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European Commission DG Environment Assessing the Economic Impacts of Soil Degradation Final Report

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Soil degradation has become an important concern for policy makers. The physical, chemical and biological effects of soil degradation on other media of the environment, ecosystems and human populations have been researched to some degree. However, so far, little research has been done about the economic costs that soil degradation imposes both on the users of soil and on society as a whole. The current study, financed by the European Commission, DG Environment, was undertake to address this lack of economic information. The work performed consists of three main components: - First, a review of the relevant literature, both economic and otherwise, to take stock of the existing information on the economic impacts of soil degradation, - Secondly, five case studies from different part of the EU, addressing different types of soil degradation; and - Thirdly, an empirical estimation of the Europe-wide economic impacts of soil degradation.
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European Commission
DG Environment
Assessing the Economic Impacts of Soil Degradation
Final Report
Volume IV: Executive Summary
Final Version, December 2004
Study Contract
ENV.B.1/ETU/2003/0024
Benjamin Görlach, Ruta Landgrebe-Trinkunaite, Eduard Interwies
Madjid Bouzit, Dominique Darmendrail, Jean-Daniel Rinaudo
Assessing the Economic Impacts of Soil Degradation
2
This report will be cited as follows:
Görlach, B., R. Landgrebe-Trinkunaite, E. Interwies, M. Bouzit, D. Darmendrail and J.-D.
Rinaudo (2004): Assessing the Economic Impacts of Soil Degradation. Volume IV: Executive
Summary. Study commissioned by the European Commission, DG Environment, Study
Contract ENV.B.1/ETU/2003/0024. Berlin: Ecologic
Assessing the Economic Impacts of Soil Degradation
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Table of Contents
1 Introduction.......................................................................................................... 4
2 Aim and Scope of the Study................................................................................ 5
3 Review of the Literature....................................................................................... 6
3.1 The Economic Approach to Soil Degradation .................................................. 6
3.2 Typology of the Economic Impacts of Soil Degradation................................... 6
3.3 Typology of Valuation Methods........................................................................ 9
3.4 Methodology for the Economic Assessment of Soil Degradation..................... 9
3.5 Quantitative Estimates................................................................................... 11
4 Case Studies..................................................................................................... 12
4.1 Erosion, UK.................................................................................................... 12
4.2 Erosion, France ............................................................................................. 14
4.3 Contamination, France, MetalEurop Nord...................................................... 15
4.4 Salinisation, Spain, Central Ebro Area........................................................... 18
4.5 Organic Matter Loss, Sweden........................................................................ 20
5 Empirical Estimation of the Impacts .................................................................. 21
5.1 Estimation for Erosion, Contamination and Salinisation................................. 21
5.2 Interpretation of the Results........................................................................... 24
6 Policy Recommendations and Further Research Needs................................... 27
6.1 Policy Recommendations .............................................................................. 27
6.2 Research Needs ............................................................................................ 29
7 References ........................................................................................................ 30
List of Tables
Table 1: Synthesis – costs of soil erosion for the UK case study.............................. 13
Table 2: Synthesis – Average annual cost of soil erosion for the FR case study...... 15
Table 3: Synthesis – Average annual cost of soil erosion for the FR case study...... 17
Table 4: Gross margin and unit gross magrin loss for different crops production..... 19
Table 5: Estimates of the Costs of Erosion (€2003 / ha*y).......................................... 21
Table 6: Estimated Total Cost of Soil Erosion (million €2003)..................................... 22
Table 7: Cost of Soil Contamination at European level (M€2003)............................... 23
Table 8: Total Cost of Salinisation for Spain, Hungary and Bulgaria (million €2003).24
Table 9: Overview of the Total Annual Cost of Soil Degradation (in M€2003)............. 25
Assessing the Economic Impacts of Soil Degradation
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1 Introduction
Soil performs a multitude of functions that are essential to human life. Apart from providing
food, biomass and raw materials and serving as a habitat and gene pool, soil also performs
storing, filtering and transformation, as well as social and cultural, functions. In this way, soil
plays an integral part in the regulation of natural and socio-economic processes that are
necessary for human survival, such as the water cycle and the climate system. Because soil
forms the basis of many different human activities, it also has a significant economic value.
However, this "fundamental" economic value of soil is barely recognised.
Soil deterioration, understood as an impairment of these different functions, occurs both
naturally, and as a consequence of human influences. This study focuses only on man-made
impacts on the soil functions, which are described as soil degradation. Like other parts of the
environment, soil has come under increasing stress as a consequence of human activities.
Intensive agriculture, land consumption for building, the contamination of soil through
pollutant emissions and changing climatic conditions are but a few of the man-made
pressures on soil. In its Communication “Towards a Thematic Strategy for Soil Protection”,
the European Commission (2002) distinguishes between the following eight soil threats:
Soil erosion,
Decline in organic matter,
Soil contamination,
Soil sealing,
Soil compaction,
Decline in soil biodiversity,
Salinisation, and
Floods and landslides.
While “healthy soil” can withstand these pressures to a certain degree, the combination and
the extent of the stresses has resulted in a slow, but widespread, degradation of soils in
many parts of Europe.
Soil degradation has become an important concern for policy makers. The physical, chemical
and biological effects of soil degradation on other media of the environment, ecosystems and
human populations have been researched to some degree. However, so far, little research
has been done about the economic costs that soil degradation imposes both on the users of
soil and on society as a whole. The current study was undertaken to address this lack of
economic information.
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2 Aim and Scope of the Study
The current study was undertaken in order to take stock of the existing knowledge on the
economic impacts of soil degradation in Europe and abroad, and to provide initial estimations
of the total economic impact of soil degradation in Europe. In the latter task, it is one of the
first works of this sort that has been carried out in Europe.
The project has been financed by the European Commission, Directorate General
Environment, and was carried out by Ecologic and the BRGM. It was prepared in support of
the process leading up to a Thematic Strategy for soil protection in Europe.
The work performed consists of three main components:
First, a review of the relevant literature, both economic and otherwise, to take stock of the
existing information on the economic impacts of soil degradation, and on the basis of this,
to develop a methodology for assessing these impacts in Europe;
Secondly, five case studies from different parts of the EU, addressing different types of
soil degradation; and
Thirdly, an empirical estimation of the Europe-wide economic impacts of soil degradation.
These tasks are documented in separate volumes, which together constitute the final report
for the project "Assessing Economic Impacts of Soil Degradation”. This volume summarises
the main findings of the three tasks.
However, a general caveat applies for this document. As the literature review (Volume I of
this report) and the database research (contained in Volume II of this report) have shown, the
data availability on soil degradation is still limited in many respects. Information on the
economic impacts of soil degradation is generally scarce, somewhat less for erosion and
contamination, much more so for soil biodiversity loss or soil compaction. Likewise, the
availability of soil-scientific data on the state of soils in Europe differs markedly between
different soil threats and between different regions.
The five case studies that were described as part of this project shed some light on specific
impacts and specific regions. Still, they are not sufficient to compensate the shortage of
empirical economic data, in order to provide a more comprehensive picture of soil
degradation and its impacts in Europe.
Thus, at this stage, on the basis of the available data, a conclusive judgement cannot be
made for many of the different types of soil degradation. For those threats with better data
availability, the problem remains that many assumptions have to be made in order to arrive
at Europe-wide estimates for the economic impacts of soil degradation. Care was taken to
make these assumptions and the underlying motivations explicit wherever possible.
Nonetheless, these assumptions are sometimes heroic and may be disputed in many cases.
In this sense, the current study should be regarded as a first scoping, providing the basis for
further discussion and research, rather than as conclusive evidence.
Assessing the Economic Impacts of Soil Degradation
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3 Review of the Literature
The economic assessment of soil degradation in Europe has been based on a survey of
existing studies and relevant literature assessing the impacts of soil degradation in economic
terms. This literature review focused on empirical research and quantitative estimates of soil
degradation impacts in Europe and abroad in order to take stock of the existing information,
and to give an overview of the relevance of the problem.
The surveyed studies have assessed a variety of impacts associated with soil degradation,
both on-site (e.g. yield losses due to compaction or salinisation) and off-site (e.g. the cost of
siltation or sedimentation as a consequence of erosion). While the main focus was on the
impact of suffered damages, the study also considered the defensive expenditure needed to
alleviate impacts of soil degradation, such as the cost of replacing eroded nutrients.
3.1 The Economic Approach to Soil Degradation
Besides its use for agriculture, horticulture and forestry, soil performs a number of different
functions that support a variety of human activities. Not all soil functions are of direct and
measurable economic relevance: soil also has ecological, cultural and aesthetic functions, for
instance as an archive of human and natural history or as a spiritual or religious symbol.
Such functions cannot be adequately measured in economic terms, nonetheless, they
contribute to the value of soil.
