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  • Cost of agricultural productivity loss by soil erosion in the European Union: from direct cost evaluation

    approaches to the use of macro-economic models

    February 16, 2018 IAERE Conference - Turin

    Francesco Bosello 1*, Panos Panagos2, Gabriele Standardi1, Pasquale Borrelli3, Emanuele Lugato2, Luca Montanarella2

    1 Department of Environmental Sciences and Policy, University of Milan and Euro- Mediterranean Center on Climate Change, Venice, Italy 2 European Commission, Joint Research Centre, I-21027 Ispra (VA), Italy 3 Environmental Geosciences, University of Basel, Switzerland

  • Outline

    • Introduction: motivations and objective

    • Methodology: from bottom-up to top-down

    • Results: direct and indirect effects

    • Discussion: identification of key mechanism

    • Conclusions

  • Introduction: motivations and objective

    In Europe erosion affects 115 million ha  around 12% of Europe’s total land

    area.

    Major effects include:

    On-site costs: losses in production, yields, and nutrients, damage to

    plantations, and reduction of the available planting area

    Off-site costs: siltation of reservoirs, sediment impacts on fisheries, the loss of

    wildlife habitat and biodiversity, increased risk of flooding, damage of

    recreational activities, land abandonment, and destruction of infrastructure

    Land Degradation Neutrality (LDN) is included in the recent international

    policy initiatives (UNCCD, UNFCCC, CBD), is one of the Sustainable

    Development Goals (SDGs).

    The main objective of this study is to estimate the direct and indirect impacts

    of water-induced soil erosion in the EU-28 in 2010 as representative year.

  • Introduction: A quick look at the literature

    Quite an investigated topic even though economic assessments of

    soil erosion build just the 4% of the related scientific production.

    Which methodologies?

  • Methodology

    Coupling a EU model for soil erosion (RUSLE2015, (Panagos et al. 2016))…

    …with computation of land productivity

    losses (allowing also a first estimate of

    direct costs of soil erosion)…

    …with a CGE model translating land

    productivity losses into impacts on sectoral

    production and country GDP

  • RUSLE2015

    The RUSLE2015 model assesses soil erosion

    by water with a 100m resolution in year

    2010, for the EU 28 Member States for :

    rice, barley, maize, rye, rape, turnip rape

    and soya, sunflower seed, sugar beets,

    Potatoes pulses, wheat and “remaining

    crops.”

  • RUSLE results

  • From soil erosion to crop production loss

    CPLi,r = LPLr∙ CAi,r∙ CPi,r

    CPL = crop production loss (t)

    LPL = land productivity loss (0,1)

    CA = crop area (ha)

    CP = crop yield (t/ha)

    SEA = cropland area subjected to soil erosion

    TAA = total cropland

    Sec = soil erosion coefficient 0.08 (8%)

    LPLr = (SEAr/TAAr)∙(sec)

    using crop prices it

    is then possible to

    «attach» an

    economic

    assessment to

    these quantity

    losses

  • The “direct costs”

    Other studies…

    € 20 B/year EU (Panagos et al 2015)

    € 3.25 B/year EU (Kuhlman et al. 2010)

    £ 11.3 M/year UK (Evans 1996)

  • The ICES CGE (Computable General Equilibrium) model (Eboli et al. 2010)

    calibrated on GTAP 8 database (Narayanan et al. 2012) is used to quantify the

    indirect impacts of soil erosion on the economic activity of the agricultural

    sector, and on the overall GDP performance of European Member States.

    From crop production losses to higher order effects

    Sectors cosidered

    1) Rice

    2) Wheat and remaining crops

    3) Other cereals

    4) Oil seeds and oleaginous fruits

    5) Sugar beets

    6) Livestock

    7) Industry and Extraction of natural

    resources

    8) Services

  • The structure of the ICES model

  • The production side

    The structure of the ICES model

  • Results from the CGE: indirect effects

    Annual changes in production levels (€ million) per country and crop type

  • Results from the CGE: indirect effects

    % Annual changes in agricultural production and GDP

    (accounting for endogenous prices)

    In the end €

    0.155 B GDP

    («higher

    order») losses

    vs € 1.2 B

    direct losses

  • Conclusions

     In the EU the direct cost of agricultural productivity loss is

    around € 1.25 billion annually. According to the CGE estimates

    the cost of soil erosion to agricultural sector activity is around

    € 295 million and the final GDP loss is € 155 million annually.

     The direct cost is 4 times higher than the indirect loss in the

    agricultural sector and 8 times higher than the GDP loss. This

    is due to 2 main drivers:

    1) endogenous adjustments or adaptations in the

    economic system through domestic and

    international trading mechanisms (import/export

    flows, consumer preferences, re-allocation of labor and

    capital between sectors).

    2) “frictionless” adjustments

  • Thanks

    francesco.bosello@cmcc.it

  • Results from the CGE: indirect effects

    % Annual changes in production across crop types

  • Results from the CGE: indirect effects

    GDP %

    Change

    GDP Impact

    (Million €)

    Austria -0.0012 -3.635

    Belgium -0.0005 -2.064

    Czech -0.0008 -1.213

    Denmark -0.0006 -1.636

    Finland -0.0003 -0.544

    France -0.0008 -16.801

    Germany -0.0004 -10.177

    Greece -0.0048 -12.579

    Hungary -0.0026 -3.063

    Ireland -0.0003 -0.595

    Italy -0.0021 -36.837

    Netherlands -0.0005 -3.370

    Poland -0.0010 -3.467

    Portugal -0.0014 -2.824

    Spain -0.0014 -17.128

    GDP % Change

    GDP Impact

    (Million €)

    Sweden -0.0002 -0.707

    UK -0.0001 -2.614

    Cyprus -0.0011 -0.195

    Estonia -0.0003 -0.049

    Latvia -0.0004 -0.095

    Lithuania -0.0005 -0.179

    Luxembourg -0.0004 -0.161

    Malta -0.0010 -0.063

    Slovakia -0.0020 -1.395

    Slovenia -0.0119 -4.797

    Bulgaria -0.0022 -0.776

    Croatia -0.0143 -7.100

    Romania -0.0149 -21.475

    EU-28 -0.0011 -155.542

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