Bridging the science-policy-practice divide:Making a case for land degradation through valuation of

ecosystem services

UNCCD 2nd Scientific ConferenceEconomic assessment of desertification, sustainable land management and

resilience of arid, semi-arid and dry sub-humid areas9-12 April 2013 - Bonn, Germany

DAY 2 – WED 5.1: Economics of Land Degradation (ELD) initiative

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)

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

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

Categorisation of economic values:Total Economic Value framework

Total Economic Valueof Land and Land-based services

Use Value Non-Use Value

DirectUse Value

IndirectUse Value

Stewardship Value

Bequest Value

Existence Value

OptionValue

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

Examples of valuation of ecosystem servicesfor 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

Combining the two frameworks:Millennium Ecosystem Assessment and Total Economic

Value

Components of Total Economic Value

Provisioning services

Regulating services

Cultural services

Supporting services*

Use valueDirect use

Indirect use

Non-Use value

Option

Existence (Bequest)

* Risk of double-counting

Intuitively, our objective is to ‘sum’ all the ticks to derive the total economic value of land services

Cost of inaction or benefits from actionFully functioning (restored) land(100% crop yields /timber /biodiversity/…)

Fully degraded land, no economic activity(0% crop yields /timber /biodiversity/…)

Action 2

3

70%

100%

0%

2

Action 1

Cost of inaction = benefits from actiononly if action means 100% land restoration (action 1)

Cost of inaction > benefits from action otherwise (action 2)

Land under consideration

1

40%

Decision-making framework

A given piece of land, for a given legal, political and

economic context

Alternative livelihoods (economic activities)Improved productivity Do nothing

(business as usual)

Starting point:

3 options for action:

Estimate total economic value of economic costs and benefits:

Net economicbenefit from

Alternative livelihoods

Net economicbenefit from

Improved productivity

Net economicbenefit from

business as usual

Choose option with greatest net economic benefit for action (or inaction)and adapt legal, political and economic context

to enable adoption of chosen option

Links to complementary initiatives

• Micro-economics approaches based on the total economic value of ecosystem services (multiple geographical levels)– Cost of actions vs cost 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 vs benefits 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

Identified gaps

Technological 1. Overall costs/benefits of different land

management interventions (trade offs with focus on livestock and rangelands)

2. Understanding of drivers of changes (case studies)

3. Relationship between population density and land degradation

4. Identify system tipping points for land degradation

Environmental evaluation 5. Lack of harmonized methodology

(scales, discount rate)6. Lack of information on social costs of

land degradation7. Lack of information on mapping

ecosystem services8. Lack of information on non-market

values of ecosystem services

9. Lack of robust low cost methods applicable by affected countries in short term

10. Limited understanding of value of ecosystem services to local livelihoods

10+. Lack of consideration of stock evolutions as well as flows

Policy gaps 11. Lack of plausible scenarios12. Lack of monitoring and evaluation for

total ecosystem assessments13. How can policies promote sustainable

land managementInstitutional and private sector

14. Lack of incentives for sustainable land management

15. Greater interdisciplinary approaches (incentives)

16. Lack of (appropriate) knowledge management

ELD initiative organisational structure

ELD working group on data and methodology

• Leader: Bob Costanza, Australian National University

• Objectives1. assess both existing data, knowledge and methods to identify

good methodological practices2. design an integrated tool for assessment for policy-makers which

will use scenarios and options for action established by the other two working groups

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

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

ELD working group on economic evaluation of options (scenarios)

• (see dedicated presentation)

Expected working group contributions to each of the ELD output reports

Working group“Data and

Methodology”

Working group“Options and pathways for

action”

Working group“Economic

evaluation of options (scenarios)”

Report to Scientific Communities

+++ ++ +

Report to Decision Makers

+ ++ +++

Report to the Private Sector

+ ++ +++

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 ushttp://eld-initiative.org/