The Value of Land
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Naomi Stewart, Hannes Etter, Nicola Favretto, Tobis Gerhartsreiter, Mark Schauer, Richard Thomas. (15/9/2015). The Value of Land. Bonn, Germany: Economics of Land Degradation Initiative (ELD).
Land has long been valued solely for the market price of crops, or similar commodity-based market values. The services that ecosystems provide are now understood to include not only those that have market values (e.g., charcoal, minerals, crops), but also those which have non-market values that also contribute to our economy and social well-being, albeit in less direct ways (e.g., water filtration, provision of clean air, nutrient cycling). These are all collectively known as ecosystem services, and are categorised as provisioning, regulating, supporting, and cultural services (see Box 1.1). Including non-market valuation is critical to inform decisions on resolving the issues of desertification and land degradation through economic tools, as many of these values take place outside of the current market values, and thus land valuations. Land degradation is defined by the United Nations Convention to Combat Desertification (UNCCD) as ‘a reduction or loss of the biologic or economic productivity and complexity of rain-fed cropland, irrigated cropland or range, pasture, forest, and woodland’15. Here, as in previous ELD reports (e.g., the ELD Initiative Scientific Interim Report, 2013), it is referred to as the reduction in the economic value of ecosystem services and goods of land, as a result of human activities or natural biophysical causes. As desertification and land degradation have negative impacts on land and land-based ecosystems, much of the economic focus on land degradation to date has been on the costs resulting from these issues (of inaction, as well as action). The estimations of both direct and indirect costs (see Table 1.1) are often imprecise, based mainly on biophysical information on land degradation and its impacts, singular – instead of multiple – estimates of impact costs, unvalued non-market costs, and variation in estimation methods11, and this is an even more pronounced issue in indirect costs. However, assessments of the economics of land degradation to date have shown that the costs of action are lower than the costs of inaction, or ‘business-as-usual’16, which demonstrates the value of taking action towards sustainable land management.