Caspian EVE 2005/UNDP and WBI

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Session 8
Iran Cost Assessment of Environmental
Degradation
Morteza Rahmatian (mrahmatian_at_fullerton.edu)
World Bank Institute Ashgabad, November, 2005
Caspian EVE 2005/UNDP and WBI
GEF
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Cost of Environmental Degradation
From materials prepared by Maria Sarraf Marwan
Owaygen
Islamic Republic of Iran
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Present the Main Findings of the Report

1. Water
2. Land
3. Air
4. Coastal
5. Waste
6. Forest

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Whats the objective?

• To assign a monetary value (using latest
  environmental economics methodologies and data
  available) to damages resulting from
  environmental degradation in Iran in 2002

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Whats the point?

1. It allows comparison between various
   environmental categories (air, water, land,
   forest, waste etc.)
2. It enables comparison with other economic
   indicators
3. It enables comparison between the benefits and
   the costs of investing in natural resource
   management
4. It raises awareness about environmental
   degradation beyond the environment audience
5. It gives environment ministers a tool to
   discuss the importance of environmental
   protection using the same language as ministers
   of finance.

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Estimated Average Annual Damage Costs (
of GDP in 2002)
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Water Impact on Health

• Mortality Based on Iranian health experts,
  diarrhea disease is responsible for about 12.5
  of children death. That means that about 8,600
  children under 5 years old die every year. This
  is equivalent to 246,000 DALYs (1 death 33
  DALYs)
• Morbidity DHS survey in Iran showed that
  diarrhea prevalence in children in the last 10
  days is 22 , using an average duration of
  diarrhea of 4 days, an avoidance ratio of 85, a
  severity weight of 0.11, and an age weight of
  0.31 ? the estimated no. of DALY lost for
  children is 15,000. Using a same methodology DALY
  lost due to diarrhea diseases population above 5
  years is 67,000.
• Cost of illness In addition to pain and
  suffering from illness (measured by DALY) one
  should also add the cost of treating diarrhea
  (medication, doctors visit) as well as the time
  spent by care givers to take care of sick
  children.
• ? Estimated costs 2.5 billion or Rials 20,000
  billion (2.2 GDP)

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Water Underground Water Depletion
1. Decrease in Water Table Groundwater
exploitation constitutes 54 of total water
withdrawal. Before 1960 groundwater extraction
was estimated at 20 BCM per year. In 2002 this
number reached 73.8 BCM. This increase in mainly
due to the drastic rise in the number of wells.
Current abstraction from aquifers exceeds the
safe yield by 3.2 BCM. Overexploitation of
groundwater results in decrease in the water
table, and in extreme cases in the penetration of
salty waters into aquifers and destruction of
soil quality.
Main Basins Annual extraction (million m3) Safe Yield (million m3) Deficit (million m3) Average long term change in water table (m)
Mazandaran 7,380 7,210 -170 -0.24
Persian gulf sea of Oman 26,630 26,310 -320 -0.26
Urumieh Lake 2,630 2,620 -10 -0.06
Central Plateau 33,320 30,910 -2,410 -0.47
Eastern Border 1,310 1,240 -70 -0.25
Ghara-Ghoom 2,600 2,340 -260 -0.79
Total / weighted average 73,860 70,620 -3,240 -0.41
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Water Underground Water Depletion
1. Decrease in Water Table To assess damage
costs, we looked at the additional pumping costs
needed to extract water from a deeper water
level. The main additional variable costs is
fuel. The amount of diesel required to extract 1
m3 of water per meter depth is 0.004 liter. Given
an average market price of diesel of 18
cents/liter. ?Total present value of damage costs
is 200 million (0.17 GDP). 2. Well replacement
costs overexploitation of groundwater also
results in the need to abandon wells and dig new
ones. Total number of new wells 3,500 / yr (85
due to decline in water table). Cost of digging
new well 43,000 and 53,000 ? Annual costs 332
million (0.3 GDP) 3. Groundwater pollution
rapid survey undertaken during this study reveals
that in 2002 out of 450 new wells (drinking
water) every year about 60 were abandoned due to
water pollution. ? Annual costs 3 million
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Water Dam Sedimentation

• Iran has 151 dams in operation with a capacity of
  25 BCM.
• Water from storage and diversion dams irrigate 22
  of irrigated land
• Deforestation, overgrazing, etc. resulted in soil
  erosion estimated at 30 tons/ha/year and sediment
  loads 10 tons/ha/year. Loss in reservoir storage
  capacity 236 MCM (1 of dam storage capacity)
• Damage costs estimated in terms of potential loss
  in irrigated crops (approximated by potential
  loss in wheat (31 of irrigated land).
• Estimated the productivity of irrigated water
  in terms of wheat production 0.1/m3.
  (opportunity cost of water)
• ? NPV 370 or Rials 3,000 billions (0.33 GDP)

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(No Transcript)
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LAND DEGRADATION Rangeland

• Irans rangelands total about 90 million
  hectares.

