Iran: Cost Assessment of Environmental Degradation

Caspian EVE 2005/UNDP and WBI

Session 8

Iran: Cost Assessment of Environmental Degradation

Morteza Rahmatian([email protected])

World Bank InstituteAshgabad, November, 2005

GEF

Cost of Environmental Degradation

Islamic Republic of Iran

From materials prepared by

Maria Sarraf Marwan Owaygen

Caspian EVE 2005/UNDP and WBI Morteza Rahmatian, Iran: Cost Assessment of Environmental Degradation

1. Water

2. Land

3. Air

4. Coastal

5. Waste

6. Forest

Present the Main Findings of the Report


What’s 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


What’s 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.

Estimated Average Annual Damage Costs (% of GDP in 2002)

0

0.5

1

1.5

2

2.5

3

Water Land, Forest Air Waste Coastal

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, doctor’s 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)

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.

Water – Underground Water Depletion

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

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

Water – Underground Water Depletion

•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)

Water – Dam Sedimentation


IRRIGATED AGRICULTURAL LAND SALINTYFOREST

RANGELAND WETLAND FLOODS & SOIL EROSION

LAND DEGRADATION

LAND DEGRADATION: Rangeland

Iran’s 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).

27.4-22.7-4.7Total change in area

9043.437.39.3Area in 2000

90166014Area in 1975

Total area(in million ha)

Poor/Very poorFair/PoorGood/FairQuality of rangeland

27.4-22.7-4.7Total change in area

9043.437.39.3Area in 2000

90166014Area in 1975

Total area(in million ha)

Poor/Very poorFair/PoorGood/FairQuality of rangeland

LAND DEGRADATION: Wetland

Iran has 286 wetlands, twenty of which have been listed in the Ramsar Convention, covering 0.7 percent of the country’s 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.

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:

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:

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

Table 2: Estimate of damage costs resulting from wetland degradation


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).

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 leveldS/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 >32 1.11 15%

Total irrigated land 7.4 100%


Table 4: Irrigated cropping patterns, salinity tolerance and yield decline

Irrigated cropsCropping pattern

(share of irrigated land)Salinity

threshold(dS/m)

Yield declineper 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%


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

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 country’s 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).


Rangeland6%

Forest32%

Irrigated Land Salinity

45%

Wetland 12%

Floods&Soil Erosion

5%

LAND DEGRADATION

Total annual damage cost: US$ 2.8 billion

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)

Air – Urban air pollution (Epidemiology)

Greater Tehran Area Mashad Isfahan City Shiraz Tabriz

Health end-points Cases Cases Cases Cases Cases

Premature mortality (PM 2.5) 5,324 1,095 1,140 454 528

Chronic bronchitis (PM 10) 4,760 900 1,090 380 430

Hospital admissions (PM 10) 10,850 2,050 2,490 870 990

Emergency room visits (PM10) 212,900 40,200 48,900 17,000 19,400

Restricted activity days (PM 10) 31,461,000 5,940,000 7,220,000 2,513,000 2,864,000

Lower respiratory illness in children (PM10) 604,000 114,000 139,000 48,000 55,000

Respiratory symptoms (PM 10) 100,126,000 18,903,000 22,979,000 7,998,000 9,113,000

Ahwaz Karaj Other cities Iran

Health end-points Cases Cases Cases Total Cases

Premature mortality (PM 2.5) 342 516 3,801 13,200 3% of CDR

Chronic bronchitis (PM 10) 350 460 4,150 12,520

Hospital admissions (PM 10) 790 1,050 9,470 28,560

Emergency room visits (PM10) 15,500 20,600 185,800 560,300

Restricted activity days (PM 10) 2,285,000 3,048,000 27,458,000 82,789,000 2.1 per adult

Lower respiratory illness in children (PM10) 44,000 58,000 527,000 1,589,000 0.06 per child

Respiratory symptoms (PM 10) 7,272,000 9,702,000 87,387,000 263,480,000 6.7 per adult

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)

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.


Figure 1: Sturgeon Catch in Iran (1978-2002)

0

500

1000

1500

2000

2500

1975 1980 1985 1990 1995 2000 2005

Year

Stu

rge

on

ca

tch

(in

to

n)

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).

Sturgeon Fishery:

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.


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

Kilka Fishery:

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).

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

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)

Deforestation - WWF Ecological Regions in Gilan and Mazandaran Provinces

Cleared Areas(GEF & IFPRI)

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 US$150/m3. Estimated annual loss of timber US$ 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)

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)

Deforestation

Indirect Use Value: Protection of Water Reserves & Water PurificationStudy 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)

Deforestation

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

Thank You

Documents

Iran: Cost Assessment of Environmental Degradation