Estimating the yield effect of soil degradation

ABSTRACT:

Cost-benefit analysis is often used to examine the returns to conservation measures. A commonly-used approximation in such exercises consists of using a constant estimate of the yield decline induced by soil degradation over the period of analysis. This approximation is shown to significantly distort the results of the analysis, both quantitatively and qualitatively. Such a fixed-yield decline leads to an apparent front-loading of the losses caused by erosion, causing them to be ueighted more heavily in the analysis. The likely returns of conservation would thus be overestimated. An opposite bias might be induced if the true yield decline would cause an early cessation of production, since production can continue indefinitely under the assumption of a fixed yield decline. Data from Kenya is used to illustrate the effect of the biases on a specific case.