Socioeconomic Conditions that Enable Restoration of Land and Ecosystems: What we know – What we need to know

By V Santhakumar with contributions from Alisher Mirzabaev, Karen Sudmeier, Muralee Thummarukudy, Sharadchandra Lele, and Seema Purushothaman

Introduction

Several reports highlight the severity of land surface degradation caused by human activities. The Global Land Outlook¹ compiled by United Nations Convention to Combat Desertification (UNCCD) is a recent documentation, according to which nearly one-fourth of the land surface is subjected to one or the other kind of degradation.² About 2 billion hectares of forest land offers very little economic value currently due to degradation. It is estimated that land degradation leads to a loss of 2 trillion US dollars per year for countries. These losses are known to policymakers. The importance of arresting the ongoing degradation of land and ecosystems (including forests) and reversing its trend is also known. It is important to address climate change and preserve biodiversity. There are global initiatives to restore land.³ There are also efforts by communities, governments, non-governmental organisations to restore land cover.

This essay highlights briefly through a review of literature what we know about the socioeconomic conditions which enable the restoration of land and ecosystems. It also highlights a few lesser-known aspects of the connection between socioeconomic conditions and land/ecosystem restoration. In addition, it looks at the experience of a number of initiatives to restore vegetative cover over land in different parts of the world. It is not a compressive review of all relevant literature and efforts to restore land/ecosystems. The objective of this review is to draw attention to those socioeconomic aspects which affect the effectiveness of the efforts towards the restoration of land and ecosystems.

One important conclusion of this review is that the discussions on land restoration so far have not focussed adequately on the connection between human development (which is also connected to the quality of governance and institutions) and the restoration of land and ecosystems. There are historical cases where such a broad-based development led to an increase in the vegetative cover over those lands which were used for intensive (or degrading) agriculture in the past. This shows the importance of poverty eradication, education, diversification of the economy and urbanisation in land restoration. However, this argument is not to underestimate the efforts which are needed to encourage people to conserve land and ecosystems in situations that they are in. It is also not to underestimate the land degradation that is happening through unplanned urbanisation. This review indicates that there may be a need to pursue the traditional ways of ushering in human development on the one hand, and to make the creation of vegetative cover over land attractive to those who depend on it for survival on the other.

Socioeconomic conditions and land restoration: What we know

There are notable social and economic benefits in restoring land. According to Ding et al (2017)⁴ `every $1 invested in restoring degraded forests can yield between $7 and $30 in economic benefits.⁵ Restoring 150 million hectares of degraded agricultural land could generate $85 billion in net benefits to national and local economies and provide $30–40 billion a year in extra income for smallholder farmers and additional food for close to 200 million people.’⁶

There is a great deal of understanding of the socioeconomic causes of land degradation. The fact that those who own/cultivate/use land may not get the full benefits of conserving it is known. This issue of `positive externality’ – a source of market failure – may reduce the efforts towards restoration by direct users.  Many people may not have land rights which reduces their incentive to make investments for its regeneration. Their uncertainty about their ability to derive gains in the long run (which may enhance the discount rate that they may use in calculating the return on their investments) may discourage them from making adequate investments for this purpose. The benefits of restoring land may be derived only in the long run, and this may discourage not only the poorer people who focus on their immediate survival but also those financial investors who focus on shorter-term returns from making investments for restoration.

The benefits of regenerating land cover are not known widely, and such an information failure can also lead to inadequate investments for this purpose. Certain outcomes of restoration (like ecosystem services) do not have a market and this `absence’ of markets can be yet another constraint. Even when individuals (for example, farmers) can gain from restoration, it may require collective action and the possibilities of free-riding and coordination problems may work against such collective action. Following the insights from behavioural economics, there can be non-rational behaviour which may lead to inadequate efforts towards restoration even if these are privately beneficial. These disincentives or factors which may reduce the efforts towards land/ecosystem restoration and possible solutions are summarised in Table 1.

