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The Economics of Land Degradation and the
Costs of Action versus Inaction
Nicolas Gerber, Center for Development Research (ZEF), University of Bonn, Germany
ESOF 2012, Dublin
Based on a joint study by ZEF and the International Food Policy Research Institute (IFPRI), 2011
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Economic perspectives on land degradation
• Land degradation is widespread in the tropics and in areas with severe poverty.
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Global indicators of LD ‐ Net Primary Productionas a measure of ecosystem functioning
Humid areas account for 78% of global land degradationWhere more is produced, more can be lost. → Hence the need for an analysis based on the impacts on human well‐being.
Loss of Net Primary Production between 1981‐2003Cartography: Valerie Graw; Data Source: FAO GeoNetwork
Source: ISRIC – World Soil Information, 2008
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Economic perspectives on land degradation
• Land degradation is widespread in the tropics and in areas with severe poverty.– At the global level, positive correlation between poverty (Infant Mortality rate) & land degradation.
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Relationship between poverty (IMR) and land degradation
Variable Resolution Baseline End line Source of data NDVI 8km x 8km 1982–84 2003–06 Global Land Cover Facility (www.landcover.org), Tucker, Pinzon, and
Brown 2004); NOAA AVHRR NDVI data from GIMMS
Infant Mortality Rate
Sub‐district 2005
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Economic perspectives on land degradation
• Land degradation is widespread in the tropics and in areas with severe poverty.– At the global level, positive correlation between poverty (Infant Mortality rate) & land degradation.
• High human costs of LD, as 42% of the world‘s very poor rely on degraded land (food & income)
• Costs of LD as much as 10% of GDP in SSA • Increasing shortage of land large scale land investments (land „grabbing“)
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Home region of land aquirers, mio ha of cross referenced deals
Source: Land Matrix
Globally rising competition for farmland
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Some global patterns suggest actions to address LD
At a global level, we observe…• Positive correlation between government effectiveness and lower land degradationGovernment effectiveness plays a key role in SLM
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Relationship between change in vegetation cover & change in gov’t effectiveness
Source: Nkonya et al. 2011
Variable Resolution Baseline End line Source of data NDVI 8km x 8km 1982–84 2003–06 Global Land Cover Facility (www.landcover.org), Tucker, Pinzon, and
Brown 2004); NOAA AVHRR NDVI data from GIMMS
Government effectiveness
Country 1996–98 2007–09 Worldwide Governance Indicators: http://info.worldbank.org/governance/wgi/index.asp
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Some global patterns suggest actions to address LD
At a global level, we observe…• Positive correlation between government effectiveness and lower land degradation Government effectiveness plays a key role in SLM
• Negative relationship between population density and higher land degradation LD is not doomed by population pressure, provided that the right incentives are in place
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Source: Nkonya et al. 2011
Relationship between change in vegetation cover and change in population density
Variable Resolution Baseline End line Source of data NDVI 8km x 8km 1982–84 2003–06 Global Land Cover Facility (www.landcover.org), Tucker, Pinzon,
and Brown 2004); NOAA AVHRR NDVI data from GIMMS
Population density
0.5o x 0.5o 1990 2005 CIESIN (2010)
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A global paradox• Policy action and research are urgently needed to resolve the paradox of:– Increased competition for productive agriculturalland (land with water)
– Increased land prices (2‐3 folds in certain areas)– Upward trends for future demand for „land‐based“ goods and services
– Sustained underinvestment in SLM
• Food security depends on productive and sustainably used land
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Why an economic assessment of LD?
• To assess the costs and benefits of action against LD versus the costs of inaction
Roles of the cost of action vs ination (COAVI) analysis:• Facilitate policy priority setting (human impacts)
• Enable investment targeting (regions, issues)• Propose institutional designs (transactions costs)• Mobilize stakeholders for broad based actions
(COAVI to motivate action and constitutencies)
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Conceptual framework
Levels of Land Degradation
Processes
Proximate Causes
Underlying Causes
OutcomesAll effects of levels of LD on:• The provision of ecosystem services• Human well‐being/society• Economy
ActorsAction against LD:
• SLM• Institutional and policy settings
Action Scenario
Institutional Arrangements
(Discounted) costs/benefits of action• On‐, off‐site costs/benefits• Direct, indirect costs/benefits• Current, future costs/benefits
Source: Nkonya et al. 2011
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Comparing the costs of action versus inaction – a few case study results
Source: Adapted from Nkonya et al 2011
‐Action is less costly ‐
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Enacting the ELD assessment ‐Partnership concept
Political decisionmaking, actions and investment
Policy Body 1:UN organizations, +... • Leads PB2• Absorbs information• Disseminates it to PB2• Facilitates decisionmaking
Policy Body 2:• Funding and recipient countries• Civil societies / NGOs• Business partners, private‐sector representatives.
Development of the science‐based evidence
Science Body 1:Independent scientific leadership team• Coordination, accountability.
Peer review process of • Scientific results / findings, • Action and investment progress.
Science Body 2:Scientific assessment of ELD• Methodology• Ground proofing• Sampling / case studies• Transnational / global aspects• Costs of action / inaction.
Drafting of policy‐relevant results and findings
Source: Nkonya et al. 2011
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Main messages: toward a global and integrated economic assessment of LD
1. The cost of LD is high, not well known, and crucial to global human well‐being (food security, poverty, …)
2. The cost of action (sustainable land management, SLM) is much smaller than the cost of inaction
3. The LD problems are global, thus the assessment has to be global (i.e. no focus on desertification)
4. The institutional arrangements for the assessment must follow best practices: credibility through independence and peer reviews.