1. Bridging the science-policy-practice divide: Making a case for land degradation through valuation of ecosystem services UNCCD 2nd Scientific Conference Economic assessment of desertification, sustainable land management and resilience of arid, semi-arid and dry sub-humid areas 9-12 April 2013 - Bonn, Germany DAY 2 – WED 5.1: Economics of Land Degradation (ELD) initiative

2. Session outline Why such an initiative? The ELD approach Links to complementary initiatives Identified knowledge and practice gaps Organisational structure and the three ELD working groups – Stacey Noel (ELD working group leader on options and pathways for action) – Makiko Yashiro (UNEP) representing Pushpam Kumar, ELD working group leader on scenarios Panel discussion – Mark Schauer (ELD Secretariat, GIZ) – Richard Thomas (ELD Scientific coordinator, UNU-INWEH) – Emma Quillérou (ELD Scientific coordination, UNU-INWEH) – Stacey Noel (SEI, ELD working group leader on options and pathways for action) – Ephraim Nkonya (IFPRI, ELD scientific partner) – Simone Quatrini (Global Mechanism of the UNCCD)

3. Why such an initiative? ELD movie Not much action so far despite well-known technical solutions, hence economic approach Three types of problems faced by land managers that economics can help solve: – Decide which option benefits the most to society as a whole (eg Development vs Conservation) – set “fairer” compensation levels and reduce social unrest (redistribution from winners to losers) – assess further opportunities for development and set up new markets

4. The ELD approach Cost-benefit analysis based on the total economic value of ecosystem services derived from land to compare the costs of action to the benefits from action If benefits > costs, we should take action

5. Categorisation of economic values: Total Economic Value framework Total Economic Value of Land and Land-based services Use ValueNon-Use Value Direct Use Value Indirect Use Value Stewardship Value Bequest Value Existence Value Option Value

6. Categorisation of ecosystems services: Millennium Ecosystem Assessment framework The economic value of an ecosystem is the sum of economic values derived from individual services flows – Provisioning services, e.g. food, timber and fresh water – Regulating services, e.g. pollution reduction – Cultural services, e.g. aesthetic and spiritual values – Supporting services, e.g. soil formation and nutrient cycling* A framework which excludes the value of natural resource stocks for future benefits (so far) – If the flow of services is maintained but the stock decreases over time, then the system will not be sustainable in the long run! – Stock value can be estimated by complementary methods, e.g. green accounting * Risk of double-counting

7. Examples of valuation of ecosystem services for improved land management Provisioning services – Estimation of costs of soil erosion (productivity loss, replacement costs and participatory contingent valuation) for investment in erosion reduction Regulating services – Estimation of non-agricultural and non-timber values to set up carbon payments – Estimation of costs of pollution to set up payments for maintenance Cultural services – Estimation of recreational values to develop the tourism industry – Estimation of aesthetic and spiritual values to protect cultural and spiritual assets

8. Combining the two frameworks: Millennium Ecosystem Assessment and Total Economic Value Components of Total Economic Value Provisioning services Regulating services Cultural services Supporting services* Use value Direct use Indirect use Non-Use value Option Existence (Bequest) * Risk of double-counting Intuitively, our objective is to ‘sum’ all the ticks to derive the total economic value of land services

9. Cost of inaction or benefits from action Fully functioning (restored) land (100% crop yields /timber /biodiversity/…) Fully functioning (restored) land (100% crop yields /timber /biodiversity/…) Fully degraded land, no economic activity (0% crop yields /timber /biodiversity/…) Fully degraded land, no economic activity (0% crop yields /timber /biodiversity/…) Action 2 3 3 70% 100% 0% 2 2 Action 1 Cost of inaction = benefits from action only if action means 100% land restoration (action 1) Cost of inaction > benefits from action otherwise (action 2) Land under consideration 1 1 40%