• The main source of degradation is overgrazing.

• There are about 46 million animal units in
  excess on rangelands.

Table 1 Degradation of rangeland quality between
1975 and 2000

• Using a social discount rate of four percent and
  a 25-year time horizon, the net
• present value of the damage cost in 2002
  amounts to US 172 million (Rials 1,400 billion).

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LAND DEGRADATION Wetland

• Iran has 286 wetlands, twenty of which have
  been listed in the Ramsar Convention,
• covering 0.7 percent of the countrys
  territory.

• The most serious threats to wetlands have been
  their drainage and reclamation for
• agriculture and the diversion of water
  supplies for irrigation.

• Many wetlands have been polluted with
  domestic sewage, herbicides, pesticides,
• fertilizers, industrial effluents and other
  waste products.

• The report focuses on damages resulting from
  man-driven droughts. The value of
• damage is assessed by multiplying the total
  service value of a hectare of wetland
• by the total damaged area.

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Table 2 Estimate of damage costs resulting from
wetland degradation
Name of wetland Type Area (ha) dried up Area degraded (ha) Degradation time span (years) Annual degradation (ha) Value of service (US/ha/y) Total loss (US millions per year)
Ramsar sites Ramsar sites Ramsar sites Ramsar sites Ramsar sites Ramsar sites Ramsar sites Ramsar sites Ramsar sites
Gavekhoni Lake (2) 43,000 80 34,400 30 1,147 940 1.08
Lake Orumiyeh (2) 483,000 25 120,750 10 12,075 940 11.35
Neyriz Lakes and Kamjan Marshes (2) 108,000 25 27,000 25 1,080 940 1.02
Yadegarlu and Dorgeh Sangi Lakes (2) 500 100 500 10 50 940 0.05
Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands Other internationally important wetlands
Helleh (1) 42,600 30 12,780 20 639 1,620 1.04
Boralan (2) 2,000 10 200 10 20 940 0.02
Lavandavil Marsh (2) 200 60 120 20 6 940 0.01
Huralazim (2) 35,000 20 7,000 23 304 940 0.29
Jazmourian (2) 200,000 100 200,000 25 8,000 940 7.52
Total 914,300 402,750 23,321 22.4
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LAND DEGRADATION Wetland

• Using a social discount rate of four percent and
  a 25-year time horizon, the net present
• value of the damage cost in 2002 equals US
  350 million (Rials 2,800 billions).

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LAND DEGRADATION Irrigated Agricultural Land
Salinity

• The irrigated agricultural land in Iran amounts
  to 7.4 million ha. Around 60 of this
• land suffer from different degrees of
  soil salinity.

Table 3 Soil salinity on irrigated lands
Salinity level dS/m Area irrigated (million ha)
No salinity 0-4 2.67 36
Slight salinity 4-8 0.87 12
Moderate salinity 8-16 1.18 16
Strong salinity 16-32 1.55 21
Very strong salinity gt32 1.11 15
Total irrigated land 7.4 100
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LAND DEGRADATION Irrigated Agricultural Land
Salinity
Table 4 Irrigated cropping patterns, salinity
tolerance and yield decline
Irrigated crops Cropping pattern (share of irrigated land) Salinity threshold (dS/m) Yield decline per 1dS/m
Pulses 8 1.5 15
Fodder 11 2 7
Fruits 14 2 15
Citrus 2 2 15
Vegetables 5 2 10
Maize 2 2 12
Potatoes 2 2 12
Rice 9 3 12
Soybean 1 5 20
Wheat 31 6 5
Sugar beet 3 7 5
Barley 9 8 5
Cotton 3 8 5
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LAND DEGRADATION Irrigated Agricultural Land
Salinity
Table 5 Estimated annual cost of soil salinity
Irrigated crops Average yield losses (in million ton) Price/ton (in US) Total loss (in million US)
Pulses 0 0
Fodder 0 0
Fruits 0 0
Citrus 0 0
Vegetables 0 0
Maize 0 0
Potatoes 0 0
Rice 0.75 325 245
Soybean 0.02 281 6
Wheat 3.07 170 522
Sugar beet 5.45 35 191
Barley 1.34 140 188
Cotton 0.27 408 112
Total 1,265
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LAND DEGRADATION Floods Soil Erosion

• The number of floods recorded in the 1980s and
  1990s is more than five times the
• number recorded in the 1950s and 1960s.

• Forest clearing for agriculture, firewood
  and charcoal production reduced forest
• area from 19.5 million hectares to 12.4
  million hectares over the last 57 years.

• The countrys most damaging floods occur in the
  Caspian region.

