The document summarizes an initiative called the Economics of Land Degradation (ELD) which aims to use economic analysis to assess the costs and benefits of sustainable land management practices. It outlines the ELD's approach of evaluating ecosystem services and determining the total economic value of land. It also describes the ELD's organizational structure including three working groups focused on data/methodology, options/pathways for action, and economic evaluation of scenarios. Key knowledge gaps are identified that the ELD aims to address to help decision-makers adopt more sustainable land management policies and practices.

1. 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

2. Session outline
• 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
– 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)

3. 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

4. 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

5. Categorisation of economic values:
Total Economic Value framework
Total Economic Value
of Land and Land-based services
Use Value Non-Use Value
Direct Indirect Option Existence Bequest Stewardship
Use Value Use Value Value Value Value Value

6. 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

7. 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

8. Combining the two frameworks:
Millennium Ecosystem Assessment and Total Economic
Value
Components of Total Provisioning Regulating Cultural Supporting
Economic Value services services services services*
Direct use   
Use value
Indirect use   
Option  
Non-Use
value Existence

(Bequest)
* Risk of double-counting
Intuitively, our objective is to ‘sum’ all the ticks to derive the total
economic value of land services

9. Cost of inaction or benefits from action
100% Fully functioning (restored) land
(100% crop yields /timber /biodiversity/…)
Action 1
70%
1 2
Action 2
3
40% Land under consideration
0% 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)

10. Decision-making framework
A given piece of land, for a
Starting point: given legal, political and
economic context
3 options for Do nothing Alternative livelihoods
action: Improved productivity
(business as usual) (economic activities)
Estimate total
economic value Net economic Net economic Net economic
of economic benefit from benefit from benefit from
costs and Improved productivity business as usual Alternative livelihoods
benefits:
Choose option with greatest net economic benefit for action (or inaction)
and adapt legal, political and economic context
to enable adoption of chosen option

11. Links to complementary initiatives
• Micro-economics approaches based on the total economic value of ecosystem
services (multiple geographical levels)
– Cost of actions vscost 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 vsbenefits 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

12. Identified gaps
Technological 9. Lack of robust low cost methods
1. Overall costs/benefits of different land applicable by affected countries in
management interventions (trade offs short term
with focus on livestock and rangelands) 10. Limited understanding of value of
2. Understanding of drivers of changes ecosystem services to local livelihoods
(case studies) 10+. Lack of consideration of stock
3. Relationship between population evolutions as well as flows
density and land degradation Policy gaps
4. Identify system tipping points for land 11. Lack of plausible scenarios
degradation 12. Lack of monitoring and evaluation for
Environmental evaluation total ecosystem assessments
5. Lack of harmonized methodology 13. How can policies promote sustainable
(scales, discount rate) land management
6. Lack of information on social costs of Institutional and private sector
land degradation 14. Lack of incentives for sustainable land
7. Lack of information on mapping management
ecosystem services 15. Greater interdisciplinary approaches
8. Lack of information on non-market (incentives)
values of ecosystem services 16. Lack of (appropriate) knowledge
management

13. ELD initiative organisational structure

14. 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

15. 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

16. 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

17. ELD working group on economic evaluation of options
(scenarios)
• (see dedicated presentation)

18. Expected working group contributions to each of the ELD
output reports
Working group Working group
Working group
“Options and “Economic
“Data and
pathways for evaluation of
Methodology”
action” options (scenarios)”
Report to Scientific
+++ ++ +
Communities
Report to Decision
+ ++ +++
Makers
Report to the
+ ++ +++
Private Sector

19. Take home message
• Economics can be used for improved decision-making
• in relation to land management
• for increased political stability and economic growth
• 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/