Sustainable Land and Watershed Management (SLWM) practices in the Blue Nile: A systems evaluation

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International Food Policy Research Institute (IFPRI) and Ethiopian Development Research Institute (EDRI). Conference on "Towards what works in Rural Development in Ethiopia: Evidence on the Impact of Investments and Policies". December 13, 2013. Hilton Hotel, Addis Ababa.

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  • Investment in MST alone is not profitable after 20 yearsProviding SLWM adopting households with a government transfer of 450 Birr / household in the first year and 180 Birr / household during the following 20 years to compensate for SLWM maintenance labor inputs increases the net present value of MST to 101.7, or 7.5 billion birr more than the base simulation. Fertilizer investment is more profitable than MST + fertilizer investment50 percent reduction in transport costs = 25% of earth roads are upgraded to gravel road status (and receive annual maintenance and rehabilitation), while the remaining road stock receives planned annual maintenance and 7 or 12-year road rehabilitation30 percent decrease in transport costs = 10 percent of earth roads are upgraded to gravel status
  • Sustainable Land and Watershed Management (SLWM) practices in the Blue Nile: A systems evaluation

    1. 1. ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE Sustainable Land and Watershed Management (SLWM) practices in the Blue Nile: A systems evaluation Emily Schmidt, Paul Chinowsky, Sherman Robinson, Ken Strzepek IFPRI ESSP-II Towards what works in rural development in Ethiopia: Evidence on the impact of investments and policies December 13, 2013 Addis Ababa 1
    2. 2. Background • The SLWM programs implemented are designed to: • Decrease erosion and increase agricultural yields • Improve rural household welfare • Important to understand the linkages among: • • • • Agricultural production increases Corresponding output price changes Labor allocation Household income effects in program areas • Previous research suggests that maintenance of SLWM structures in rural Ethiopia is limited
    3. 3. Analyses in study Hydrological Model Economic Model Exogenous Factors Systems Model
    4. 4. Systems model Multi-market model that is modeled in GAMS • Simulates the effects of SLWM investments on: • agricultural production • producer and consumer prices • household income • Models different production systems by slope type • Compares different investment simulations in order to identify optimal investment strategy.
    5. 5. SLWM Investments Soil Bunds Stone terraces Wood check dam Stone check dam
    6. 6. Area in Blue Nile Basin with similar land characteristics of Mizewa watershed
    7. 7. Design of Systems Simulations A series of SLWM simulations are compared to the calibrated base: 1. Calibrated base simulation with imposed downward trend (Schmidt & Tadesse, 2012; Holden and Shiferaw, 2002) 2. Terraces built on middle and steep slopes (MST) 3. Calibrated base simulation with fertilizer application 4. MST with fertilizer application 5. MST with fertilizer application and 50% reduction in transportation costs
    8. 8. Simulation Results: Production Total Maize Production in watershed Million Tons 3 2.5 2 1.5 1 0.5 0 Base MST * Fertilizer Base MST and Fertilzer MST, Fertilizer, and -50% transport cost
    9. 9. Average production and price by slope in Fogera Base with MST* Fertilizer Base Maize (million tons) Steep 0.07 23.9% Mid 1.08 22.8% Flat 0.15 -0.7% Maize price (1000 birr/ton) Fogera 1.11 -8.8% Fertilizer, M ST, -50% Fertilizer transport and MST cost 61.2% 59.9% 60.0% 98.5% 94.8% 57.9% 100.0% 96.3% 59.3% -22.8% -30.7% -25.2% • MST increases production by 23 – 24% • Pairing fertilizer with MST almost doubles production • An increase in production (supply) with no increase in demand causes prices to fall
    10. 10. Average household income 0.8 Base 0.7 0.65 MST 0.6 0.55 Fertilizer Base 0.5 MST and Fertilizer 0.45 *MST = Middle and Steep Terraces 2030 2027 2024 2021 2018 2015 2012 0.4 2009 Thousand birr / HH 0.75 MST, Fertilizer, and -50% transport cost
    11. 11. Simulation Results: Income by slope type Year 2030 HH income (1000 birr/person) Base Fertilizer, MST, -50% Fertilizer Fertilizer transport MST* Base and MST costs Steep 0.51 -4.4% 7.2% 9.5% 14.3% Mid 0.62 0.1% 10.1% 20.9% 28.7% Flat = Middle and Steep Terraces 0.51 -3.1% *MST 5.8% -1.0% 2.0%
    12. 12. Benefit cost of policy options to incentivize SLWM sustainability Change in Household Consumption (NPV) 0 Marginal benefit of government investment (NPV) - Government Cost (NPV of cost) - Marginal Benefit: Cost - -2.5 - 0 - 7.5 22.9 20.1 10.0 - 6.95 0 0 1.5 - 22.9 2.8 2.1 1.4 21.7 1.6 0.9 1.8 21.1 1.1 0.89 1.2 Simulation 2009-2030 Household 3% discount rate Consumption (billion birr) (NPV) Base 94.2 Land Investments Terraces on middle and steep slopes (MST) 91.7 MST with government transfer 101.7 Fertilizer increase 117.1 Fertilizer increase and MST 114.3 Road Investment Scenarios (w/ fertilizer and MST) Transport cost decrease 50% 117.1 Transport cost decrease 30% 115.9 Transport cost decrease 20% 115.3
    13. 13. Conclusion • Producer benefits of only SLWM do not outweigh the costs – Do not compensate foregone off-farm labor opportunities – Do not increase output enough to compensate for price falls • More profitable for producers (within the 20 year timeframe) to invest in fertilizer and allow the land to continue to degrade
    14. 14. Conclusion • A more comprehensive investment approach may be necessary to ensure that SLWM is maintained. • SLWM + fertilizer • Government transfer (BC ratio 1.5) • Improved roads (BC ratio 1.2 – 1.8) • Successful SLWM programs must take into account the social benefits (improved land, decrease consumer prices), but also private income gains in order to incentivize rural farmers to maintain SLWM structures

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