Report No. 32043-IR Islamic Republic of Iran Cost Assessment of Environmental Degradation Sector Note June 30, 2005 Rural Development, Water and Environment Department Middle East and North Africa Region Document of the World Bank Acknowledgements This report was prepared by a team consisting of Maria Sarraf (Task Team Leader, MNSRE), Marwan Owaygen (Enviromental Economist, Consultant), Giovanni Ruta (Environmental Economist, ENV) and Lelia Croitoru (Forest Economist, Consultant). The team would like to acknowledge the cooperation and support received from the Government of Iran, particularly H.E. Dr. Massoumeh Ebtekar (Vice President and Head o f the Department of Environment (DOE)), Dr.Youssef Hojjat (Deputy Head of DOE) and Dr.Mojtaba Ardestani (DOE). They would also like to thank Mr.MasoudBagherzadeh Karimi (DOE), Dr.DariushFarhud(Tehran University ofMedical Sciences), Mr. Javad Baradar Javari (Water Resources Management Company), Dr. Aziz Moameni (Soil and Water ResearchInstitute), Ms.Marzieh Jalali (DOE), Mr. Negahdar Eskandari Shiri and Mr.Hossein Badripour (Forest, Range &Watershed Management Organization), Mr.N.Ellahi Panah (National Water and Waste Water Engineering Company), Mr. Anoosh Noori Esfandiari (Iran Water Resources Company), Dr.Mostafa Panahi, Dr.MohammadMahdavi (University o f Tehran), Mr.Jabbar Vatan Fada (MinistryofEnergy), Dr.SeyedAminollah Taghavi Motlagh(Iranian Fisheries Department), Ms.Mahsa Resaie (DOE), Mr. Alireza Abedini (Organization for Waste Material Recycling and Composting), Mr. Morteza Sharifi (Forest, Range &Watershed Management Organization), Mr. Hamid Ghaffarzadeh (Caspian Environment Program), Mr. S. Assadollahi (Water Resources Management Organization) as well as many other people and institutions consulted duringthe preparation ofthe study. The team would also like to thank the peer reviewers: MaureenCropper (Lead EnvironmentalEconomist, DECRG) and David Wheeler (Lead Environmental Economist, DECRG) as well as Sherif Anf (Regional Environmental and Safeguard Advisor) and Bjorn Larsen (Environmental Economist, Consultant) for providing constructive comments. Finally, we would also like to thank Anne Carlin for editing the report and Magalie Pradel for overall administrative assistance. ... 111 Contents Abstract Executive Summary 1. Introduction I.1Background 1.2Objective and rationale 1.3The preparationprocess 2. MethodologicalFramework 2.I What is the cost o f environmental degradation? 2.2 What does this report tell? 2.3 Type o f costs 2.4 Measuring impacts 2.5 Monetary valuation 2.6The cost of degradation and time 2.7 The costs and benefits o fenvironmental management 3. Water 3.1 Overview o fwater sector 3.2 Health impacts o f inadequate water, sanitationand hygiene 3.3 Underground water depletion 3.4 Water erosion and dam sedimentation 3.5 Total damage costs 4. Air 4.I Overview o furban air pollution 4.2 Measuringthe impact o furban air pollution onhealth 4.3 Measuringthe impact o findoor air pollution onhealth 4.4 Total damage costs 5. Land Resources 5.I Overview o f land resources inIran 5.2 Cropland salinity 5.3 Rangeland degradation 5.4 Wetlands degradation 5.5 Flooddamage and erosion 5.6Total damage costs 6. Deforestation and Forest Degradation 6.1 Overview o fthe forest sector 6.2 Deforestation and forest degradation 6.3 Costs of deforestation and forest degradation 6.4 Total damage costs 7. Coastal Zone 7.I Overview o f Iraniancoastal zones 7.2 Pollutioninthe Persian Gulf andthe Sea o f Oman 7.3The Caspian Sea 7.4The sturgeon fishery 7.5 The kilka fishery 7.6Total damage costs 8. Waste and Global Environment 8.I Waste sector 8.2 Global impact from COz emissions Bibliography iv Annexes Annex I Notes related to the forest chapter Annex I1 Estimate o f damage costs Annex I11 Detailed estimates o f air, water, land, waste and forests degradation Tables Table 2.1 Sources, impacts and valuation o fthe cost o f environmental degradation Table 3.1 Water: valuation o fhealth impact in2002 Table 3.2 Underground water: sources and amount supplied in2001-2002 (millions o f cubic meters) Table 3.3 Over extraction o fground water inmainbasins in2002-2003 (millions o fcubic meters) Table 3.4 Short and long-term annual change inthe level o fground water table inmainbasins (inmeters) Table 3.5 Damage cost o f undergroundwater depletion Table 3.6 Productivity o f irritation water (interms o f wheat production) in2001 Table 3.7 Water: annual damage costs (mean estimate, 