Table 1. Factors which may work against land/ecosystem restoration

However, even when there are sources of finance and instruments which take care of the issues mentioned in the previous paragraphs (and Table 1), these may not help land/ecosystem restoration for other reasons. Ding et al⁷ list down some of these reasons: (a) difficulty to access climate finance; (b) restoration projects require small budgets and many financing agencies are not interested in such projects due to higher transaction costs; (c) lack of coordination among different financing agencies. Some of the restoration projects are also perceived as risky and this can be more due to the dependence of the success of such projects on political and institutional contexts – an issue discussed later in this essay.

Unanswered questions

The knowledge of the factors which may work against land/ecosystem restoration that is summarised in the previous section raises a number of questions, and our reading is that there is not enough attempt to answer these questions. These questions include the following:

1. Why do we see land degradation higher in poorer or developing countries?
   If we look at the map of restoration hotspots (as in Figure 1.7, Global Land Outlook, p.17) almost all the high-priority areas for restoration are in the global south and most of these countries are poorer or developing ones. There are also indications that there is an increase in natural assets (like the area under forests) in developed countries like those in Western Europe over time.
2. If restoration projects require only small budgets, which may not interest large funding agencies, should these not be available from other sources including those within the countries where these are required?
   What could be the reason if such small funds are not available within those nations where such restoration should be a priority agenda? Moreover, if restoration often requires small budgets, then private investors or venture capitalists or other agencies should be in a position to invest in multiple projects, even if the risk is higher. (Venture capitalists invest in multiple start-ups even though the risk is high).
3. Why do we see permanent (tree) crops in certain areas (with minimal degradation) and seasonal crops (with a higher level of land degradation) in other areas even within the same country?
   The former seems to be the case in the state of Kerala in India which is also known for relatively higher levels of human development.
4. Why do subsidies in agriculture lead to land degradation in certain cases but not so in others?
   It is noted⁸ that these subsidies lead to the expansion of intensification of agriculture which in turn leads to land degradation and/or deforestation. Since these subsidies increase the income of farmers, it is not clear whether the absence of such subsidies (or lower incomes) would not facilitate the expansion of agriculture (and deforestation). Moreover, theoretically, these subsidies can help the pursuit of land-restoring agriculture too, if these are not for inputs (like chemical fertilisers or pesticides which cause land degradation). In a way, subsidies can be part of government financing to internalise the positive externalities associated with land-restoring agriculture. Hence, the reasons for the subsidy to encourage the practice of land-degrading agriculture need to be analysed. Moreover, subsidies for agriculture in developed economies like the US and Europe are higher but land degradation is relatively less there. There could be factors other than subsidies which may encourage farmers to cultivate in a manner that causes land degradation in poorer countries. Many governments in poorer countries, especially in Africa, cannot provide significant support to farmers as subsidies, but land degradation seems higher in these countries. This is not to argue that the subsidies are benign in terms of land degradation but to highlight the need for a nuanced analysis.
5. What is the impact of `governance’ on land degradation and the effectiveness of projects which aim at restoration?
   For example, poor quality governance can lead to the degradation of forests (since the expected cost of illegal felling can be lower due to the poor enforcement of regulation/control) but this poor governance may be connected to the underdevelopment of the country.
6. Does the cost of capital in the domestic economy have an impact on the attractiveness of restoration projects?
   The long-time horizon of restoration projects (which may require 20-25 years in certain cases to start yielding returns) could be discouraging for investors. The difficulty to have liquidity in hand during this long lock-in period may strengthen this discouragement. Some of the intermediaries like ‘Forest Finance’ which aggregate small investments for restoring degraded forests offer an annual return of 6 percent in the developed world. This return may not be that attractive in developing countries where the interest rates are higher. These rates may be reflecting the higher opportunity cost of capital in such countries. In that sense, one can argue that the higher opportunity cost of capital in developing countries which is a reflection of their stages of economic development makes restoration projects less attractive.
7. Will more attempts to value the economic benefits of ecosystem restoration encourage efforts towards it?
   There is a call for more economic valuation of environmental benefits and to disseminate the insights of such valuation widely. Though such an economic analysis is useful for policymaking at national and international levels, will it encourage private individuals and companies to move towards land restoration? These actors may be driven by private benefits and costs unless there are government incentives to convert the positive/negative externalities into private benefits (like the payment for ecosystem services)/ costs (through taxes). Though the payment for ecosystem services and carbon tax may facilitate the internalisation of a part of environmental costs/benefits, these may not be enforceable in many developing and poor countries even if they adopt these instruments legally. Or the effectiveness of these instruments may depend on the governance of the context, and the latter is not commendable in many parts of the developing world. Though government financing may encourage direct stakeholders like farmers to internalise positive externalities of land restoration, many governments in poorer parts of the world may be facing higher opportunity costs of public resources (in terms of the provision of other social services) and hence, may not be in a position to allocate enough resources for this purpose.
8. What is the impact of the ownership of land on its restoration?
   Though public ownership of land may lead to degradation in certain contexts where governance (and the enforcement of public ownership) is weaker, such ownership may help in other cases. There is a need to analyse the impact of ownership on land degradation or restoration in countries like China where private ownership is a lot more ambiguous. In certain cases, there could be a higher degradation when the land ownership is transferred to private individuals, especially due to the higher discount rate or positive externality that is discussed in the previous sections.
9. Will addressing any one factor that leads to land degradation (say the ownership of land) enough to accelerate restoration?
   The analysis of the impact of one factor on land degradation is mainly through a partial equilibrium analysis. This may limit the assessment of the possibility of land restoration when such a constraint is removed (or mitigated). The restoration could be the outcome of a change in equilibrium, which in turn may depend on the change in a number of constraints.
10. How do we ensure that the restoration does not affect people, especially those belonging to the poor and marginalised communities (like the tribal communities in India)?
    Though the Forest Rights Act (FRA)in India envisages the sustainable management of forests by ensuring the rights of tribal communities, the implementation is tardy in most parts of the country. However, there are indications that the act has the potential to improve the quality of life of these communities on the one hand and the quality of forests on the other, wherever the act is implemented properly.

