DOES RESTORATION PAY?

In a previous contribution we argued the economic benefit of restoration and as a consequence soil health, whether in a dairy farming context or national. Conceptually this seems a good argument, but does it pay? If restoration does not make economic sense, the country is better off without it. However, if it does make economic sense, then the opportunity cost of not restoring is negative – that is, the country is worse off by not restoring. To investigate this further, Drs Crookes and Blignaut in a study used the so-called opportunity cost decision-rule to try and answer the question of whether the restoration of degraded natural capital truly pays from a national (food) security perspective. They did so by analysing and synthesising 37 site-specific case studies throughout South Africa, drawing on 20 years of research where restoration was investigated. Their study was published in Heliyon, Volume 5 of 2019, e01765, with the title: Investing in natural capital and national security: A comparative review of restoration projects in South Africa.

The authors found that the mean opportunity costs of not restoring are the following (a negative value implies an economic loss to society): 1) For five local single species studies concerned with clearing invasive alien plants  -R395* per ha per year, sd 332; 2) For 14 local multiple species studies concerned with clearing invasive alien plants -R4190 per ha per year, sd 7985; 3) For three national studies concerned with clearing invasive alien plants -R580 per ha per year, sd 249; 4) For ten non-clearing related restoration studies -R755 per ha per year, sd 2236; and 5) For five agricultural land rehabilitation studies -R6210 per ha per year, sd 5114. When these annual values are capitalised (i.e. discounted into perpetuity) to reflect the impact of the benefits of restoration, the losses amount to between 16 and 50 times greater than the annual values. Capitalisation of these values is an important step towards an asset-based approach in the management, restoration and conservation of natural capital. It is a step towards viewing the investment in restoration not merely as an expenditure item to be minimised, but as a truly worthwhile investment in the future wellbeing of agriculture, the food security of the country and indeed, the sustainability of the planet as a whole. More work, however, is required to transfer this value onto the balance sheets of companies in order to entice the private sector to invest more as well as to convert the implicit societal benefits of restoration to explicit company-wide value enhancement opportunities.  

*The published figures are in USD, but I have converted to SA Rand by multiplying with 14.5.