Measuring the environmental impacts of economic change: The case of land degradation in Philippine agriculture

We evaluate the onsite land degradation effects of economic changes occurring both within agriculture and elsewhere in the Philippine economy, simulated with the APEX applied general equilibrium model. We derive changes in land degradation rates from changes in land use in rainfed annual crops, using Philippine data on upland erosion under a range of crops, rainfall patterns and slopes. In general equilibrium, land degradation rates are affected by endogenous price changes as well as by direct interventions in agriculture and agricultural processing sectors. We examine the effects of technical progress in corn, and of a capital subsidy to the rice and corn milling sector. Using the nutrient replacement cost method, we calculate the value of changes in land degradation rates and compare them with GDP, government expenditures and other aggregates used by policy makers.