2002) Table 4.1 Air pollutants inmajor cities, 2002 Table 4.2 Urban air pollution dose- response coefficients Table 4.3 DALYs for health effects Table 4.4 Estimated health impacts o f urban air pollution, 2002 Table 4.5 Estimated health impacts o f urban air pollution inmajor Iranian cities, 2002 Table 4.6 Unitcost ofillness andtreatment incities Table 4.7 Estimatedmortality o f children and female adults from LRIand COPD inIranin2002 Table 4.8 Estimatedmorbidity o f children and female adults from LRIand COPD inIranin2002 Table 4.9 Mortality, morbidity and DALYs lost due to indoor air pollution inIran in2002 Table 4.10 Cost o f illness from indoor air pollutioninIranin2002 Table 4.11 Air: Annual damage costs (mean estimate, 2002) Table 5.1 Soil salinity on irrigated lands in2003 Table 5.2 Irrigated croppingpatterns, salinity tolerance and yeld decline Table 5.3 Estimatedannual cost o f soil salinity Table 5.4 Degradation o frangeland quality between 1975 and 2000 (millions ofhectares) Table 5.5 Damage cost o frangelanddegradation in2002 Table 5.6 Value o f services o f three types o f wetlands (inU S dollars per hectare per year) Table 5.7 Evaluation of damage costs resulting from wetland degradation Table 5.8 Numberofrecorded floods inIraninthe last five decades Table 5.9 Damage costs o f selected surveyed floods over the past 15 years Table 5.10 Land: annual damage costs (mean estimate, 2002) Table 6.1 Forest inventory data inIran Table 6.2 Average annual deforestationper sub-region Table 6.3 Economic losses due to deforestation(US$ per hectare o f deforested areaper year) Table 7.1 Annual damage costs o f fishery degradation (mean estimate, 2002) Table 8.1 Waste: annual damage costs (mean estimate, 2002) Figures Figure 2.1 Comparing costs andbenefits o f environmental management Figure 4.1 Comparing the likelihood o frespiratory illnesses under different biomass use assumptions Figure 5.1 Threats to landresources inIran Figure 6.1 Costs o fdeforestation and forest degradation inIran Figure 7.1 Iranian Sturgeon and Kilka Production inthe Caspian Sea (intons) Figure 7.2 Economic valuation of fishery degradation Figure 8.1 Greenhousegases emissions inCOz equivalent in 1994 Boxes Box 2.1 I s it possible to value life? Box 6.1 Forest fires inIran V Acronyms AQCC Air Quality Control Company A N Acute Respiratory Infections BOD Biological Oxygen Demand: The amount o f oxygen requiredby aerobic microorganisms to decompose organic matter ina sample of water, such as that pollutedby sewage. It i s used as a measure o f the degree o f water pollution. B C M BillionCubic Meters CEP CaspianEnvironmental Program CNG Compressed Natural Gas COD Chemical Oxygen Demand COI Cost o f Illness COPD Chronic Obstructive Pulmonary Diseases DALY Disability AdjustedLife Year DECRG Development Economics Research Group at the World Bank DHS Demographic and HealthSurvey DM DryMatter DOE Department o f Environment dS/m decisiemnes per meter (a measure of electrical conductivity) ECe Electrical Conductivity at crop root zone level EER Energy Environment Review EMRO East MediterraneanRegional Office o f the World HealthOrganization FA0 Food and Agriculture Organization FRWO Forest, Range andWatershed Organization GDP Gross Domestic Product GEF Global Environment Facility GHG GreenHouse Gas GLASOD GlobalAssessment o f Soil Degradation GNI Gross National Income HCA HumanCapital Approach I C M IntegratedCoastal Management IFDC International Center for Soil fertility and Agricultural Development IPCC International Panel on Climate Change IRR Iranian Rials LRI Lower Respiratory Infections MA1 MeanAnnual Increment MENA Middle East andNorthAfrica METAP MediterraneanEnvironment Technical Assistance Program MICS MultipleIndicator Cluster Survey NBSAP National Biodiversity Strategy andAction Plan NMVOC Non-Methane Volatile Organic Compound MNSRE Water, Environment, Social and Rural Development Department inthe MiddleEast and North Africa Region vi MOH Ministry ofHealth MOJA MinistryofJihadandAgriculture N P V Net Present Value NWFP Non-Wood Forest Product ODDS Odds Ratio ORT Oral Rehydration Therapy OWRC Organization for Waste Recycling and Composting P M Particulate Matters PSI Pollutant Standard Index RAD Restricted Activity Days SCI Statistical Center o f Iran SRRI Social Rate ofReturnon Investment tC Ton of Carbon tCO, Ton o f Carbon Dioxide TDN Total Digestive Nutrient TSP Total SuspendedParticulates UNDP UnitedNations Development