Estimation of on-site cost of soil erosion: A comparison of replacement and productivity change methods

Solutions to soil erosion problems in developing countries are constrained by tack of reliable data for formulating sound soil conservation policies. Given the budget constraints faced by these countries, use of expensive methods to generate data is not practical. Therefore, it is important to search for low cost and less time consuming methods to generate economic information of soil erosion. This research examines the reliability of less expensive replacement cost methods. Replacement cost and productivity change methods are applied to estimate the onsite cost of soil erosion in the zipper Mahaweli watershed of Sri Lanka. Results show that on the average, replacement cost method provide about 29% higher estimates for on-site cost. When the two sets of on-site cost estimates are used in benefit cost analysis for practicing soil conservation, they provide identical decision guidelines. However, the two methods provide different results in choosing the best soil conservation measure. Further empirical investigations on reliability of the replacement cost method are encouraged.