Cost-benefit analysis of soil and water conservation measure: The case of exclosures in northern Ethiopia

Bedru Babulo Balana, Bart Muys, Nigussie Haregeweyn, Katrien Descheemaeker, Jozef Deckers, Jean Poesen, Jan Nyssen and Erik Mathijs

Forest Policy and Economics, 2012, vol. 15, issue C, 27-36

Abstract: This paper is about the cost-benefit analysis of a specific soil and water conservation measure, commonly termed as ‘exclosures’ in the case study area of this research, adopted in the Tigray region of northern Ethiopia. The analysis integrated available data on on-site and off-site effects of the conservation measure. Major benefit and cost items related to this specific measure were identified, quantified, and valued. Direct market prices and variants of indirect environmental valuation techniques (cost based and productivity change methods) were employed in valuing the benefit and cost items included in the analysis. Our results indicate that establishing exclosures in degrading marginal lands generate a large positive net present value (NPV) of ETB 5620ha−1. However, putting productive agricultural land under exclosures yields a negative NPV even under some hypothetical scenarios of 50% rise in prices of forest products and a social discount rate halved from the base rate of 8%. Sensitivity analyses indicate that the net present value is quite volatile to changes in biomass production and the social discount rate. Thus, appropriate forest management schemes have to be adopted in order to maximize sustainable biomass production. Furthermore, factors such as credit constraints that affect local people's time preference should be addressed to induce local people to discount the future at lower rate.

Keywords: Exclosures; Tigray; Cost-benefit analysis; Net present value; On-site effects; Off-site effects (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:15:y:2012:i:c:p:27-36

DOI: 10.1016/j.forpol.2011.09.008

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