Economics of Land Degradation and Improvement in Bhutan

Abstract

This study was conducted with the objective of determining the returns to sustainable land management (SLM) at the national level in Bhutan. The study first uses satellite data on land change (Landsat) to examine land use change in 1990–2010 and its impact on sediment loading in hydroelectric power plants. The study then uses the Soil and Water Assessment Tool (SWAT) model to analyze the impact of land use change and land management on sediment loading. The results from the land use change and SWAT analyses are used to assess the economic benefits of SLM. We estimate the benefits and costs of SLM practices and compare them with the land-degrading practices that are most prevalent in Bhutan—that is, business as usual. An analysis of the drivers of adoption of SLM practices is also done to draw conclusions about strategies that Bhutan could use to enhance adoption of SLM practices. The land cover change results show that the vast majority of forested areas remained as such between 1994 and 2010. SWAT results show that with long-term SLM practices such as contouring, increased forested cover and density, terracing, and other SLM practices, soil erosion from forested area could be reduced by 50 %. Analysis of returns to SLM practices showed that citrus orchards are the most profitable enterprises in 13 of the 20 districts (dzongkhag), but they require farmers to wait for at least six years before the first harvest. Improved pasture management is the second most profitable enterprise—underscoring the potential role it can play to meet the growing demand for livestock products as household incomes increase. Returns to community forest management are low but profitable at a 10 % discount rate. Considering the drivers of SLM adoption, our research shows an inverse relationship between returns to land management and their corresponding adoption rates. The factors that increase adoption of SLM were land security, access to extension services, and roads. In summary, Bhutan’s policies and its cultural and historical background have set the country on the path to becoming a global green growth success story. Results of this study vindicate the country’s efforts to invest in sustainable land and forest management and highlight the additional policies and strategies that will enhance achievement of Bhutan’s SLM objectives.