Analytically, the economic valuation of soil degradation originates from the economic
approach to valuing soil quality. Soil degradation is a deterioration of soil quality, which can
be understood as a loss of soil functions. Consequently, the process of valuing soil quality
can be described as moving
from soil functions (biological and chemical processes that take place in the soil, which
are described by ecology)
to the uses of soil (in this context, human uses of soil that are of economic relevance, and
thus at the interface between ecology and economics. This also includes indirect uses –
i.e. the beneficiaries of ecosystem services provided by soils)
to the valuation of these uses (which is an economic task).
Assessing the economic impact of soil degradation in this framework can be done as follows.
First, soil degradation is a process whereby pressures exerted on the soil ecosystem lead to
a partial or complete loss of soil functions. This impact on soil functions means that the
human uses of soil are also affected. Uses here include both direct, economic uses, as well
as ecosystem services provided by soil. A typology of different uses, and how are affected by
degradation is presented below. In the following, the impact of soil degradation on soil uses
is valued in economic terms. To this end, different valuation methods can be applied. A brief
discussion of such methods can be found in the literature review (Volume I of this report).
3.2 Typology of the Economic Impacts of Soil Degradation
Soil deterioration makes itself felt in different ways, and there are different methods of
classifying the economic impacts of soil degradation. The different impacts can be classified
spatially into on-site and off-site effects, distinguished according to the economic values that
are affected; they may also be grouped according to causality as direct and indirect impacts.
Assessing the Economic Impacts of Soil Degradation
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3.2.1 On-site vs. off-site effects
In the economic context, spatial distinction between on-site and off-site impacts is also of
central relevance, taking account of the fact that economic impacts occur both at the site
where degradation takes place (on-site effects), as well as in spatially remote areas (off-
site effects). Apart from the spatial criterion, the distinction between on- and off-site effects
is also relevant because soil degradation caused by one actor can have negative effects on a
third party, thus creating an “externality” in the economic sense. In addition, off-site effects
can also occur with a time lag.
On-site effects generally tend to be more manifest and self-evident consequences of soil
degradation, as they directly affect the soil uses taking place at the site, like agriculture,
forestry or recreational activities. Also, while there may be temporal delays between the
degradation and its effects, on-site effects tend to be more immediate than off-site effects.
Off-site effects can account for a sizeable proportion of the total economic impact of soil
degradation; however, as they are less directly related to soil degradation, it can be difficult
to quantify precisely which off-site effect is related to which soil degradation process.
Off-site effects include the following processes:
Siltation of dams as a consequence of erosion;
Sedimentation of waterways, leading to cleaning and maintenance costs;
Damage to irrigation infrastructure and pumping equipment;
Contamination of drinking water reserves and associated health impacts;.
Increased frequency of flooding events through reduced water retention;
Increased dust concentrations leading to health impacts and physical damage;
Impact on the aquatic environment.
It has been argued that, for developed countries, the off-site effects of soil erosion tend to be
higher than its on-site costs. This view is supported e.g. by FAO (1999), Furtan (1997),
Crosson and Stout (1983), Crosson (1986) and Clark et al. (1985). Pretty et al. (2000)
estimate the off-site costs of soil erosion for the UK at £ 14 m per annum (in 1996 prices).
In addition, there are also global effects of soil degradation. Climate change effects arise
through the reduced carbon storage in degraded soils: With an estimated storage capacity of
3,200 - 3,500 Petagrammes (3.2 - 3.5 * 1012 kg), soil is the third largest global carbon pool
(Lal 1999). Furthermore, soil degradation may diminish the biodiversity above and below-
ground, reducing the resilience of soil ecosystems when faced with changing land uses or
climatic conditions.
3.2.2 Use values and non-use values
A different way to categorise soil degradation is to consider the economic values affected by
it. These can either be use values or non-use values. The use value is impacted if soil
functions are currently used in one way or another, and if the capacity of soil to support these
uses is diminished by the soil degradation. Uses can be agriculture or forestry, but also
housing, tourism or recreational activities.
Within the category of use values, a further subdivision is possible between direct and
indirect use value. Broadly speaking, the direct use value relates to the immediate uses of
soil, e.g. if soil is used for agriculture. Direct use values are mainly related to the soil function
of producing food and biomass. By contrast, indirect use values are related to other,
Assessing the Economic Impacts of Soil Degradation
8
ecological functions that soil fulfils, either by itself, or by sustaining other ecosystems.
Examples include the filtering and buffering functions of soil, the decomposition of dead
organic matter and wastes, and the role that soil plays in the natural carbon, nitrogen and
sulphur cycles. These ecological functions performed by soil may be source of significant
benefits for economic actors, soil acting as a natural infrastructure. The valuation of such
ecological functions from the perspective of human uses is referred to as ecosystem services
(see Box 1 below). For certain aspects of soil degradation, such as soil biodiversity, it is likely
that the impact on indirect use values will exceed that on direct use values.
In opposition to direct and indirect use values, there is also a non-use value of soil. It is
affected if the degradation of soil (and the ecosystems it supports) is experienced as a loss
by someone who is not currently using it, nor intends to use it. Non-use values can take the
form of existence values, based on the conviction that soil should be protected as a valuable
resource in its own right, or they can take the form of bequest values, if the soil is to be
preserved for use by future generations. Non-use values are typically much more difficult to
assess economically than use-values. Finally, a category that falls between use values and
non-use values is the option value. Soil is said to have an option value if it is uncertain
whether, and in what form, it will be used at a later stage.
The advantage of classifying soil degradation according to the values affected by it is that the
appropriate methods for the economic assessment can be derived more easily: for impacts
on use values, market prices can usually be used as a proxy, whereas indirect valuation
methods are needed to assess impacts on non-use values.
Box 1: The Ecosystem Services provided by soils
The concept of ecosystem services has attracted much attention in ecological economic
research (see e.g. Constanza et al. 1987, Daily et al. 1997). Analytically, ecosystem services
form part of the indirect use values: soil is an integral part of many ecosystems and natural
processes, including the regulation of the natural water cycle, nutrient cycling, the creation
and absorption of biomass, the sustenance of biodiversity, and the natural carbon, sulphur
and nitrogen cycles. These functions are of great importance for human survival and for
economic activity; however, so far, their value rarely been assessed.
Some ecosystem services were quantified in this study - e.g. the role of soils for flood
protection. A broad indication of the value of soils as a pool in the global carbon cycle can be
derived from Hartridge and Pearce (2001). They estimate that in the UK, 7.6 million tons of
carbon are released annually from cultivated soils, drained peatlands and fenlands, through
peat extraction and through the transport of eroded soil to the sea. The annual climate
change impact of organic matter released from British soils thus amounts to £1998 226.5
million (€2003 361 million). In a similar estimation, Pretty et al. (2000) value the economic
impacts of soil organic matter loss in the UK at GB£ 82.3 m p.a. (€2003 143.3 m).
Along the same lines, Balmford et al. (2002) have reviewed the evidence on the economic
value of different ecosystems. They provide evidence from five different ecosystems that
were converted to human use (however none of them from Europe). For all the ecosystems
considered, they find that the net benefits from conversion are actually negative. For the
case of a Canadian wetland, the total economic value decreased by more than 40% as a
consequence of conversion (from US$ 8800 to US$ 3700 / ha *y), as the loss of services
formerly provided by the wetland is not outweighed by the marginal benefits of conversion.
This finding holds despite the fact that some particularly valuable ecosystem services, such
as nutrient cycling and the provision of cultural values, were not even quantified.
Assessing the Economic Impacts of Soil Degradation
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The FAO Soil Biodiversity Portal (FAO, undated) provides some estimates of the value of
ecosystem services provided by soil, based on a study by Pimentel (1997). They investigate
the following ecosystem services: waste recycling, soil formation, nitrogen fixation,
bioremediation of chemical pollution, biotechnology (genetic resources), biological pest
control, pollination and the support of wild animals and ecotourism. The worldwide economic
value of these services is estimated at US$ 1.542 billion.
While these results are only indicative, they underline the importance of considering wider
environmental and social benefits of soil uses, and show that a focus on the immediate soil
uses (such as agriculture) can be misleading. Quite to the contrary: the value of ecosystem
services may far exceed the direct use value, e.g. for agriculture. This applies in particular to
ecosystems that are rich in species and in biological activity, such as wetlands, floodplains,
bogs and forests.
3.3 Typology of Valuation Methods
Different methods have been put forward to assess the economic impact of soil degradation
in monetary terms (see van den Bergh 1999 for a general overview). In general, all valuation
methods serve to put a price on “environmental quality”, a good which is not traded in the
market. Therefore, prices have to be inferred in other ways: either by comparing related
products and markets, such as agricultural produce, or by eliciting consumers’ willingness to
pay for the conservation of environmental features by means of surveys and questionnaires.
