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, 2018IAERE 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, Italy2 European Commission, Joint Research Centre, I-21027 Ispra (VA), Italy3 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
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
