1. A Cost-Benefit Analysis Tool for
Zero Net Land Degradation Schemes
Alan Grainger
University of Leeds

2. Different Approaches
• Compare Benefits of Restoration With Costs
of Land Degradation
• Compare Benefits/Costs of Restoration with
Benefits/Costs of Land Degradation

3. Zero Net Land Degradation
Reduce the rate of desertification +
Increase the rate of restoration of
desertified land
African Union (2012) Rio + 20 Conference
A modest intermediate step to halting desertification:
"While completely halting [desertification] by 2030 may be difficult,
setting a target of Zero Net Land Degradation by 2030 is realistic."
UNCCD Secretariat (2012)

4. UNCCD Strategy
• Adopt sustainable land management practices
• Avoid degradation on non-degraded lands by
intensifying use of existing agricultural lands
• Employ community-based implementation
• Introduce payments for ecosystem services
• Involve governments, private sector, farmers
• Possibly add a ZNLD Protocol to the UNCCD

5. Estimating Economic Costs of
Land Degradation
• Direct Costs
• Indirect Costs
• Economy-wide Costs

6. Estimates of National Direct Costs Vary
Widely
Estimates for the 1980s
Country Value % GDP % Agricultural GDP Source
Burkina Faso - 9 20 Lallement
(1989)
Ethiopia - - 2 Bojö and
Castells (1995),
based on Hurni
(1988)
India Rs 75 bn 2 4 Reddy (2003)
Mali - 0.9-12.5 2-30 Bishop and
Allen (1990)
USA $27 bn 0.4 20 Pimentel et al.
(1995)

7. Reasons for Variation:
1. Different Information and Data Resolution
• Estimates of Area Affected by Soil Erosion in India
• Reddy (2003): 32 million ha
– Satellite images
• Agro-Climatic & Regional Planning Unit: 58 million ha
– Regional statistics
• Sehgal and Abrol:166 million ha
– GLASOD method

8. Reasons for Variation:
2. Different Estimation Methods
• Replacement Cost Method
– Cost of fertilizers to replace lost nutrients
– Reddy (2003): $1 billion (satellite data)
• Loss of Production Method
– Value of cut in crop/livestock production
– Reddy (2003): $3.7 billion (satellite data)

9. Reasons for Variation:
3. Differences with Loss of Production Method
in Ethiopia in 1980s
Study Projection Discount Direct Cost (%
Period Rate (%) AGDP)
(Years)
Ethiopian Highlands 25 9 2.2
Reclamation Study
Soil Conservation 0 - 2.0
Research Project
National Conservation 25 Na 6.8
Strategy Secretariat
World Bank 100 10 3.0
Reassessment

10. Indirect Economic Costs
• Water erosion
– Siltation of rivers, reservoirs, irrigation canals
• Wind erosion
– Dust storm effects: car accidents, airplane delays

11. Estimates of
Indirect Economic Costs Vary Too
• US estimate – Pimentel et al. (1995)
– $17 billion = 13% AGDP
• China estimates – Transportation alone
– Liu (2006): $6 million
– Zhang et al. (1996): $32 million

12. Reasons for Variation in Estimates of
Indirect Economic Costs
• Lack of reliable biophysical information
• Many studies focus on few impacts
• Many costs lack market prices
• Different methods used to estimate costs
– Contingent valuation – willingness to pay
– Choice experiment – choose from range of options
– Avoided cost – cost of avoiding damage
– Replacement cost – replace service by alternative

13. Economy-Wide Costs
• % GDP Estimates Ignore Multiplier Effects
• Chains of Influences
– Water erosion
– Siltation of reservoirs
– Power outages
– Industrial production losses
– Short-time working
– Reduced wages

14. Comparing Benefits and
Costs of Land Degradation
• Costs-only approaches ignore land use benefits
– Income from crops offset costs of lost production
• Optimal rates of land degradation
• Kirby and Blyth (1987):
– "A problem exists from the social viewpoint only if
the actual rate of degradation differs from the
optimal rate."

15. Comparing Benefits and Costs of
Land Restoration

16. Comparing Benefits and Costs of Land
Restoration
• Benefits
– Increases land productivity
– Increases values of provisioning/regulating services
– Increases direct use values and indirect use values
– but biophysical suitability> actual availability
• Costs
– Financial costs
– Knock-on effects: displacing people to marginal lands
– Giving priority to restoring most fertile areas first
• Increase net rate of return

17. Conclusions
• Compare Benefits/Costs of Restoration with
Benefits/Costs of Land Degradation
• ZNLD more feasible than eliminating degradation
physically and economically
• Comparing development vs conservation projects:
– (Bd - Cd) - (Bc - Cc) > 0
• Combining degradation control and restoration
– (Bd - Cd) + (Br - Cr) > t