As different valuation methods approach the problem of soil deterioration from different
angles, there are no clear-cut rules about which of these methods should be applied in which
cases, and how they can best be combined. In addition, not all of the different methods can
be applied to all types of soil degradation. Also, some of the different economic impacts
mentioned above (on-site vs. off-site, use values vs. non-use values) require the use of
particular valuation methods. The multitude of valuation methods brings with it the danger of
double counting; likewise, it can be difficult to judge whether a combination of different
assessment methods does cover the “true” and full economic impact of soil deterioration.
As a broad-brush classification, the total damage cost of soil degradation can be divided into
the cost of suffered damage, i.e. damage that is not prevented (damage cost), and
the cost of measures to prevent or alleviate damage (damage avoidance cost).
Different valuation methods that can be used to assess these cost categories are discussed
in the literature review. The damage costs can be assessed trough the lost production
value, as well as through hedonic pricing or the travel cost approach. By contrast, restoration
and replacement cost approaches are methods that are used to estimate the avoidance
cost. Stated preference methods can be used for both categories.
The economic impact of soil degradation will normally comprise both cost categories: part of
the damage is suffered unmitigated, while other parts of the damage are avoided through
mitigation and repair measures. Therefore, in principle, the two can be combined to yield the
full cost of soil degradation, under the assumption that the cost of preventing or alleviating
damage is at least as large as the damage thereby avoided.
3.4 Methodology for the Economic Assessment of Soil Degradation
Based on the theoretical considerations elaborated above, the next step in the evaluation of
soil degradation is to derive a damage function. This function expresses the economic impact
Assessing the Economic Impacts of Soil Degradation
10
of soil degradation (in monetary terms) as a function of the soil degradation processes
themselves (expressed in environmental terms).
In principle, establishing a damage function proceeds in three steps:
1. Identify the impacts of soil degradation;
2. Quantify the identified impacts (including the selection of suitable indicators);
3. Estimate or derive coefficients (expressed in /unit of impact) to value the impacts.
3.4.1 Identification of the impacts of soil degradation
As stated above, the impacts of soil degradation can be divided into different categories:
the on-site (private) costs of damage suffered as a consequence of soil degradation.
An example for this are the yield losses that farmers incur if the agricultural productivity of
soil has been reduced through erosion, compaction or other degradation processes.
These costs are denoted PC;
the on-site private cost of mitigation and repair measures to limit the impact of
degradation or to prevent further degradation. This includes, for example, the cost of
additional fertiliser input to compensate for the impact of erosion, or the cost of measures
to restore the physical structure of compacted soils. This category is labelled MC;
the off-site (social) costs of soil degradation, which are suffered by other parties. One
example is the cost of damages caused by floods and landslides. It also includes the
value of foregone ecosystem services, such as biodiversity maintenance or carbon
sequestration, which are reduced through soil degradation. These costs are denoted SC;
The off-site defensive costs incurred in order to mitigate or limit the off-site impacts of
soil degradation. This includes e.g. the cost of soil conservation measures to prevent
landslides, or to retain the soil on the site. These costs are abbreviated as DC.
the non-user costs that accrue to the individuals that do not use the soil, but are
nonetheless distressed by its degradation. This category measures the non-use values
attached to soil, e.g. the patrimonial value of preserving soil for future generations. Where
such values are affected by soil degradation, the cost are captured as NC;
Hence the total cost of soil degradation in the time period t can be expressed as the sum of
these five cost components, as expressed in the following formula:
()
++++=
i
itititititt NCDCSCRCPCC
where C represents the total cost. The subscripts (t) and (i) indicate the time
period and the type of soil degradation, respectively.
This means that each of the five cost categories has to be calculated and summed for each
of the different types of soil degradation. It is important to note that mitigation costs should
not be confused with an analysis of possible policy responses: here, mitigation cost are
merely used as a proxy, based on the argument that the costs of mitigation is at least as big
as the avoided impacts of soil degradation. However, in most cases, mitigation measures will
not address soil degradation as such, but rather aim to limit its impacts.
In relation to the theoretical impact categories discussed in section 3.2 and the cost
categories explained in 3.3, the five cost components are visualised in Figure 1. As shown in
the figure, the private damage costs (PC) and the social damage costs (SC) constitute the
Assessing the Economic Impacts of Soil Degradation
11
damage costs of soil degradation. By contrast, the on-site mitigation and repair costs (MC)
together with the off-site defensive expenditure (DC) sum up to the damage avoidance cost.
The non-user costs (NC) can fall into either category.
If added up horizontally, the private on-site costs (PC) and the mitigation and repair costs
(MC) give the on-site costs of soil degradation. The sum of off-site, social costs (SC),
defensive costs (DC) and non-user costs (NC) yields the off-site costs of soil degradation; in
economic terms also referred to as the external effects.
Figure 1: Overview of Different Cost Components
3.5 Quantitative Estimates
The literature review also presents an overview of sixty studies that have quantified the
economic impact of soil degradation. Many of these studies are agronomic, focussing on
agricultural yield losses associated with soil degradation. In addition, a number of studies
have considered the cost of replacing lost nutrients. By contrast, in the case of soil
contamination, estimates mainly address the remediation of contaminated land. Thus, the
majority of empirical estimates have centred on the impact that soil degradation has on
agriculture and forestry, and here concern the direct, on-site effects. The effect of soil
degradation on indirect use values and especially on ecosystem services is less researched.
Of the different types of soil degradation identified by the Commission, erosion is covered
most extensively in the empirical economic literature. For salinisation and contamination, as
well as for floods and landslides, there is some evidence. The economic effects of
compaction, biodiversity loss and loss of organic matter are covered only in occasional
studies, or are not quantified at all.
In terms of the geographical distribution, the majority of studies comes from those countries
where economic valuation has a longer tradition, i.e. Australia and North America.
Furthermore, there is some evidence from regions where a substantial part of the economy
depends on soil functions. Generally, there is not a large amount of evidence from European
countries, with the United Kingdom as a notable exception.
PC
(on-site, private
damage cost)
MC
(private repair /
mitigation cost)
DC
(off-site damage
avoidance cost)
SC
(off-site social
damage cost)
NC
(cost of the loss of non-use values)
Private /
on-site costs
Social /
off-site costs
direct
use values
non-use
values
Damage
avoidance cost
Cost of suffered
damage
Affected values:
Location /
affected actors:
Cost types:
indirect
use values
TC (total cost of soil degradation)
Assessing the Economic Impacts of Soil Degradation
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4 Case Studies
In the course of the project, five case studies were discussed in greater detail (see Volume II
of this report). These were selected in order to reflect:
Different types of soil degradation;
Different Member States;
Different climatic conditions;
Different economic uses and affected sectors.
For Erosion, two case studies were selected in order to better cover the diversity of situations
in Europe. The first was selected in United Kingdom. This choice was mainly guided by the
availability of data at a large scale. The second case study was chosen in France where two
small sites, located in very different climatic and soil conditions, have been monitored and
studied in detail for several years.
4.1 Erosion, UK
In UK, erosion has been assessed in England and Wales since the early 1980s, through
field-based assessment rather than plot experiments, as is usually done for this particular
threat. Therefore, this extensive study, involving 17 communities, gives valuable information
on the rate, frequency, and extent of the erosion, as well as off-site effects.
4.1.1 Threats encountered in the area
The main origins of erosion are (i) water erosion (80.7%) and (ii) wind erosion (9.1%), and
additionally, (iii) upland erosion and (iv) overgrazing. Studies have been conducted at the
local level to evaluate the actual risk of erosion (Evans, 1990), covering an overall area of
151,207 km2 (England and Wales) representing 296 soil associations. The pre-dominant land
use is agriculture with a low population density, apart from on the edge of urban areas.
The intensity of impacts have been assessed:
38.2% (53,449 km2) of the surveyed land was considered as having a very low risk of
erosion (erosion rare or inexistent): this part of the area is mostly covered by grass
(52%), arable land (36.1%), forests (0.8%) and heather and moorland (12.0%),
38% was classified at low risk (fields and moorland subjected to erosion are likely to
cover 1% or less of the land each year), mainly arable land (53%) and grass cover (32%),
18% (25,157 km2) was at moderate risk (for arable land, between 1 and 5% shows a risk
of erosion each year), of which 75% is arable land,
4.4% (6,198 km2) was at high risk (more than 5% of fields affected per year),
1.5% was classified at very high risk (more than 10% affected per year and two years in
five as much as 20-25% affected).
Losses of soil by erosion can be considered irreversible over a period of 100 years, due to
the very slow rates of soil formation. In Southeast England, wind erosion has been recorded
at 21 t/ha*y over a period of 30 years. Therefore Evans (1995) introduced a temporal
distinction of impacts: short-term (5-10 years), medium-term (10-50 years) and long-term
(>50 years) impacts. On-site impacts occur mainly in the short- to medium-term period,
whereas off-site impacts occur in the medium- to long-term period.