• Average annual losses
• - Human losses US 23
  million
• - Damage to infrastructure US 164 million
• Total annual damage cost US 187 million

• One-fifth of the annual damage cost can be
  related to natural causes and four-fifths
• to man-made activities. This would amount
  to US 150 million (Rials 1,200 billion).

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LAND DEGRADATIONTotal annual damage cost US
2.8 billion
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Air Urban air pollution (PM10 and lead)

• PM10
• Based on existing and estimated level of PM10 in
  7 cities in Iran Tehran, Mashad, Isfahan,
  Shiraz, Tabriz, Ahwaz, and Karaj and using
  international D-R coefficients to combine
  concentration levels and baseline data on
  mortality and morbidity
• 13,200 premature deaths
• 12,500 new cases of chronic bronchitis
• 28,600 hospitalizations
• 560,300 emergency room visits
• 1.6 millions restricted activity. days
• 263 million respiratory symptoms

• Lead
• Health Impacts
• IQ losses in children
• Mortality
• Morbidity
• Total costs US 1.5 billion or Rials 12,000
  billions (1.32 of GDP)

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Air Urban air pollution (Epidemiology)
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Air Indoor air pollution

• International literature estimates odds-ratio
  which relate the likelihood of contracting a
  disease if biomass fuel is used for cooking
• 7.8 of Iranian households use biomass for
  cooking. Impacts on
• Acute respiratory infections
• Children 552 deaths / 3 million cases of illness
• Adult women 726 deaths / 549 thousand cases of
  illness
• Chronic obstructive respiratory disease
• Adult women 770 deaths / 2,200 cases of illness
• Total costs US 300 millions Rials 2,500
  billions (or 0.28 of GDP)

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COASTAL ZONE Loss in Fishery in the
Caspian Sea

• Sturgeon Fishery
• Most of the world's caviar comes from
  sturgeon of the Caspian Sea. It is believed
• that about 90 percent of all the world's
  sturgeons swim in the Caspian.
• The most pressing threat for sturgeon is
  widespread poaching throughout the Caspian
• to feed the international demand for caviar.

• Sturgeons are also under stress due to natural
  habitat degradation including
• - Reduced access to spawning grounds caused by
  the construction of large dams.

- Destruction of natural spawning grounds due to
quarry operations.
- Chemical and organic pollution.
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COASTAL ZONE Loss in Fishery in the
Caspian Sea
Sturgeon Fishery
Figure 1 Sturgeon Catch in Iran (1978-2002)
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COASTAL ZONE Loss in Fishery in the
Caspian Sea
Sturgeon Fishery

• An average of 2,500 tons/year is used as the
  best estimate of potential annual sustainable
  catch of sturgeon. Under this consideration, the
  loss of sturgeon catch
• for year 2002 would be 1,857 tons.
• This is equivalent to a loss of 278 tons of
  caviar. At an average export price of 533/kg,
  this will result in a loss of around US 148
  million (Rials 1,200 billions).

• Numerous sturgeon hatcheries were created as
  mitigation for lost spawning habitat. 85 percent
  of Iranian sturgeon catches are related to
  fingerlings release. The production cost of each
  fingerling is US 0.50. With an average annual
  release of 22 million, this would result in a
  total cost of US 11 million.

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COASTAL ZONE Loss in Fishery in the
Caspian Sea
Kilka Fishery

• The kilka fishery is threatened by the
  comb jelly, an invasive species introduced
• by the ballast water of ships traveling
  the Volga-Don canal.

• The kilka fish catch decreased dramatically
  since 2000. The catch of 2002 presents
• 44 percent of the average annual catch
  between 1993 and1999. This results in a
• loss of US 6.8 million.

Total Loss in Sturgeon and Kilka Fisheries for
the Year 2002 US 166 million (Rials 1,300
billions).
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Waste

• Municipal waste collection is 90 to 100
  (cities with more than 500,000 people, 70
  (cities with pop between 25,000 to 500,000) and
  50 to 60 in rural areas.
• WTP to improve waste collection and street
  cleaning varies 3.3 and 7.3/hshl/month.
• Apply WTP to 5 (large cities), 30 of hshl of
  medium cities and 45 of rural households
• ? Damage cost 235 million or 0.21 GDP
• Unsanitary Landfills comparison between the gate
  fee of two landfills (same size)
• Current Kahrizak landfill serving Tehran
  without environmental consideration gate fee
  1/t (include waste reception, dumping, minimal
  soil cover, exclude land and profits).
• Proposed Houshang landfill designed with
  environmental considerations gate fee 4.7/t
  (incl. bottom liner, leachate collection and
  treatment, gaz collection, replanted vegetation,
  site closure). The difference 3.7 is applied to
  municipal waste generated. ? Damage cost 90
  million or 0.08 GDP