10. Decision-making framework A given piece of land, for a given legal, political and economic context Alternative livelihoods (economic activities) Improved productivity Do nothing (business as usual) Do nothing (business as usual) Starting point: 3 options for action: Estimate total economic value of economic costs and benefits: Net economic benefit from Alternative livelihoods Net economic benefit from Alternative livelihoods Net economic benefit from Improved productivity Net economic benefit from Improved productivity Net economic benefit from business as usual Net economic benefit from business as usual Choose option with greatest net economic benefit for action (or inaction) and adapt legal, political and economic context to enable adoption of chosen option Choose option with greatest net economic benefit for action (or inaction) and adapt legal, political and economic context to enable adoption of chosen option

11. Links to complementary initiatives Micro-economics approaches based on the total economic value of ecosystem services (multiple geographical levels) – Cost of actions vs cost of inaction Stern Review on Climate Change The Economics of Ecosystems and Biodiversity (TEEB) UK National Ecosystem Assessment (UK NEA) Germany Centre for Development Research (ZEF)’s Economics of Land Degradation research project – Cost of actions vs benefits from action Offering Sustainable Land Use Options (OSLO) consortium Currently considered for the Economics of Land Degradation (ELD) initiative Macro-economics approaches (mostly national level): System of Environmental-Economic Accounting (SEEA): describing stocks and changes in stocks of environmental assets Wealth Accounting and the Valuation of Ecosystem Services (WAVES): natural capital and ecosystem accounting for national accounts

12. Identified gaps Technological 1.Overall costs/benefits of different land management interventions (trade offs with focus on livestock and rangelands) 2.Understanding of drivers of changes (case studies) 3.Relationship between population density and land degradation 4.Identify system tipping points for land degradation Environmental evaluation 5.Lack of harmonized methodology (scales, discount rate) 6.Lack of information on social costs of land degradation 7.Lack of information on mapping ecosystem services 8.Lack of information on non-market values of ecosystem services 9.Lack of robust low cost methods applicable by affected countries in short term 10.Limited understanding of value of ecosystem services to local livelihoods 10+. Lack of consideration of stock evolutions as well as flows Policy gaps 11.Lack of plausible scenarios 12.Lack of monitoring and evaluation for total ecosystem assessments 13.How can policies promote sustainable land management Institutional and private sector 14.Lack of incentives for sustainable land management 15.Greater interdisciplinary approaches (incentives) 16.Lack of (appropriate) knowledge management

13. ELD initiative organisational structure

14. ELD working group on data and methodology Leader: Bob Costanza, Australian National University Objectives 1.assess both existing data, knowledge and methods to identify good methodological practices 2.design an integrated tool for assessment for policy-makers which will use scenarios and options for action established by the other two working groups

15. ELD working group on options and pathways for action Leader: Stacey Noel, Stockholm Environment Institute OBJECTIVE OF ELD: to enable decision-makers in politics and business to take the necessary measures UNDERSTAND BETTER HOW LAND USERS TAKE DECISIONS TARGET AUDIENCES – Political and Local Decision-Makers – Private Sector – Scientific communities

16. ELD working group on options and pathways for action Engagement of stakeholders – Initial meetings with national policymakers and private sector through regional and/or national meetings – Deeper interactions during case study work – Presentation of final result through diverse methods Personal interaction with government decision makers Training courses for decision-makers and practitioners Policy briefs, website and other outreach materials Participation in regional and international conferences

17. ELD working group on economic evaluation of options (scenarios) (see dedicated presentation)

18. Expected working group contributions to each of the ELD output reports Working group “Data and Methodology” Working group “Options and pathways for action” Working group “Economic evaluation of options (scenarios)” Report to Scientific Communities ++++++ Report to Decision Makers ++++++ Report to the Private Sector ++++++

19. Take home message Economics can be used for improved decision-making in relation to land management for increased political stability and economic growth Most importantly, we need your inputs! – existing case studies – new inputs and participants to provide content for the ELD reports – additional funding for case studies Please come and join us http://eld-initiative.org/