Assessing the Economic Impacts of Soil Degradation
13
4.1.2 Cost estimation
The UK evaluation made in the mid-1980s and early 1990s for England and Wales for the
costs of the impacts of erosion is based on the following three steps:
Estimation of the area of the land affected,
Assessment of how often the damage occurs,
Evaluation of how severe the damage is.
Table 1: Synthesis – costs of soil erosion for the UK case study
On-site costs (PC & MC) Off-site costs (SC & DC) NC
Production loss due to eroded
agricultural soils
Damage to roads, ditches and property -
Road accidents due to erosion
Water pollution
Restoring footpaths
Stream channels
Fisheries and fishing
Motoring erosion
Impact on landscape
Values and
biodiversity
Destruction of
archaeological
monuments
9.99 million €2003/yr 625.01 million €2003/yr Not estimated
The costs are borne by farmers (from whose land the soil is washed away), property owners
(those on the receiving end of the flooding), council taxpayers (who pay for repairs to
highways), water ratepayers (who pay for water clean up), and insurance companies (that
reimburse other stakeholders).
The costs are borne primarily by the households and the council taxpayers. As regards
industry, the costs are borne by the water and insurance companies rather than the agrofood
producing and selling/retailing (supermarkets) industries.
4.1.3 Conclusion
Based on erosion survey data and information relating to costs in several areas, the study
estimated the total costs of UK erosion damage taking account of the multifaceted and long-
term nature of erosion and its economic impact. The actual erosion risk depends mainly on
the present-day land use. Off-site costs are usually broader than on-site costs.
The British situation described in this study is representative of the European situation. The
costs could be derived taking into consideration the variation of population density, which is
the only parameter changing in the different countries and affecting the off-site costs. The
links between soil erosion and its impacts (environmental and economic) are immediate. In
the context of intensified land use known in Europe, erosion has become more extensive,
frequent and severe, and its impacts more widespread and pervasive.
Assessing the Economic Impacts of Soil Degradation
14
4.2 Erosion, France
Concerning the French case study, two areas were investigated. France presents a wide
range of different erosive contexts induced by diversity in soil types, climate, geomorphology,
land use and agricultural systems. To account for this variety, two contrasting systems were
studied in the pays de Caux and in the Lauragais.
The Lauragais has a hilly topography and is covered by soils rich in clay fraction and with a
relatively good structural stability. It is characterised by a temperate oceanic climate with
some Mediterranean influence (intense spring storms).
The Pays de Caux is representative of the loess belt of Northern Europe. The topography is
relatively smooth and is covered by silt loam soils very sensitive to soil crusting because of
low clay content (13–17%) and low organic matter content (1–2%).
4.2.1 Threats encountered in the area
Runoff and soil erosion problems have reached an alarming level both in terms of rate and of
geographical extent in this area as catastrophic muddy floods still occur regularly and the
pollution of drinking water sources by sediments and agricultural chemicals are recurrent.
Pays de Caux
Soil erosion is not the result of exceptional climatic events in the area, hence it is a recurrent
phenomena taking place annually. On the site, 5 ephemeral gullies per year were observed.
On-site, the impact of erosion is mainly characterised by the destruction of crops either by
rilling (need to refill), deposition or because they are transported by overland flow (flax). For
the public domain (off-site impact), the damages consist of the pollution of the drinking water
sources (nitrate, sediment or pesticide) and of sediment deposition on the road. Almost no
damages are observed after the conservation measures were installed.
Lauragais
The frequency of storm occurrence is not constant through time. The last three years, up to 2
to 3 intense storms per year have been observed in the vicinity of the field. But if we consider
a longer time span (ca. 10 years), only one storm every two years was observed. As an
indication, we consider that the return period of a storm on a field is five years.
On-site and off-site damages are similar to those observed on the Pays de Caux site.
However, in addition to the consequences of erosion that are easily observed, one of the
main concerns in the Lauragais area is the reduction of the soil layer. Soil depth can be
relatively low, and an irreversible loss of fertility can occur where the slopes are the steepest.
Here also, almost no damages are observed after the conservation measures were installed.
4.2.2 Cost estimation
As for the UK case, soil erosion impacts are divided into on-site and off-site impacts. While
on-site impacts are direct effects of losses of soil and affect mainly agricultural production
(also designed as on-farm impacts), the physical damages to natural ecosystems and water
bodies are off-site impacts. Off site costs are generated by the transport of sediments and
deposits in other places (land, roads, rivers, etc.) where they generate a damage cost for
third parties (negative externality). The off-site cost of soil erosion depends on the cost of the
conservation measures and their effect on the reduction erosion damage. Table 2 below
gives a synthesis of the costs estimation at catchment level.
Assessing the Economic Impacts of Soil Degradation
15
Table 2: Synthesis – Average annual cost of soil erosion for the FR case study
On-site costs (PC & MC) Off-site costs (SC & DC) NC
Production losses from eroded
agricultural soils
Area loss (without government
subsidies)
Working time loss
Erosion conservation measures (cost of
implementing measures and
maintenance cost)
Remediation / clean up measures
(damage of deposits on roads and Cost
of restoring property)
Government financial subsidies for the
reduction of field size
Impact on
landscape
values and
biodiversity
etc.
Lauragais: 938 €2003/yr
Pays de Caux: 1295 €2003/yr
Lauragais: 1582 €2003/yr
Pays de Caux: 2786 €2003/yr
Not estimated
Lauragais: 39 €2003/ha/yr
Pays de Caux: 41 €2003/ha/yr
Lauragais: 53 €2003/ha/yr
Pays de Caux: 35 €2003/ha/yr
These cost figures underestimate the true costs, as they do not take in account the temporal
distribution of the costs, and as they do not include estimates for non-use costs. The costs of
measures are mainly supported by the owner, in general farmers, at the local level. When
necessary at the river level (i.e. implementing an erosion conservation measure upstream),
costs are borne by public subsidies.
4.2.3 Conclusion
At the opposite of the UK case, the French case of erosion impacts constitutes a micro case
and may not be representative for erosion effects in all France: Firstly, the off-site costs are
certainly underestimated. The off-site impacts over the catchments are not considered.
Secondly, only agricultural effects are considered and the non-user costs (attached to the
decreasing value of soil, for example) are not estimated in this study. Knowing these limits, it
is also important to notice that the two French case studies are based on data gathered over
several years (to account for the temporal variability of soil erosion processes) and that they
are complementary (in terms of soil types, topography and climate) and representative of
larger ecolo-physiographic contexts; Northern France being part of the Central and Northern
European agricultural zone; Southern France being closer to the Mediterranean.
The conclusion that off-site costs are more important is coherent to what is generally
observed in Europe. However, one it should be kept in mind that the ratio on-site / off-site
costs are varying in function of the type of soil erosion and of where the vulnerability is.
4.3 Contamination, France, MetalEurop Nord
Soil contamination from localised sources is often related to industrial plants no longer in
operation, past industrial accidents and improper municipal and industrial waste disposal. At
industrial plants still in operation, soil contamination is commonly associated with past
activities, although current activities can still have significant impacts (EEA-UNEP, 2000).
The MetalEurop Nord site is representative of this main category of local point source
contamination, and has been classified as a contamination megasite.
Assessing the Economic Impacts of Soil Degradation
16
The MetalEurop Nord site is located in a semi-urban area with low population density,
characterised by a dispersed habitat (105 inhabitants per km2) and significant agricultural
activity. In the past, the landscape was highly modified by mining activities (in the coal mining
basin), industrial activities (smeltering), but also transport facilities (connection by waterway,
road and motorway, railway). The industrial plant is located on chalky permeable ground in
its southern part, and on semi-permeable alluvium near the valley of the Courant Brunet.
4.3.1 Threats encountered in the area
This case study deals with local soil contamination, located on the industrial plant (c. 30 ha)
and in the surroundings. This industrial activity has had an impact on several environmental
compartments, in particular soils on site and in the vicinity, through atmospheric emission
(although regulated under the authorisation permit), and water resources (both surface water
and groundwater) by fluid discharge. It has also had significant socio-economic impacts:
Impact on air: important atmospheric emissions from the Pb smelter operating from 1894
until the beginning of 2003. In 2001, the site emitted 18 tons of channelled lead, to which
around 10 to 15 tons of diffuse effluent can be added – 0.8 tons of cadmium, 26 tons of
zinc and 8,600 tons of sulphur dioxide. Air pollution has, however, decreased significantly
over the last 30 years, from 350 tons of lead in the 1970s to around 12 tons in 2003.
Impact on surface water: the water quality of the Haute-Deule canal (effluent discharge)
falls in class 3 (bad quality). The estimated values of contamination of the sediments are:
Cd up to 2,000 ppm, Hg up to 80 ppm, Ni up to 500 ppm, Pb up to 10,000 ppm, Zn up to
9,000 ppm, Cu up to 380 ppm, As up to 350 ppm. Surface water discharge was also
significantly reduced with the start-up of a sewage station in 1988 (150 tons of lead
discharged in 1988, 4 to 5 tons of lead in 2003, 1.9 tons of cadmium, 10 tons of zinc).