Program UNFCCC UnitedNations Framework Convention on Climate Change UNICEF UnitedNations Children's Fund USAID UnitedStatesAgency for InternationalDevelopment US$ U S dollars WHO World HealthOrganization WTP Willingness-to-Pay YLL Years o f Life Lost vii Executive Summarv THEOBJECTIVE THERESULTS How much is a cleaner environment worth? For In 2002, the annual cost of environmental policy makers, that question often goes largely degradation in Iran was estimated at 4.8 to 10 unanswered. It i s not that the environment i s percent of GDP, with a mean estimate o f 7.4 seen as unimportant. It i s simply easier to percent (equivalent to US$8.4 billion or IRR compare the costs and benefits of tangible 67,300 billion). Estimated costs o f projects such as airports or electrical grids than environmental degradation are presented in weigh the merits and value o f a landfill cleanup Figure A and Table A. In addition to the or a change inemissions legislation. damages to the national economy, Table A also presents damage to the global environment The objective o f this report is to provide an through greenhouse gas emissions. estimate of the cost of environmental degradation in Iran. Despite the difficulties FigureA. Annual cost of environmental degradation inIran(mean estimate as apercentage ofGDP, 2002) involved in assigning monetary values to environmental degradation, such estimates can 3.00% 3 1 be a powerful tool to raise awareness about environmental issues and facilitate progress 2.50% toward sustainable development. It i s hoped that 2.00% this study will provide an instrument for policymakers to better integrate the environment 1.50% into economic development decisions. 1.00% Estimates o f environmental damage presented in 0.50% this report should be viewed as orders of magnitude. The accuracy o f all estimates has 0.00% Water Land, Air Waste Coastal been constrained by data availability and was Forest subject to various assumptions and simplifications. A range of values has been presented to reflect this uncertainty. Nevertheless, the estimates presented in this report indicate the severity and magnitude o f Category US$ Rials GDP environmentaldegradation inIran. millions billions % Water 3,200 25,500 2.82 The reader should bear in mind that this report Land andForest 2,840 22,600 2.50 only shows one side of the coin. Any policy Air 1,810 14,500 1.6 action that causes environmental damages also Waste 410 3,200 0.36 produces benefits to society. For example, Coastal zone (limitedto I deforestation is often a result o f changes in land Caspiansea) 170 1,300 0.15 use to agnculture. While this report only focuses Subtotal 8,430 67,100 7.43 on environmental degradation costs, C02emissions 1,540 12,300 1.36 understanding and evaluating both the costs and Total 10,000 79,400 8.8 benefits of each development actions is necessaryfor soundpolicy making. 1Numbersmay not addup exactlydue to rounding Detailed results of each environmental US$1 and 4 billion (equivalent to an average o f degradation costs are presentedbelow. IRR20,000 billion or 2.2 percent of GDP). Water Groundwater. The main effect of unsustainable exploitation o f groundwater i s a decrease in the This section presents the health impacts water table and the eventual exhaustion o f the resulting from the lack of water supply, resource. Over the past 30 years, over- sanitation and hygiene, and water pollution. It exploitation o f groundwater - primarily through also presents the damages costs associated with wells -has resultedina decreaseinwater levels. over-pumping groundwater, water erosion and Although the problem inIran i s not as severe as dam sedimentation. It shouldbe noted, however, in other countries, information provided by the that there are other aspects o f water resource Groundwater Department o f the Ministry o f degradation for which costs are not estimated Energy indicate an average long-term annual due to data constraints. Therefore, cost estimates decrease inwater levels o f 0.4 meter. To assess presented in this report are likely to the damage costs resulting from a decrease in underestimate total damage costs. the water table, the additional pumping costs needed to extract water from a deeper level were Health imuact. Sub-standard quality and calculated. The main additional pumping cost is inadequate quantities of water for drinking and likely to be fuel. As a result, the net present hygiene purposes, inadequate sanitation