2.2 International links
1.2.2 Economic evaluation of soil degradation
Through the services and uses they provide, soils are resources which make a decisive contribution to ensuring the survival of human societies; soils are therefore assets of global importance from an economic point of view.
The services and uses associated with soil functions are values which demand global efforts aimed at their long-term conservation, improvement and, where necessary, restoration – whereby economic aspects must also be taken into consideration. Impairment of soil functions reduces the usefulness and the productivity of soils. In addition to the economic losses thus caused, account must also be taken of the compensation and remediation costs, insofar as such measures are feasible in the first place.
Close economic links exist between the individual functions, e.g. between the habitat and production functions. The regulation function is also economically important when soil processes, e.g. the formation of groundwater or of greenhouse gases, or the silting of surface waters, are important for people or society.
A distinction must also be made between the costs incurred directly as a result of impaired soil function and those that are brought about by the effects of soil changes or damaged soil functions on people or on other environmental media.
These interrelations also explain the dependence of soil on Global Change, e.g. through the greenhouse effect.
Soil degradation is usually caused by local factors that only lead to global consequences when they occur on a wider scale. However, there are also examples of soil degradation being caused by factors in very distant regions through global commercial links (see Section D 2.1.2.2.5). When producing an economic evaluation of soil degradation, particular attention must be given to the fact that soils are, for all practical purposes, not expandable, and are available to only a limited extent. Consideration must also be given to the fact that the uses of soils are restricted by their respective properties. This factor has an important bearing on the value of soils as a protected interest in relation to other environmental assets, and on any comparison of the respective costs of reversible and irreversible damage or impairment.
Soils as an environmental medium within an environmental accounting system
No ready-made concepts are available for positioning soils within an environmental accounting system. A definition of the total economic value of soils is also lacking. The extent to which the
– current use value of soils (as an expression of utility for the private sector or national economy),
– option value (as a preference, i.e. willingness to pay, for the protection of soils. e.g. as a habitat for soil organisms), – existence value (as a preference for the preservation of soils and the landscape, e.g. as an archive of natural and
cultural history)
results or should result in an overall economic value should be examined within the framework of a research project that also includes developing and newly industrialised countries.
The German Federal Statistical Office is currently developing an environmental accounting system with scientific support from the advisory council for “Environmental-Economic Accounting” at the Federal Ministry for Environment, Nature Conservation and Nuclear Safety. A link to soils as an environmental medium can be shown (Fig. 10) by using “modules” from this accounting system.
Such accounting systems are an important instrument for reinforcing awareness of increasing soil degradation and the related losses in utility and welfare, and for encouraging the relevant prevention strategies. Such concepts still need further refinement, however. In particular, they need data in order to produce a monetary assessment of the individual resources, data which is not yet available in adequate quantity and quality.
As a statement of flows and stocks, the services listed in Table 9 are to be allocated to the inventory potential of the soil, the utilisation of which leads to changes through natural processes and human activities. Hübler (1991) studied the relation between the impairment of soil functions and the resulting costs of soil pollution in Germany for different types of impact. Taking into account the methodological approaches used there regarding the cost structure of different kinds of harmful environmental impact on the soil, it is possible to allocate the cost factors to the individual soil functions, defined according to direct and indirect impairment of the soil (Table 9). The impairment of the habitat,
D 1.2 Stress-bearing and Carrying Capacity 65
Inventory of non-produced natural assets
A. Disaggregation of traditional national accounting B. Physical description C. Additional monetary assessment of soil impairment
Soil protection activities in monetary terms (prevention and remediation)
Damage costs due to the deterioration of environmental quality (also for other environmental media) Inventory of toxic substances and residues in soils (and on soil surfaces)
Inventory of natural resources of the soil (biotic and non-biotic resources)
Land use, changes in landscape, soil ecosystems Costs of soil impairment due to the extraction of non-produced raw materials
Costs of soil impairment due to land use changes and impairment of ecosystems Costs of soil impairment due to toxic substances and residues (including air pollutants)
Figure 10:Components of the integrated macroeconomic "environmental accounting" system as applied to soils Source:modified from Statistisches Bundesamt, 1991
Elaborating such an accounting system will require much greater coordination at both the national and international level. The focus here could be on ascertaining the costs for measures to stop the loss of soils (especially cultivated soil) through degradation and for measures against the progressive decline in yields obtained from utilised soils in the newly-industrialised and developing countries. It would make sense to provide these countries with support determining these costs.
66 D 1.2 Stress-bearing and Carrying Capacity
production and regulation functions brought about by Global Change could also be included here. Cost factors which are necessary for measures to combat the negative effects of Global Change, such as reduction of CH4 and N2O emissions, should be taken into account as well. The required expenditures for soil protection must also be counted as avoidance costs; for example, worldwide erosion protection is estimated to cost US$ 17.5 billion for 1992 and US$ 30 billion for the year 2000 (WWI, 1992).