Impact on groundwater: contamination of the chalk aquifer by lead and arsenic is limited
to the site property boundary by hydraulic trapping. Also, to avoid dispersion of the
pollutant plume, 100 m3/h are pumped from former site wells. The variation in water
quality is monitored using a network of 15 piezometers in the chalk aquifer and 4 others
in the sandy aquifer in the north of the area. The aquifer remains suited for drinking water
abstraction without treatment downstream of the site.
Impact on soil: heavy metals are mainly confined to the upper soil levels (0 – 40 cm),
except for zinc, which migrates deeper. A total of 600 ha of urban soils are heavily
contaminated (>250 ppm Pb) and 4,000 ha show a lead concentration >200 ppm.
Impact on agriculture: about 400 ha of soils used for agricultural production have been
heavily contaminated (>250 ppm Pb). As a result, high levels of contaminants are also
found in crops and animal products.
Impact on health: human health has been affected by atmospheric pollution generated by
the production units, by the smelter residue deposits (essentially by dust emissions), by
the raw materials of the site's soil and by ancient industrial waste dumps. Increased lead
concentrations in the blood were reported. Children are particularly affected: in 1995,
14% presented lead levels higher than the standard of 100 micrograms per litre of blood;
in 2002, 11% of children aged 2 – 3 years living in the five closest municipalities were still
affected. The adult population is equally affected, with 29 people declared inapt for work
every year (average 1996-2001). It has to be noted however, that this health problem is
Assessing the Economic Impacts of Soil Degradation
17
not only due to soil contamination but also to air pollution: assessing the relative
responsibility of each contamination channel is almost impossible.
Socio-economic impact: the decision to withdraw the plant caused unemployment for 830
workers of the company. The company’s assets are far from adequate to meet the social
liabilities. Also, this social crisis caused economic difficulties, extending to subcontracting
firms (3,000 indirect jobs). The associated impacts were not considered in this study.
4.3.2 Cost estimation
Certain damages generated by contamination are due not only to soil contamination, but also
to air and water pollution, both having an impact on public health. For this particular threat, it
is also difficult to assess costs on a yearly basis as some of the costs are one-off expenditure
(e.g. decontamination of soil) and others are recurrent costs that may occur over very long
periods of time (more than 50 years). Assessing an average yearly cost requires converting
one-off expenditures into a perpetual annuity equivalent. All types of cost, except non-use
costs – NC, are identified in this case. As shown above, the costs related to soil
contamination are substantial and are not easily bearable for the different actors.
Table 3: Synthesis – Average annual cost of soil erosion for the FR case study
PC MC SC DC NC
Reclamation of the
site within
redevelopment
project, performed
by private investor.
Monitoring impact.
Demolition of
contaminated
buildings
Soil
decontamination
and treatment
Acquisition of
contaminated land
(>250 ppm Pb) and
refitting of forests
Monitoring impact
Human health
impact (costs of
disease, those
inapt for work,
etc.)
Agricultural impact
(loss of income)
Urban impact
(decrease in
housing prices)
Hydraulic pumping
in the aquifer to
limit propagation of
the pollution plume
Survey of
groundwater
quality
Decontamination of
school yards
Loss of non-use
value for citizens
Included in MC 947,800 €/yr 4,429,647 €/yr 312,400 €/yr Not estimated
The estimated total annual cost of the contamination case study is about € 5.7 million. The
total costs of the off-site measures (SC + DC) outweigh on-site costs (PC + MC) by a factor
of 5:1. These figures can be regarded as conservative estimates, as they do not take in
account the historical soil contamination damage and the costs of measures realised before
the MetalEurop plant was closed.
Due to the particular economic situation of this case study – the company closed down in
2003 due to bankruptcy – three levels of decision-making are involved in the management
and funding of the contaminated site: local, regional and national level. The costs for
prevention, suffered damages, monitoring and reclamation concerning off-site costs are
borne essentially by the public administration (local authorities and ADEME). A private
investor will perform the reclamation of the site integrated in the redevelopment project
(waste treatment plant), in close relationship with the local partners.
Assessing the Economic Impacts of Soil Degradation
18
The costs identified above will be financed by the private investor. For on-site soil
reclamation within the redevelopment project, public subsidies from the Regional Council, the
European Fund for the Redevelopment of Regions (FEDER), and the French Government for
reclamation costs in the vicinity of the site (off-site costs) will be paid.
4.3.3 Conclusion
The cost related to soil deterioration due to contamination are significant. This situation is
encountered in most megasites leading to new national prevention principles for managing
those sites in order to avoid repeating such situations of "orphan sites".
Concerning the structure of the costs: the private PC costs are not really relevant and should
be included in the on-site costs of mitigation. For most cases of point-source contamination,
the economic activity that caused the pollution may not even be affected by it.
The social cost estimation is based on the potential development of human health diseases
not yet observed in the population. It should be considered as a maximum estimate for the
costs of non-action. The consequences of ongoing actions cannot be assessed at the time.
The spatial distinction between on-site and off-site impacts is of central relevance in the case
of local contamination, taking account of the fact that damage occurs both at the polluted site
and in spatially remote areas (off-site damage). For soil contamination, off-site costs tend to
exceed the on-site costs by far (by a factor 5 in this case).
4.4 Salinisation, Spain, Central Ebro Area
The salinisation case study is located in Aragón, central Ebro Valley, the most arid inland
region of Europe. Spain is the country with the largest irrigated area (3.4 million ha) in
Western Europe (FAO 1994). This particular case is related to extensive irrigation, which
allows plant growth in otherwise water-deficient conditions. Irrigation is mainly applied in arid
and semi-arid regions, and can increase growth and build-up of soil organic matter.
The central Ebro area is an agricultural zone, with a low density of population. It is mainly
composed of flat areas, with an average rainfall of 400 to 500 mm/year, and a potential
evapotranspiration of 1,300 to 1,400 mm/year. The irrigated land of Aragón has developed
over the last 2000 years and comprises 413,100 ha, with an additional 404,600 ha that are
likely to be irrigated in the future. Irrigated crops include mainly Alfalfa, winter cereals (barley
and wheat), maize, sunflower, deciduous fruit trees, horticultural crops and rice.
4.4.1 Threats encountered in the area
Different events are at the origin of the increased salinisation of soils and groundwater
resources, including the intensification of agricultural production, improper irrigation and
drainage management, and improper land levelling with soil destruction and burial under
geological materials generating salt accumulations underground. Due to the local climatic
and soil quality conditions, the central Ebro area very vulnerable to salinisation.
A survey of farmers and local agricultural experts was conducted to establish the relative
importance of different land qualities and their impact on the production of different crops.
The standard value of relative yield decreases under saline conditions.
Several conservation measures have been undertaken for several years to control salinity in
the Aragón area, such as application of low salinity water for soil with good natural or artificial
drainage properties; drainage of salts by open ditches and subsurface pipes; a change of
crops from corn and sunflower to rice or the use of salt-tolerant crops. Degraded soils were
Assessing the Economic Impacts of Soil Degradation
19
reclaimed through soil amendments (adding calcium ions that displace sodium ions from the
soil exchange complex), modification of the irrigation water, breaking up the surface crust,
using soil reclaiming plants, and technical specifications in drainage projects.
4.4.2 Cost estimation
The cost estimation focuses on lost crop productivity and reclamation costs, by amendments
or modifications of the irrigation system.
Table 4: Gross margin and unit gross magrin loss for different crops production
Gross margin loss (€2003) Unit gross margin loss (€2 003/ha)
Crop yield decrease slight
10%
moderate
25%
severe
50%
slight
10%
moderate
25%
severe
50%
Wheat 333,409 833,522 1,667,045 74 187 375
Barley 47,662 119,153 238,307 50 127 253
Maize 641,711 1,604,277 3,208,554 173 434 867
Lucerne 497,616 1,244,042 2,488,083 136 341 683
Apple 55,240 138,100 276,200 359 897 1793
Peer 70,431 176,076 352,152 306 766 1531
Peach 115,943 289,858 579,717 366 914 1829
Apricot 23,930 59,822 119,646 239 598 1196
Potato 108,295 270,739 541,477 1245 3111 6224
Total loss 1,894,236 4,735,590 9,471,180 139 348 696
While these are estimates of the on-site costs related to agricultural income, the off-site
effects caused by soil salinisation could not be assessed in this case study. This would
include damage to the environment and to infrastructure as well as non-user costs (NC). The
costs of salinisation are essentially borne by farmers and water users through the impact on
crop yields and the modification of irrigation systems, as well as water quality monitoring.
4.4.3 Conclusion
The assessment of the cost of salinisation mainly considers the loss on farmers’ income.
Based on results of the case study, the loss in farmers' income is estimated at up to:
16% in case of light salinisation (139 €2003 per ha),
39% in case of moderate salinisation (348 €2003 per ha),
78% in the case of severe salinisation (696 €2003 per ha).