facilities value of the damage cost associated with over- and sanitary practices, and inadequate personal, pumpingwas assessed at about US$190 million food and domestic hygiene have a cost to in2002. society. It is well known that these factors are associated with waterbome illnesses and Inadditiontothe abovecost, overexploitationof mortality. The most common o f these illnesses groundwater also results in the necessity to and the one with the most established link abandon wells and to dig new ones. The cost of between inadequate water, sanitation, and digging new wells to compensate for hygiene i s diarrhea. overexploitation was estimated to range between US$130 and 160 million in 2002. A smaller Based on information provided by health experts numberofwells are also beingabandoneddue to in Iran, diarrhea is estimated to be responsible groundwater pollution. This cost was estimated for 12.5 percent o f under-five mortality. This at US$ 3 million. impliesthat more than 8,600 children under the age of five years die annually from diarrheal Water erosion and dam sedimentation. Over the disease. If adequate water supply and sanitation last four decades, intensive deforestation and services are provided and good hygiene rangeland overgrazing have contributed to soil practices are observed among the entire erosion in watershed areas. According to the population, up to 85 percent o f these cases could MinistryofJihad andAgriculture, soil erosionis be avoided. Many more cases of non-fatal leading to dam sedimentation which in turn is diarrheal disease occur in Iran each year, resulting in a loss in reservoir storage capacity causing discomfort to victims and imposing the o f 236 million cubic meters per year. In this cost of treatment and the time of caregivers. report, the damage cost resulting from dam Based on the most recent health survey in Iran, sedimentation is assessed in terms of potential the number o f mildand severe diarrheal i s about loss in irrigated crops. Since a significant 50 million per year for children under the age of portion of.irrigated land (31 percent) in Iran is five years. The number o f cases for the cultivated with wheat, the study focuses on the population above five years o f age i s 65 million potential loss in wheat. The net present value of per year. this loss in 2002 was assessed at US$370 million. In addition dam sedimentation also Mortality and morbidity resulting from diarrheal results in the need for dredging activities in diseases are estimated to cost society between 2 Air Land diversion of water supplies for irrigation. Wetlands provide a wide range o f benefits and Under land resources, damage costs resulting services, including protection o fbiodiversity and from cropland salinity, rangeland and wetland genetic resources, hunting and fishing, degradation, floods and soil erosion, as wells as ecotourism and cultural heritage, supply of wood deforestation and forest degradation have been and fodder, microclimate regulation, air assessed. The results are presentedbelow. refkeshment and wind break, water supply and regulation, transportation, medical, industrial Cropland salinity. More than 70% o f irrigated and nutrimental plants, handicraft production, agricultural land in Iran suffers from different azotes fixation, and protection of coasts. The degrees o f soil salinity. The main consequence value of these benefits and services is estimated o f cropland salinity i s the decrease o f land at an average o f US$960ihafyear. The net productivity. The estimated annual cost o f yield present value of the damage cost resulting from losses due to salinity i s estimated at US$1,2 the loss of around 23,000 ha o f wetland per year billion (equivalent to around IRR 10,000 billion amounts to US$350 million (equivalent to IRR or 1.1percent o f GDP). 