Table 9: Factors of stress on soils caused by Global Change
Primary Cost factors Function
impairment H U R
Impairment of the Disturbance of the balance between production and x
habitat function decomposition of organic matter
Measures to minimise impacts of climate and land use change x
(with respect to accumulation and release of substances)
Impairment of the Production losses due to climatic impacts x
utilisation function (CO2, UV-B radiation, temperature, precipitation) Fertilisation and pest control to increase yields and sustain production
Protection of fragile soils x x
Protection of other ecosystems x x
Provision of additional production areas Research and application/distribution of findings
Residues in water, other ecosystems and food x
Procurement of additional food
Loss of natural soil cover x x
Impairment of the Irrigation and water supplies x
regulation function (in the case of surface sealing, compaction and humus deficiency)
Preservation of soil as a filter, buffer and transformer x x for providing clean drinking water
Poor vegetative soil cover (prevents assimilation of CO2) x x
Conservation of soils as carbon reservoir x x
Compensation for N2O release from fertile and intensively fertilised agricultural areas (water and heat budgets)
Reduction of CH4emissions from natural and artificial wetlands (particularly from rice cultivation)
Release of pollutants from soils with declining storage capacity
Source: WBGU, 1994
H = Habitat function U = Utilisation function R = Regulation function
D 1.2 Stress-bearing and Carrying Capacity 67
Box 10
Economic evaluation of soil degradation
Up to now, the extent and the impact of soil degradation have been analysed primarily from the natural scientific perspective. The findings obtained are often of limited use in political decision-making, however. If they can be translated into monetary terms, at least in part, their essential content becomes more obvious and they become easier to implement. This applies in principle to all forms of soil degradation, whereby specific lines of approach are required to evaluate each in economic terms.
Degradation through erosion
The evaluation of so-called on-site damage has been limited in the main to impairment of the production function of soil through the removal of soil material or the loss of nutrients. Evaluating this type of damage can be based on the loss of productivity (cost of damage approach), in other words the declining yield of the soil, or the damage can be calculated using the avoidance cost approach. Available evaluation studies can be criticised with regard to details, but economic analysis essentially provides solid results with respect to the production function. One excellent example is the calculations for Costa Rica carried out by the World Resources Institute (WRI, 1991).
Major problems are raised by the evaluation of the ecological regulation function of soils, however, damage which can affect areas far beyond the actual surface used:
– An example is the loss of water storage capacity of soils, but also the release of CH4and N2O, which are known to have a global impact. Even if an economic evaluation of these types of damage has been problematic to date, they must not be ignored, since this leads to an underestimation of the value of soils. There is a great need for research in this area.
– Similar arguments exist with respect to damage caused by the leaching of nutrients and deposition of sediments.
These extend from eutrophication of other ecosystems and the silting of bodies of water (which can adversely affect shipping and hydro-electric energy production) to damage to coastal ecosystems (where negative effects on fishing and tourism are possible). Here, evaluation can be based on the cost of damage or repairs. Such off-site damage must be taken into account if the total economic value of soils or land use is to be determined.
– Practicable evaluation procedures exist for many of these types of damage, although they have to be adapted to the specific conditions in each individual case before they can be applied in practice. In general, however, these methods need further refinement.
In contrast, it is still a matter of speculation how processes which precede erosion should be evaluated economically – e.g. clearing of primary forest in order to enable utilisation for forestry or agricultural production. The mass transfer processes which may then occur can be evaluated well, at least in relationto the production function.
However, the question as to how the transition from primary forest to utilised land should be evaluated is still unresolved. Evaluations of biodiversity reductions (WBGU, 1994) form a complex with the evaluation of subsequent production and/or degradation, and should lead to an overall evaluation.
The importance of the evaluation of erosion damage for environmental policy can be seen from the potential fields of application:
(1) At the micro- and project-related level, the success of soil protection measures is often expressed in terms of the number of trees planted, how many kilometres of terraces have been built on slopes, etc. Of crucial importance for assessing soil protection measures, however, are not the conservation measures themselves, but their actual output – the increase or preservation of grain and fuelwood production, or the retention of specific environmental regulation functions. If these factors have been determined, then the attempt can be made to carry out an economic evaluation, whereby the benefits identified for a particular protective measure must be seen in relation to the costs involved.
(2) At the macro- and/or national level, state interventions into the price system have been identified as one of the causes of soil degradation; in many cases, subsidies are given to forms of land use which favour soil degradation. Determining the total economic value of different land-use forms (sustainable use of tropical forests versus extensive livestock grazing) could show the political decision-makers the direction in which
68 D 1.2 Stress-bearing and Carrying Capacity