The original values in the case study date back to 1988, these were translated into 2003
Euro values using Spanish harmonised annual average consumer price indices. Data
availability did not permit to account for the time distribution of cost or for different soil types
and their vulnerability to salinisation. An evaluation of the ecological side effects or long-term
revenue losses was not carried out, hence the results should be considered as partial.
Assessing the Economic Impacts of Soil Degradation
20
4.5 Organic Matter Loss, Sweden
At the European scale, three types of configurations for OM losses issues are encountered: i)
peat exploitation in Northern Europe (Scandinavia, Ireland), ii) intensive agriculture and
progressive depletion of organic matter content under middle latitude (e.g. France,
Netherlands, Germany), iii) historic and intensive OM losses due to climate and
desertification in the Southern Europe. The Peat extraction can differ from the two other
configurations as it occurs intentionally and is not reversible.
The case studies selected in Sweden are related to peat cutting, thus only addressing a
specific facet of the problem of organic matter loss. Although peat soils only cover a minor
part of the total global land area (about 2.3%), they are estimated to represent as much as
23% of the total organic carbon stock in soils. This case could be considered as a hotspot of
organic matter loss. The two areas studied hereafter, the Porla and the Västkärr areas, are
two adjacent peatlands (10 km apart) in the Southwestern part of Sweden where peat has
been harvested almost down to the mineral soil bottom and converted into wetlands.
4.5.1 Threats encountered in the area
Peat cutting is performed from the South of Sweden to almost the far North. Apart from the
high mountains in the Northwest, peat-cutting activities are spread over all Sweden. The two
peat cutting areas investigated, the Porla mire and the Västkärr site, are restored as
wetlands for 1 to 10 years, and then turned into overgrown mires. The impacts mainly
concern biodiversity (changed wetland biodiversity), groundwater quality, and land values.
4.5.2 Cost estimation
Information on costs was received from the peat and energy companies. Due to the
specificity of the situation (even Environment Protection authorities do not consider peat
mining as soil degradation), there is no cost estimate for prevention or monitoring.
The only costs available for this case study are those related to the restoration of the peat
cutting areas to convert them into wetlands and forests. These costs have to be considered
as the costs of compensatory measures, as the restoration of the organic matter content in
the soil is possible at a human time scale. Expenditure of the peat companies to convert the
two sites into wetlands was estimated at ca. 25.000 € for Porla and ca. 35.000 € for Västkärr.
4.5.3 Conclusion
This case study should not be considered as soil degradataion as such: peat cutting
deliberately uses peat as a source of energy. It is not a loss of organic matter as discussed in
the Soil Thematic Strategy. In order to assess the situation more fully, different types of cost
would need to be estimates, in particular the total economic value of the bog that is lost as a
consequence of peat extraction, restoration costs, benefits of rewetting (e.g. biodiversity),
and effects on the property value. This information, however, is not available at present.
Assessing the Economic Impacts of Soil Degradation
21
5 Empirical Estimation of the Impacts
Based on the review of the literature and the case studies, Volume III of this report assesses
the current, annual cost of soil degradation in the European Union. The analysis assessed
not only the on-site costs of soil degradation, which have traditionally been the focus of
economic and especially agronomic research, but has also considered the off-site costs
associated with soil degradation.
5.1 Estimation for Erosion, Contamination and Salinisation
In the current study, three of the eight different soil threats identified by the European
Commission were quantified comprehensively: erosion, contamination and salinisation. For
the other threats, a qualitative discussion is provided in Volume III of this report, supported
by quantified economic evidence where available. For the three threats treated in greater
detail, the approach and results are briefly summarised below.
5.1.1 Erosion
In the economic and agronomic literature, there is considerable evidence of the impacts of
erosion on agricultural productivity and yields (i.e. the PC category). In recent years, a
number of studies have also tried to assess the off-site costs of erosion, in many cases
leading to the result that these costs are indeed much higher than the on-site costs. From the
identified literature as well as the results of the two case studies, three values were derived
for each of the cost categories identified above: a lower-bound and an upper-bound estimate
as well as an intermediate mean value. For the category of non-use cost, it was not possible
to arrive at an estimate due to a lack of empirical data.
Table 5: Estimates of the Costs of Erosion (€2003 / ha*y)
Estimate PC MC SC DC NC
Upper-bound estimate 11.06 € 29.24 € 169.09 € 25.87 € -
Intermediate estimate 7.56 € 2.86 € 85.92 € 25.87 € -
Lower bound estimate 0.50 € 0 € 21.43 € 0 € -
These average values were then combined with the BRGM plot database, which assembles
real erosion data for 11 land use categories, of which six were excluded (see Cerdan et al.
2003 and Volume II of this report). The database covers the old EU-15 Member States
(except for Finland, Ireland, Luxembourg and Sweden) as well as Lithuania and Switzerland.
The remaining five categories cover 98 % of the calculated erosion in Europe. Within these,
70 % of the calculated erosion falls into the category arable land. For this category, the
impact of erosion was further differentiated for four levels of intensity: no erosion or light
erosion (less than 0.5 tons / ha*yr), moderate erosion (0.5 – 1 tons / ha*yr), severe erosion (1
– 5 tons / ha*yr), and very severe erosion (more than 5 tons / ha*yr).
The following table provides an overview of the estimated total cost of erosion for the thirteen
countries covered in the database (equivalent to a surface area of 150.5 million ha). It should
be noted, however, that these results were derived by making different assumptions and
simplifications in order to overcome data limitations. These necessary simplifications are
documented in detail in Volume III of this report.
Assessing the Economic Impacts of Soil Degradation
22
Table 6: Estimated Total Cost of Soil Erosion (million €2003)
PC MC SC DC Total Estimate
Lower bound 40 0 680 0 720
Intermediate estimate 588 222 6,676 2,010 9,496
Upper bound 860 2,272 13,139 2,010 18,281
Percentage (intermediate) 6.2% 2.3% 70.3% 21.2% 100.0%
Note: the total cost applies to the 13 countries covered in the BRGM plot database and to five land
use categories, equal to an area of 150,510,000 ha
5.1.2 Contamination
Contamination is one of the major threats for soils in Europe, which has been assessed at
the European level for several years (EEA-UNEP, 2000, EEA, 2002). To adequately assess
the economic impact of soil contamination, it would be necessary to reflect the diversity of
situations, as the economic impact of soil contamination is highly site specific. Costs depend
on the type of contaminant, the spatial extent of the pollution and its intensity, the natural
characteristics of the contaminated site and the socio-economic characteristics of the
surrounding area. However, while such factors have been addressed in local case studies,
the calculation of a Europe-wide figure on contamination is impeded by the fact that much of
the data is either unavailable, or not available in a unified format. This includes basic
indicators such as the surface area affected or the population exposed to contamination,
partly because of differing definitions of tolerable risk levels in the different Member States.
The different cost categories were estimated as follows:
Private costs (PC) largely consist in environmental impact monitoring costs. An
aggregate estimate was calculated based on French figures, assuming that groundwater
monitoring is implemented in 0,5 to 1,5% of all industrial sites. This represents a total
number between 7,500 and 22,500 sites in Europe, of 1,5 million contaminated sites
identified by the EEA. Based on results from the MetalEurop case, with groundwater
monitoring costs estimated at € 12,000 per year, the time-adjusted total environmental
monitoring cost ranges between € 96 and 289 million per year.
The total cost of mitigation and clean-up (MC) was assessed using 1999 EEA estimates
of public expenditures on remediation of contaminated sites as a percentage of GDP.
Reported values range between 0.05‰ (Spain) and 1.5‰ (Netherlands), with 8 countries
spending less than 1‰. For those countries without data, annual expenditure was
assumed equal to the EU average of 0.59‰ of GDP. The annual cost is computed for
each Member State and the total cost is estimated at € 3,400 million. However, the
annual expenditure of each Member State for remediation is not proportional to the
contamination situation, but is rather determined by political considerations. To account
for this, the actual annual expenditure for remediation was related to the total estimated
cost of removing all contamination. In this way, mitigation costs are calculated as the
average annual cost that each Member State would have to bear if the decontamination
process was entirely carried out over a fixed period (15, 30 and 50 years). At the
European level, the estimated total cost ranges from € 2 to 41 billion per year, with an
intermediate estimate at € 6.7 billion per year.
Assessing the Economic Impacts of Soil Degradation
23
The social costs (SC) are highly site-specific. In the absence of reliable, comprehensive
and uniform data, a pragmatic approach was implemented, based on the results of the
MetalEurop case study documented in Volume II of this report. For this case, the off-site
costs exceed the on-site costs by a factor of 5. Given that off-site social cost are probably
higher in the case of MetalEurop than in other contaminated sites, a factor of 5:1 is taken
as an upper bound, and 1:1 as a lower bound. The aggregate off-site social cost of
contaminated sites at the European level is thus estimated between 2.3 and 207.6
billion per year, with an intermediate value of € 17 billion per year.