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Waste
Loss in Recreational Value Northern Provinces 5
million tourists visit Northern provinces. 2
million tons of solid waste has been dumped in
river banks considerably reducing aesthetic
attractiveness of some areas. Based on study in
Australia, a decline in environmental condition
from Unspoiled to Somewhere Spoiled could
reduce tourists expenditure by 30 .
Conservatively used 10 to 20 reduction in
tourists expenditures. Average expenditure
35/day and average time spent is 3 days.
Potential decline in tourists revenue 75
million or 0.07 GDP No estimate of damage
costs related to Hospital or Industrial waste ?
Annual damage costs 400 million or Rials 3,200
billions (or 0.36 GDP)
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Deforestation - WWF Ecological Regions in Gilan
and Mazandaran Provinces
Cleared Areas (GEF IFPRI)
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Deforestation
Forest cover 12.4 million ha (7.4 country area).
Estimated annual deforestation 125,000 ha/yr.
Deforestation mainly due to conversion of land to
agriculture and clear cutting for wood. Benefits
loss due to deforestation Direct Use Value
Timber. Timber only important in the Caspian
Forest (45,000 ha deforested). MAI was 7m3/ha now
3m3/ha. Assume that half this figure is wood and
the rest is firewood and an average stumpage
price US150/m3. Estimated annual loss of timber
US 10 million (Rials 80 billions) Direct Use
Value Firewood. Firewood important in Caspian
(45,000 ha), Zagros (54,000 ha) and
Irano-Touranian (27,000 ha) regions. Considering
MAI (ranging 0.4m3/ha to 1.5m3/ha) and the
stumpage price in various forests ( 4/ha, 7/ha
and 30/ha). Estimated annual loss of firewood
US 2.4 million (Rials 20 billion) Direct Use
Value Grazing and other NWFP. No reliable data
was found on these values. We applied the results
found in Turkey 20/ha/yr (15 for grazing and 5
for other NWFP). Estimated annual loss US 2.5
million (Rials 20 billion)
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Deforestation

• Direct Use Value Hunting. Value found in Turkey
  1/ha was used in Iran (valuation is based on the
  hunting permit price and license fees). While
  hunting occurs only in designated areas, this
  estimate represents an average value calculated.
  Estimated annual loss 125,000 (Rial 1 bill)
• Direct Use Value Recreational. Based on the
  number of visitors to Caspian area and the
  recreational benefits in forest parks
  (6/person/yr), we estimated the potential loss
  in recreational value due to deforestation at
  6.5/ha/yr. Estimated annual loss 812,000
  (Rials 6 billions)
• Indirect Use Value Loss of plant nutrient. FAO
  reports that 46 of total soil erosion is due to
  deforestation (but this result of past
  deforestation). Conservatively assume that annual
  deforestation contributes to 1.8 of annual soil
  erosion (or 18 million t). This result in a loss
  in soil nutrient 73,000 tons. Valuation is based
  on replacement cost method ie using as proxy the
  cost of fertilizers necessary to substitute the
  loss of nutrients (0.1/kg). ? Estimated annual
  costs of substituting nutrient 7.3 million
  (Rials 58 billions)

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Deforestation

• Indirect Use Value Protection of Water Reserves
  Water Purification
• Study in Iran estimates the benefits of forests
  in protecting underground water reserves about
  17/ha Caspian Forest, 8/ha Zagros forest,
  37/ha Irano-Touranian forests. Estimated annual
  loss of water protection 2 million (Rials 16
  billions)
• Indirect Use Value Carbon Sequestration. Net
  emissions of CO2 from forestry sector is 31.5
  million tCO2 Average price adopted by Carbon
  Market 13 - 18 tC. Estimated annual damage
  costs 132 million (Rials 1,000 billions)
• Option, Bequest and Existence Values. Option
  value of pharmaceutical products no estimate
  found in Iran. Only estimate in the Mediterranean
  is Turkey 6.3/ha. Applying this estimate to Iran
  ? loss of 800,000. Biodiversity conservation
  study in Iran assessed the annual benefits of
  biodiversity conservation to 16/ha in Caspian
  forests, 8/ha in Zagros and 16/ha in
  Irano-Touranian forests. An annual loss of 1.6
  million
• ? NPV 900 million or Rials 7,000 billion (0.8
  GDP)

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Total Damage Costs
Category Rials (billions) US / yr (million) GDP
Water 25,500 3,220 2.82
Land and Forest 22,600 2,840 2.5
Air 14,500 1,810 1.6
Waste 3,200 410 0.36
Coastal Zone 1,300 170 0.15
Sub-total 67,100 8,430 7.43
Global Environment 12,300 1,540 1.36
TOTAL 79,400 10,000 8.8
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Thank You