Need to understand enabling socioeconomic conditions

Though there have been several efforts to arrest land degradation, and some of these are successful, we do not know enough about what kind of socioeconomic conditions (including policies, institutions and governance contexts) would work well in arresting this issue. Many successful financing, technological and organisational interventions to restore land or forests seem to have happened in the developed world where the trend of land degradation seems to have declined even before these efforts. However, there are not many successful cases in developing and poorer countries where land degradation continues and poses serious challenges not only to these countries but also to the global environment. The efforts to arrest land degradation in poorer countries depend heavily on international aid and these efforts may progress or slow down depending on the availability of such aid. The Great Green Wall Initiative despite its popularity could achieve only a target of only around 18 percent. Another major initiative in North Africa (3S Initiative) has also not progressed notably.

Though there is a growing interest among financial firms and private sector companies to invest in land regeneration, and there are interesting successes in developed countries like the USA and parts of Europe, not much money has flowed towards this purpose in poorer countries where the problems of land degradation and the need to reverse the trend are acute. Though there is a small set of similar investments in developing/poorer countries, these are not very successful or could not be scaled up. Since the land is used for cultivation or subsistence mostly by the less endowed people in different parts of the world, their social relationships also matter in the restoration of the land. Though alternative organisations, such as cooperatives, have been tried out in different parts of the world (such as tree-growers cooperatives in India), the positive impacts are not notable. There is a need to think about land degradation by linking it with other aspects of development.

The need to analyse the experience of land restoration initiatives from different parts of the world

It is important to analyse the successes and failures of initiatives to restore land in different parts of the world and learn lessons. It may be interesting to look at the incentive structures which are created by these initiatives and see whether these are adequate enough to encourage different stakeholders to move towards land restoration.

The details of a set of practices/projects/initiatives or incidences of land/ecosystem restoration are given in Appendix 1. Based on the experience of these, a set of hypotheses are listed below which may indicate what may help land restoration. The validity of these hypotheses may be examined during a forthcoming conference.