For the assessment of defensive costs (DC), it was assumed that only 0,5 to 1.5% of the
1,5 million contaminated sites present a potential threat for groundwater, and that
defensive measures have actually been implemented in 20% of these sites where
groundwater is contaminated. Based on the cost estimate for the MetalEurop case study
(300,000 € per year), the total time adjusted cost on the European level was estimated at
€ 482 to 1,447 million.
Combining these figures, contamination by industrial and other activities is generating a total
cost at the EU level roughly estimated at € 25 billion. Social costs (SC) represent about 69%
of this total cost, whereas remediation costs (MC), based on the 'fit-for-use' principle adopted
by most European countries, represent another 27%. PC and DC represent approximately
4% of the total cost. However, a large part of the remediation costs is covered by the public
budget. From an economic point of view, they can therefore partly be considered as social
costs, as they are paid by the taxpayers and not by the polluters. The upper and lower bound
values should be used to assess the order of magnitude of the impacts of soil contamination.
Table 7: Cost of Soil Contamination at European level (M€2003)
Cost categories PC MC SC DC Total
Lower bound estimate 96 2,187 2,283 482 5,049
Intermediate 192 6,658 17,126 965 24,941
Upper bound estimate 289 41,234 207,615 1,447 250,585
Percentage of total cost (1) 0.8% 26.7% 68.7% 3.9% 100.0%
(1) Based on the intermediate values
5.1.3 Salinisation
Data presented by the European Environment Agency (EEA 2003) indicates that, in the 25
Member States and the Accession Candidates, salinisation is only problematic in Spain,
Hungary and Bulgaria. For European countries other than these, no data is available.
Consequently, the extrapolation was limited on the three countries.
In the EU, very little research has looked at the economic impacts of salinisation. Quantified
results are few and far between, assessments of off-site effects are virtually non-existent. In
the non-European context, research on the economic impacts of salinisation has mainly
taken place in Australia.
The extrapolation of the economic impacts of salinisation mainly considers the impacts on
agricultural productivity. Based on results of the Spanish salinisation case study, it was
assumed that in cases of light salinisation, up to 10% of the output are lost, between 10 and
50% for moderate salinisation, and 50 – 90% in cases of severe salinisation (see Volume II
Assessing the Economic Impacts of Soil Degradation
24
of this report for a detailed description). The impacts of salinisation on agricultural output
were then calculated on the basis of the agricultural land area and agricultural gross value
added per ha. For this, the EEA data on salinisation in Spain, Hungary and Bulgaria were
applied to the total agricultural area of the affected countries.
For the off-site costs (SC & DC), in the absence of European estimates, impacts were
estimated based on an Australian study that had assessed the damage to transport
infrastructure (roads and bridges) from shallow saline groundwater, damage to water supply
infrastructure as well as environmental costs, including impacts on native vegetation, riparian
ecosystems and wetlands, as well as knock-on effects on tourism (PMSEIC 1998).
Based on these assumptions, the following costs were estimated:
Table 8: Total Cost of Salinisation for Spain, Hungary and Bulgaria (million €2003)
Spain Hungary Bulgaria
LB UB LB UB LB UB
Agricultural yield losses 42.71 137.64 70.16 133.91 1.08 5.38
Infrastructure damage 12.08 18.23 1.32
Environmental damage 4.83 7.29 0.53
Total 59.62 154.55 95.68 159.43 2.93 7.23
5.2 Interpretation of the Results
Given the lack of empirical data that is apparent for many threats, and for many cost
categories, the quantitative results presented in this study have to be interpreted with
caution. Even for threats like erosion and contamination, which have been researched in
greater detail in recent years, tremendous gaps still exist when it comes to placing a
monetary value on the observed damage.
Despite these limitations, the current study has provided tentative estimates of the economic
impacts of soil degradation in Europe, which may serve to illustrate the dimension of the
problem. Table 9 presents the range of estimates calculated for the different cost categories,
for three types of soil degradation. Two points should be noted:
The numbers below should be regarded as conservative estimates, as many impacts
could not be quantified at all. Hence the values reported as upper bounds in the table
below do not provide the upper bound for all impacts of soil degradation, but merely the
upper bound for those aspects of soil degradation that were quantified in monetary terms
in this study. The real costs of degradation, including impacts not quantified here, can be
expected to exceed, and in some cases exceed by far, the upper bound figures below.
This applies above all to the ecosystem services as part of the social costs (see Box 1),
and to the non-use values of soil. The latter were not assessed in this study as they have
rarely ever been quantified in economic terms.
The figures reported above are annual costs. In principle, they could be discounted and
added up over time. As it is disputed whether discounting can be applied to soil, and at
what rate, this was not done. To illustrate the effect of discounting, some calculations for
the case of erosion are presented in Volume III of this report, chapter 5.5.
Assessing the Economic Impacts of Soil Degradation
25
Table 9: Overview of the Total Annual Cost of Soil Degradation (in M€2003)
Erosion Contamination Salinisation
LB Mean UB LB Mean UB LB UB
PC 40 588 860 96 192 289 114 277
On-site
costs
MC 0 222 2,272 2,187 6,658 41,234 243* 2,005*
SC 680 6,676 13,139 2,283 17,126 207,615 43 43
Off-site
costs
DC 0 2,010 2,010 482 965 1,447 - -
Total 718 9,496 18,281 5,049 24,941 250,585 157 320
LB = lower bound, UB = upper bound (for those impacts that were quantified at all).
* The MC for salinisation are not included in the total, due to their hypothetical nature.
From these calculations, the following conclusions can be drawn:
On an aggregated level, the private, on-site costs of soil degradation (usually suffered
by land users) will not be a major cause of concern in many cases. For soil erosion, the
upper-bound estimate of the annual private costs does not exceed 0.5 % of the
agricultural gross value added in the countries covered. For the case of salinisation, the
estimated private costs are only significant in Hungary, where the impacts could lie
between 3.3 % and 6.3 % of agricultural gross value added. In Spain, with estimates
ranging from 0.2 % to 0.6 % of agricultural gross value added, the estimated private costs
are manageable. However, this is also due to the angle of this study, which has focussed
only on national or European averages, masking the fact that soil degradation may cause
considerable private on-site costs in the affected regions. It should also be borne in mind
that the impacts of soil degradation will often be cumulative and, in most instances,
irreversible. Hence, while the costs may appear negligible on a year-to-year basis, they
can become substantial when added up over a longer time.
The social, off-site costs of soil degradation (covered by society) are far more
substantial in most cases. For example, in the case of erosion, cost estimates range from
€ 1.8 billion to € 14.3 billion p.a., which corresponds to 1.1 % to 8 % of agricultural gross
value added for the thirteen countries covered. The off-site costs exceed the on-site costs
by a factor of seven (for the upper bound estimate) up to a factor of seventeen (for the
lower bound estimate). With regard to contamination, the situation is more complex, as
off-site effects are not always present. Consequently, the extrapolation arrives at a
situation where off-site-effects may be larger than or equal to on-site effects. For large
contaminated sites located in densely populated areas, such as the MetalEurop case
documented in Volume II of this report, the off-site costs may well exceed on-site costs
by a factor of five or more. The general finding that off-site costs will often surpass on-site
costs holds despite the fact that off-site costs are more difficult to delineate and quantify.
This difficulty applies to all types of soil degradation, and in particular to subsets like the
impact on ecosystem services and on non-use values of soil.
The bulk of the costs of soil degradation will thus not be felt by the people causing it. Instead,
the majority of impacts occurs off-site, affecting neighbours, downstream water users, or
other ecosystems. Thus, if the focus of the analysis shifts from the individual plot or the farm
Assessing the Economic Impacts of Soil Degradation
26
level to include regional, national or even global off-site effects of soil degradation, the
estimated potential impact increases rapidly. At the same time, whereas on-site effects are
described fairly well in the literature, off-site effects are subject to more uncertainty. If the
relevant off-site impacts, including non-use values and ecosystem services, could be
quantified more comprehensively, the imbalance between on-site and off-site impacts would
be even more pronounced.
On the whole, the analysis has shown that the inherent complexity of soil functions and their
degradation, and the interdependencies between different soil degradation processes are
difficult to grasp in an economic valuation study. To adequately account for these factors
would require far more data in far greater detail than is currently available, both from the
economic and from the soil scientific perspective.
Assessing the Economic Impacts of Soil Degradation
27
6 Policy Recommendations and Further Research Needs
This study has been the first in Europe to assess the economic dimension of soil degradation
in a comprehensive way, across different countries and for different soil threats. The results
of the study should not be seen as an exact quantification of all impacts, but rather as a way
to assess the dimension of the problem of soil degradation from a different perspective. Still,
many impacts need to be explored further before more definite conclusions can be drawn.
