Valuing Nutrients in Soil and Water: Concepts and Techniques with Examples from IWMI Studies in the Developing World

Abstract

"The value of soil nutrients in plant growth and agricultural output is closely related to water availability. Likewise, agricultural water productivity is in large part determined by nutrient supplies. Despite the importance of nutrient-water interactions, they are often ignored in analysis. For example, assessments of the benefits of irrigation often fail to consider the costs of increased nutrient export through greater crop harvest while the value of nutrient import is often neglected in discussions of wastewater agriculture. It is only through the combined and balanced consideration of nutrients and water that their true value can be measured and accurate assessments of the relative benefits and costs of various agricultural land and water management options can be assessed. However, to conduct such an analysis it is essential to have methods for valuing soil nutrients. The primary goal of this report is to provide descriptions of some of those methods and some examples of their application.

"After discussing the interrelationships between soil nutrients and water and reviewing methods for determining nutrient balances, this report describes an array of available methods for soil nutrient valuation (the Replacement Cost Approach, the Productivity Change Approach, Willingness-to-Pay, Hedonic Pricing and Total Factor Productivity) and provides a discussion of four nutrient valuation studies, which together cover a range of scales, perspectives, and geographic contexts. The case studies, based on previous work from the International Board for Soil Research and Management (IBSRAM) and the International Water Management Institute (IWMI), include a comparison of the costs of nutrient mining in two Ghanaian farming systems, a valuation of nutrients in wastewater irrigation in Mexico, a continental assessment of nutrient depletion costs in sub-Saharan Africa, and an examination of possible approaches to valuing soil organic matter and its various functions--an often ignored area in literature. The report concludes with a synthesis of the advantages and limitations of the two analytical approaches most commonly used in developing countries, considerations for choosing between them and their usefulness for future research."