Hypothesis 1: Broad-based development can help ecosystem restoration
This may be evident from the experience of Costa Rica, and the state of Kerala in India. The increase in the area under forest in developed countries in Western Europe can also be an indication of the positive impact of broad-based development.
Policy implication if the hypothesis is valid: The need to pursue strategies for human development (like other SDG) for, and along with the efforts towards, land/ecosystem restoration.

Hypothesis 2: Restoration is more likely if restoration-enabling land use can become more beneficial to direct users
This may be the case of the Argan tree plantations in Morocco; Hazelnut planting in Bhutan, Agroforestry in a set of central American countries; Pongamia tree plantations in degraded lands, etc.
Policy implication if the hypothesis is valid: The need to encourage private firms or others to market the products from land-restoring agriculture or land-use widely.

Hypothesis 3: In certain cases, avoiding degradation is useful to direct users; however, there could be a collective action problem.
This can be solved by an internal (like the federation of Kyrgyzstan pastoralists associations) or an external agency.
Policy implication if the hypothesis is valid: The need for an appropriate agency to solve the problem of collective action.

Hypothesis 4: If governments have the resources and political will, it may facilitate restoration in publicly owned lands but not that much in privately owned lands
For example, the Peatland Restoration in Indonesia.
Policy implication if the hypothesis is valid: Need for other strategies in privately controlled land.

Hypothesis 5: If the government has ownership and control over the land, it may help the restoration but it will be achieved at higher economic and social costs (by neglecting the rights of resource-dependent communities).
For example, reducing deforestation in India.
Policy implication if the hypothesis is valid: Need to reduce the social cost of restoration, especially that on the poor and the marginalised communities.

Hypothesis 6: It is possible to restore ecosystems by giving rights to dependent communities if the problem of collective action can be solved with the intervention of informed external and internal actors.
For example, the relative success of FRA in parts of India.
Policy implication if the hypothesis is valid: The need for an enabling legislation and the intervention of internal and external actors who are informed and committed to the purpose.

Hypothesis 7: Restoration may happen if the financial and other incentives for this purpose overcome the incentives to degrade land/forests.
For example, the restoration in Cox Bazar, Bangladesh.
Policy implication if the hypothesis is valid: The need for direct financial and other support to avoid degradation and facilitate restoration; the need to be concerned about restoration in post-disaster and post-conflict rehabilitation.

Hypothesis 8: Private investments may lead to restoration through certain land uses and in specific social and governance contexts. However, the interest to gain an appropriate return may encourage private parties to choose certain practices and contexts.
Policy implication if the hypothesis is valid: Private investors may invest in land/ecosystem restoration in only certain contexts. It may be incorrect to expect such an intervention in other contexts. Or there may be a need for policy interventions to facilitate private-sector investments in other contexts.

Hypothesis 9: Where the pre-existing land use is not that degrading, improved market access to their products may enhance the incentives for the continuation of this use pattern or the shift toward a restoring land use.
For example, certain interventions in Amazon, Brazil
Policy implication if the hypothesis is valid: The need to enhance market access to the products from agriculture which does not degrade the land.

Hypothesis 10: Restoration is relatively easier in developed contexts due to the reduced dependence on land; the higher size of average land holdings; public ownership of a sizeable amount of land; better governance; availability of a higher level of financial capital.
Policy implication if the hypothesis is valid: The need for international initiatives to focus on the restoration in other contexts. The need to be concerned about the development/governance context in designing projects of land and ecosystem restoration.

Appendix 1. Preliminary lessons from a set of practices of land restoration

AUTHOR

V Santhakumar, Professor, Azim Premji University

CONTRIBUTORS

Alisher Mirzabaev, Professor, University of Bonn, Germany

Karen Sudmeier, Independent Consultant, UNEP, UNCCD

Muralee Thummarukudy, Director, G 20 Global Land Initiative Coordination Office, Bonn, Germany

Sharadchandra Lele, Emeritus Fellow, ATREE, Bangalore

Seema Purushothaman, Professor, Azim Premji University

Featured image by Tomas Eidsvold on Unsplash