2,800 billion or 0.3 percent o f GDP). Rangeland degradation. One o f the main Floods and soil erosion. Flooding has increased sources o f rangelands degradation i s during recent decades in Iran. The number of overgrazing. There are about 46 million animal floods recorded in the 1980s and 1990s i s more units above the carrying capacity of rangelands. than five times the number recordedinthe 1950s Unsustainable production is an inevitable and 1960s. Poor land use management and consequence which, in tum, causes declining deforestation can contribute to increases in the trends in pastures, transformation o f good frequency and intensity o f floods. Clearly pastures into poor ones and o f the latter into identifyingcauses o f floods i s very complex and non-productive pastures. Over the past 30 years, allocating a damage cost to the responsibility o f the condition o frangelandhas worsened. Results manmade activities in flood occurrence i s o f a recent survey show that rangelands in good difficult. However, it is believed that the condition have decreasedby around five million dramatic increase in the number o f floods over hectares, rangelands in fair condition have the last three decades i s closely related to decreased by around 23 million hectares, while increased deforestation, which took place over rangelands in poor condition have increased by the same time period. Assuming that four fifths around 28 million hectares. Damage costs o f o f the increase in floods i s related to manmade rangeland degradation were estimated by the activities would result in annual damage costs loss in dry matter resulting fkom the decline in estimated at about US$150 million (equivalent rangeland quality. Annual loss of dry matter is to IRR 1,190 billion or 0.13 percent o f GDP). estimated at 110 million kilograms, which represent a net present value o f about US$172 Deforestation and forest degradation. With million (equivalent to IRR 1,373 billion or 0.15 8,200 plant species, o f which 1,900 are endemic, percent o f GDP). Iran is considered a unique country in terms o f its plant diversity and genetic reserves. Climate Wetland degradation. The importance o f diversity makes the country's forests wetlands in Iran is recognized worldwide. A heterogeneous, providing a wide range o f recent survey by the Department of Environment benefits. Despite these benefits, Iran's forests (DOE) has raised the number o f wetlands o f have been severely degraded during the last half international significance to 76. However, some century. Forest clearing for agnculture, firewood wetlands are increasingly under pressure and charcoal production reduced drastically the because o f human activity. Undoubtedly, the forest area. Overgrazing and over hunting are most serious threats to wetlands have been their believed to be responsible for decreasing forest drainage and reclamation for agnculture, quality. According to data for the Forest, Range industry and urban development, and the and Watershed Organization, between 1944 and 4 year. Coastalzone Waste collection and street cleaning can be estimated The object of measurement is welfare. The way by the willingness to pay o f individuals and govemments traditionally measure welfare is the communities for improved waste collection Gross Domestic Product or GDP, that is, the services. This cost ranges fkom US$145 to 325 total market value o f all final goods and services million per year (equivalent to an average of produced in a country in any given year. The IRR 1,872 billion or 0.21 percent of GDP) in purpose of this report is to measure welfare 2002. changes due to environmentaldegradation, using the same measurement unitsusedfor GDP. Most municipal waste generated in Iran i s sent to landfills that are generally well managed, but Measuring welfare changes due to designed with few environmental considerations. environmentaldegradation For the purpose o f this report, a comparison between the costs o f landfills "with" and There are three simple criteria to measure "without" taking into consideration changes in welfare due to environmental environmental concems i s done. The difference degradation: remediation or prevention actions, in cost is then applied to municipal waste lost productivity and willingness to pay. The generated yearly in Iran to reflect the damage first two are easily linked to GDP, and are useful cost o f environmental degradation. This cost i s in `greening' GDP types of measures, and the assessed at about U S 9 0 million per year (or third goes one step further inthe measureoftrue IRR 730billion). welfare. The three northern provinces o f Iran are Remediation and urevention actions. Some considered as popular destinations for local environmental damages are paid by society tourism. The presence of many dumping sites in directly. Such i s the case o f dam flushing these provinces results in a decrease o f their activities to eliminate the sediments caused by recreational value, with a damage cost ranging upstream deforestation. Other examples o f between US$50 and 100million annually. remediation