Extending the framework of the economic evaluation of erosion control actions in Mediterranean basins

Traditionally, the benefits of erosion control projects in Mediterranean watersheds were valued by the replacement cost method (RCM). Nowadays, however, environmental economics has provided alternative methods, such as contingent valuation (CV) and others based on stated preferences, the main strength of which is their capacity to capture non-use and future use values, which are essential for the monetary valuation of erosion. This study uses CV to estimate the externalities associated with watershed restoration and erosion control projects conducted in the Aljibe Basin (Almería, Spain). Comparison shows that CV estimates of net environmental benefits are almost double those obtained using standard methods. Thus, the project meets the profitability criteria in the former case but not in the latter. In concrete terms, the Internal Rates of Return are 5.23% versus 2.25%, respectively. The above shows CV to be a useful tool for estimating the social–environmental return on investment in this kind of project. However, as the experimental phase of this study shows, CV is not without certain issues and limitations, the majority of which derive from its hypothetical nature. Moreover, being preference-based, it may be more coherent with a cost–benefit analysis approach. The RCM, on the other hand, is highly detailed in technical terms and, by using physical data, produces more objective results. The two can therefore be considered complementary rather than competing methods, since they view the valuation from different perspectives.

► The traditional economic evaluation of erosion control projects underestimates their social-environmental profitability.
► Two key methodological changes are proposed: to include the non-uses values and update the discounting approach.
► The case study, near the largest desert in Europe, illustrates the proposal.