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Application of cost benefit analysis in evaluating action versus inaction towards climate change restoration and mitigation strategies for resilient agri-food systems

Author

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  • Mdlulwa, Z.
  • Molefe, L.
  • Mpukumpa, S.
  • Phokontsi, R.
  • Tswai, R.

Abstract

Globally, resilience of agri-food systems is threatened by consequences of desertification, land degradation, drought (DLDD) and climate change. Associated impacts include changes in soil fertility and low crop yields, crop diseases, balance of nutrients in soils, poor grazing lands, and risk of malnutrition and loss of livelihoods. Using a cost benefit analysis, this paper evaluates the cost of inaction versus the benefits of action pertaining to land restoration and rehabilitation projects as planned by the South African government. The financial gains of the proposed investment were assessed through evaluation of three economic performance indicators; Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit Cost Ratio (BCR). Results of the analysis revealed that investment in rehabilitation and restoration strategies is financially sound as shown by positive NPV, BCR over 1 and IRR that is above the discount rate. Capacitating local communities with skills to deal with climate change adaptation and mitigation, overgrazing and unsustainable farming activities is recommended to improve the adaptive capacity of communities to deal with drought and prevent land degradation. Application of economically viable, environmentally sound and timely control and management of DLDD is recommended to promote climate smart and sustainable agriculture for resilient agri-food systems. Detailed research on evaluating the extent of environmental and economic losses caused by the DLDD is recommended including possible implications on the agricultural sector and the national economy.

Suggested Citation

  • Mdlulwa, Z. & Molefe, L. & Mpukumpa, S. & Phokontsi, R. & Tswai, R., 2023. "Application of cost benefit analysis in evaluating action versus inaction towards climate change restoration and mitigation strategies for resilient agri-food systems," 2023 Seventh AAAE/60th AEASA Conference, September 18-21, 2023, Durban, South Africa 365873, African Association of Agricultural Economists (AAAE).
    • Handle: RePEc:ags:aaae23:365873
    DOI: 10.22004/ag.econ.365873
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    References listed on IDEAS

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    1. Priscilla Wainaina & Peter A. Minang & Eunice Gituku & Lalisa Duguma, 2020. "Cost-Benefit Analysis of Landscape Restoration: A Stocktake," Land, MDPI, vol. 9(11), pages 1-25, November.
    2. Mutenje, Munyaradzi Junia & Farnworth, Cathy Rozel & Stirling, Clare & Thierfelder, Christian & Mupangwa, Walter & Nyagumbo, Isaiah, 2019. "A cost-benefit analysis of climate-smart agriculture options in Southern Africa: Balancing gender and technology," Ecological Economics, Elsevier, vol. 163(C), pages 126-137.
    3. Morokong, T. & Blignaut, J.N., 2019. "Benefits and costs analysis of soil erosion control using rock pack structures: The case of Mutale Local Municipality, Limpopo Province, South Africa," Land Use Policy, Elsevier, vol. 83(C), pages 512-522.
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