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The Economics of Land Degradation in Africa: Benefits of Action Outweigh the Costs; A complementary report to the ELD Initiative

Land degradation and desertification are among of the world’s greatest environmental challenges. It is estimated that desertification affects about 33 % of the global land surface, and that over the past 40 years erosion has removed nearly one-third of the world’s arable land from production. Africa is particularly vulnerable to land degradation and desertification, and it is the most severely affected region. Desertification affects around 45 % of Africa’s land area, with 55 % of this area at high or very high risk of further degradation. It is often considered that land degradation in Africa has been vastly detrimental to agricultural ecosystems and crop production and thus an impediment in achieving food security and improving livelihoods. However, much of the literature lacks empirical underpinnings, quantifying this loss and assessing the cost of inaction, the cost of action, and benefits of action against land degradation. From the viewpoint of land degradation as a state and a process, the cost of action against land degradation includes investments to restore degraded land and reduce the rate of degradation of degrading land. This can be achieved by adopting mechanical and biological measures, and by improving land productivity. The returns to such investments are considered as benefits of action through prevention of crop damages and the derived loss in productivity. There are several other ecosystem services, on-site as well as o«-site, but due to the lack of data availability we were constrained in estimating the comprehensive benefits of action. Of course the loss in productivity and hence the benefit of action would vary based on the state and process of land degradation. The overarching aim of this exercise is to assess the cost of inaction and benefit of taking action by countries to address erosion induced soil nutrient depletion as a part of land degradation in arable lands used for cereal production. By providing continental level empirical analysis of a cropland area of 105 million hectares (accounting for 45 % of total arable land in the continent) across 42 countries in Africa over a span of 15 years (starting from 2016), the fundamental objective is to align empirical data and economic valuation to help inform policy decisions in the future. The report reviews the regional level data on the economic costs of soil erosion related to land degradation. It also analyzes the limitations and challenges of using such data and the discrepancies emerging from various methodologies. It also delves into the methodological approach utilized for regional level estimates and the cost benefit analysis of taking action against soil- erosion-induced nutrient losses on arable lands used for cereal production, which is one aspect of land degradation. This is done by using an econometric modelling approach that estimates the costs of inaction, costs of action and the net benefits of action against erosion-induced soil nutrient depletion using national level economic and biophysical data. It focuses on the regional estimates for Africa and a cost-benefit analysis of soil nutrient inflows versus soil nutrient outflows, or what is considered the overall soil nutrient balance. The results indicate that in the next 15 years, starting from 2016, inaction against soil erosion will lead to a total annual loss of NPK nutrients of about 4.74 million tons/year, worth approximately 72.40 billion PPP USD in present value, which is equivalent to 5.09 billion PPP USD per year. As a supporting ecosystem service, the loss of NPK nutrients will lead to a cost in the provisioning of ecosystem services in the form of cereal yields. A one percent increase in the total amounts of nutrients depleted from all the croplands of a country causes a 1.254 Kg/ha decline in cereal yield. In other words, countries with a higher rates of total nutrient depletion from croplands have relatively lower cereal yield per hectare than countries with lower nutrient depletion. Thus, the present value of net benefits of taking action against soil erosion on the 105 million hectares of croplands in the 42 countries over the next 15 years (2016-2030) will account for about 2.48 trillion PPP USD or 62.4 billion USD per year, which is equivalent to 5.31 % of their average Gross Domestic Product (GDP) for 2010–2012. This tells us that by taking action against soil-erosion-induced nutrient depletion in cereal croplands in the period 2016–30, the economies of the 42 countries could grow at an average rate of 5.31 % annually compared to 2010–2012 levels. Considering that the annuity value of the cost of inaction is 12.3 % of the average annual GDP of these 42 countries over the same period, the cumulative cost of inaction, which in other words measures the maximum benefits of action, is far greater than the cumulative cost of action.

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