private sector level?
Investments that create wealth and employment for small scale farmers
and that scale up successful interventions
Ie., reverse the “investment deserts” of degrading land
Options/actions at the private sector level
• Help establish new markets for ecosystem services
• Focus on local cluster building (after Porter & Kramer, Shared value)
• Joining existing research, policy and stakeholder platforms such as
ELD, UN Drylands action plan (STAD’s), Evergreen agriculture, etc.
Local cluster development
• Clusters include support related to education, transportation, health,
increasing the pool of workers (gender aspects)
• Support to suppliers, micro-financiers, service providers and logistical
infrastructure
• Collaboration with trade associations, cooperatives, government
agencies and NGO’s
Next steps for ELD
•
•
•
•
Continue compile & synthesize case studies (>200 so far)
Establish case study research sites for TEV (3 proposals funded)
Build capacity for economic valuation in developing countries
Three working groups to contribute to reports for private sector,
practitioners & decision makers, and scientific community
• Harmonize methodologies (tool box)
Take home message
A focus on economics can bring balance, equity and foster
stakeholder collaboration
Please join us
http://eld-initiative.org