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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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Page 1: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 2: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

Economic perspectives on land degradation

• Land degradation is widespread in the tropics and in areas with severe poverty.

Page 3: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 4: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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. 

Page 5: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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   

Page 6: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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“)

Page 7: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

Home region of land aquirers, mio ha of cross referenced deals

Source: Land Matrix

Globally rising competition for farmland

Page 8: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 9: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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 

Page 10: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 11: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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) 

Page 12: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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 

Page 13: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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) 

Page 14: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 15: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

Comparing the costs of action versus inaction – a few case study results

Source: Adapted from Nkonya et al 2011

‐Action is less costly ‐

Page 16: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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

Page 17: The Economics of Land Degradation and the of Action versus ... · The Economics of Land Degradation and the Costs of Action versus Inaction Nicolas Gerber, Center for Development

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.