To date, it is clear that in many instances, the impacts that were not quantified in this study
will exceed those that were quantified. Consequently, the upper bound figures presented
here are only the upper limit for the quantifiable impacts, whereas the real impact of soil
degradation will be much higher. In line with the precautionary principle, policy
recommendations need to reflect not only the quantifiable impacts, but also take into account
those impacts that could not be assessed in monetary terms.
6.1 Policy Recommendations
Irrespective of these caveats, this study has demonstrated that the economic impacts of
current soil degradation trends in Europe are substantial, and give cause to concern. Even
though many impacts cannot be quantified in monetary terms at this stage, the estimated
costs presented are substantial, running into the order of several billion Euro per year. In this
sense, the added value of the current study has shed some light on the magnitude of the
problem, as well as the distribution between on-site and off-site costs.
The private, on-site costs of soil degradation are significant, but will not be a major
concern in the short run. However, on the local scale, impacts will be more substantial for
the affected areas. Also, impacts will be felt more strongly over time.
The off-site costs of soil degradation are substantial. In some cases, they may exceed
the on-site costs by a factor 10, despite the fact that a large part of the off-site costs could
not be quantified. Off-site costs are generally covered by society: as externalities, they
are not reflected in the decision-making framework of soil owners and users.
These discrepancies underline the economic rationale for an ambitious soil protection policy.
In the short term, the private, on-site costs are mostly moderate. Even where they are
significant, the fact that the soil user is often not the same as the soil owner means that the
soil user has no incentive to protect the soil beyond the rental term, leading to unsustainable
soil use. The off-site, social costs are substantial, but are covered neither by the polluters nor
by insurers, so that there are few incentives for changed behaviour. In line with the polluter-
pays-principle, policy solutions are therefore necessary to change these incentives. By
internalising the external costs of soil degradation, off-site impacts can be better integrated
into the decision-making and the behaviour of soil users. In principle, this can be done
through taxation, through behavioural codes, or through conditionality for subsidy payments.
In practice, however, it may be problematic to relate a specific, localised off-site impact to an
individual soil use. For soil contamination, significant time lags may exist between the
contamination itself and the detection of off-site impacts. For salinisation or erosion, the
relative contribution of individual soil uses to the occurrence of off-site impacts is often
difficult to establish. To address this, more effective and unified soil monitoring is
required. Soil monitoring systems need to be designed in such a way that the link to the
assessment of socio-economic impacts is easily made. In particular, soil monitoring can be
used to support the use of political instruments aimed at internalising external costs.
Assessing the Economic Impacts of Soil Degradation
28
To some degree, the internalisation of off-site effects of soil degradation can be achieved
through better integration of soil protection requirements into other policy areas.
For soil degradation caused by agricultural soil uses, the most suitable instrument to
address off-site effects is through the use of the cross-compliance mechanism
established under the Common Agricultural Policy. Here, it is necessary to better
integrate off-site effects into the definition, guidance and the practical implementation of
“good agricultural and environmental conditions” and “good agricultural practice”. Next to
the cross-compliance mechanism, voluntary approaches such as cooperative
agreements could also be effective solutions.
Soil protection requirements should also be better integrated into the implementation of
the Water Framework Directive. By 2009, the WFD mandates the establishment of
programmes of measures, which should achieve the good ecological status for water
bodies in the most cost-effective way. Currently, off-site effects of soil degradation are
among the main pressures that prevent water bodies from reaching good ecological
status, e.g. in the case of erosion-induced water pollution or soil and groundwater
contamination. Where impacts on a water body can be related to soil degradation, the
most cost-effective way of addressing them could include better soil protection.
Furthermore, there is a clear link between soil protection and flood risk management. In
the developing European approach to flood risk management, flood prevention measures
are becoming increasingly relevant to support and complement structural / technical flood
protection measures. In order to prevent or limit floods, the capacity of soils to absorb
and retain rainwater in upstream areas needs to be enhanced. This can be achieved e.g.
through measures that reverse or limit soil compaction and soil sealing. Soil protection
and land use policies can thus make a significant contribution to flood risk management.
In view of the substantial economic damage caused by flooding events, such measures
offer themselves as a relatively inexpensive contribution to flood prevention.
In the area of climate change, soil protection needs to play a double role: first,
maintaining healthy soils and the build-up of organic matter can enhance the role of soil
as a sink for atmospheric CO2. By contrast, soil degradation will lead to the release of
carbon from soils. Furthermore, soil protection will also be key to adaptation strategies,
as the resilience of ecosystems to adapt to the changing climate depends not least on
vital and multifunctional soils. The policy objective must therefore be to stabilise and,
where possible, increase the level of soil organic matter.
For the area of land use and spatial planning, the planning of industrial, residential and
commercial development needs to take more account of soil properties. In order to
minimise the cost of soil degradation, it is not only necessary to protect the most
vulnerable soils, but also to identify soils that are more suitable for polluting or degrading
activities, and to concentrate such activities on such soils. For the remediation of
contaminated land, the objective has to be to minimise new contamination and prevent
accidental pollution, to decontaminated existing contaminated sites as far as possible,
and to limit the affected area by preventing the spread of mobile pollutants.
Other policy areas where soil protection requirements need to be better integrated are
internal market policies, chemicals policies and transport. The issue of demolition waste and
construction material is a particular example of this, as it lies at the interface between internal
market policies, waste policies and soil protection.
Assessing the Economic Impacts of Soil Degradation
29
The enhanced integration of soil protection requirements should be supported through the
nascent European Thematic Strategy on Soil Protection. For any of the policy areas
mentioned above, the integration of soil policy requirements will depend on clear definitions
and indicators for soil quality, as well as specified objectives for soil protection. Delivering
such definitions, indicators and objectives should therefore be one main focus of the
Thematic Strategy.
6.2 Research Needs
The current study should thus be regarded as a first step, which needs to be developed and
refined further. In addition to the need for a coherent soil monitoring system identified above,
socio-economic research needs concern four issues in particular.
The concept of ecosystem services that captures the interactions between soils and other
parts of the ecosphere. Since soil is closely related to the natural processes taking place
in the hydrosphere, the atmosphere, the lithosphere and the biosphere. Therefore the
degradation of soils will have a direct impact on the functioning of these other
compartments; a fact that is of particular relevance in the context of climate change.
Through such interactions, soil provides different ecosystem services, not all of which are
sufficiently understood. While many ecosystem services could not be assessed
economically in the course of this study, there is some evidence that adding ecosystem
services into the equation can affect the judgement on the economic viability of different
land uses. In particular, the value of lost ecosystem services may far outweigh the short-
term benefits of intensive land use, whereas sustainable soil management practices can
enhance the ecosystem services provided by soils (see e.g. Balmford et al., 2002).
A second category that merits closer inspection are the non-use values of soil. Soil as a
non-renewable and non-replicable resource has been the fundament of human
development since the very beginnings of civilisation, and bears manifold cultural and
spiritual connotations. Soil therefore needs to be protected both in its own right, and as
an asset for future generations. From an economic perspective, such considerations
would form part of the non-use value of soil. However, this non-use value has barely
been researched at all, safe for a few Australian estimates.
In terms of different soil threats, several types of soil degradation could not be assessed
comprehensively. This was either due to a lack of economic data, or due to the absence
of comprehensive soil data on the European level, or both. For threats such as the loss of
soil organic matter, the loss of soil biodiversity, soil sealing and soil compaction, more
primary studies are needed in order to assess their economic impacts.
A fourth research challenge concerns the intertemporal valuation of soil degradation.
This concerns not only the choice of the appropriate discount rate, but more importantly
the questions of how to deal with irreversibility, and how to predict and incorporate the
resilience of soils to increasing pressures. To move ahead in this regard, a “baseline
scenario” for soil degradation would be necessary in order to assess how pressures on
soil are likely to develop over time, how this will affect soil quality and resilience, and
what impact this will have on soil users.
To address these questions, research projects and networks would need to be established
under future calls of the 6th and in the 7th Framework Programme on Research and
Development. These should include both basic research and policy oriented research, with
the aim of building up and extending the European knowledge and data base.
Assessing the Economic Impacts of Soil Degradation
30
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... One or more compacted soil layers can be detected in the upper subsoil in most agricultural fields, which is mainly the result of intensive farming practices, including heavy machinery and short crop rotations (Guaman et al., 2016;Raper, 2005). Strong soil compaction is one of the main forms of field degradation in Central and Eastern Europe and has heavily affected over 11 % of the total land area there (Görlach et al., 2004). Bulk densities up to 1.8 g cm − 3 were recorded at depths between 20 and 30 cm (Gameda et al., 1994). ...
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Sheet and rill erosion rates in Europe
  • O Cerdan
Cerdan O. et al. 2003: Sheet and rill erosion rates in Europe in: Boardman, J., Poesen, J. (eds), Soil erosion in Europe. Wiley, Chichester, U.K. in press.