and prevention actions include: artificial hatcheries intended to restore In summary, the total damage cost resulting productivity in degraded fisheries, and the from inappropriate municipal waste collection, purchase o f bronchodilators to prevent unsanitary landfills, and waste dumping in respiratory symptoms. Northem provinces amounts to US$407 million (equivalent to IRR 3,230 billion or 0.36% of The list can be extended. What matters, GDP). however, is that remediation and prevention expenditures are included in GDP and are usually easy to account for. A greener definition THEMETHODS o f GDP should then correct for this type o f `welfare' restoring activities, because they do Obtaining monetary measures from physical not really add anything to welfare. Rather, they damage is not an easy exercise; ineveryday life, correct a decrease in welfare due to there are no market transactions for environmental problems. environmental quality. "Land quality" cannot be bought in a market. The same applies to air Lost uroduction. Another category o f pollution. For example, there are not markets for environmental damages appears in lower levels "healthy lungs". Yet, once given the possibility o f production. Such damages are much less to do so, people are indeedwilling to pay money visible than the remediationand prevention costs to reduce physical impacts. This willingness to and hence more difficult to estimate. An pay, a key concept in economics, i s implicit in example i s cropland salinity, which causes a people's behavior. The monetary valuation lower yield than would be possible in perfect techniques usedinthe report exploit this fact. land conditions. Another example is the decrease in hours worked due to illness. The measure of 6 damages in this case has to go through two and upper bound techniques. The interested steps: (i)the quantification of the physical reader will find in the report a thorough impact, that is, the change in production of explanation o f the different techniques, and will goods and services owing to environmental be able to separate lower and upper bound problems, and (ii) the monetary valuation of the estimates. physical damage. The second step is undertaken using market prices for the good being Figure E. Annual cost of environmental degradation produced. in Iran (lower and upper bound estimates as a percentage of GDP, 2002) The way this category of environmental damages relates to traditional economic indicators i s a lower level o f GDP. So in the absence o f salinity, the production of agricultural goods would be higher. In the absence o f environment related illness, such as diarrhea, labor productivity would also be higher. Willingness to pay: an upper bound measure of degradation A common feature of the WATER LAND, AIR WASTE COASTAL FOREST ZONES remediation, prevention and lost production Lower Bound0 Upper boundI criteria for valuation is that they provide a lower bound measure o f welfare changes. That is, Environmentalhealth issues are characterized by society would be willing to pay at least the the largest variation. This i s the case for diarrhea amount measured. This i s easily demonstrated (inthe water category) andrespiratoryillness (in bythe fact that society is already payingfor such the air category). This variation reflects the damages. A different issue is to measure the uncertainty linkedto measuring the value o f life. maximum amount society would pay if the Using purely remediation, prevention and opportunity arose. This would indeed provide a production changes criteria gives an estimated true measure of welfare changes linked to damage o f 1 percent o f GDP in the water environmental degradation. category. Once the health damages are calculated using willingness to pay estimates, Willingness to pay measures are based on the the estimated damage goes up to 3.5 percent o f observation o f people behaviors and associate GDP. them with environmental damages. This report heavily relies on willingness to pay measures in While lower bound estimates make comparison the valuation of health impacts. The "Value o f a across categories more precise, the consideration Statistical Life" concept i s used. So for example, o f upper bound estimates warns the policy- the impact o f diarrhea i s accounted for by maker about the fact that environmental impacts measuring both the lost productivity (lower can be very important and may need special bound measure) and the willingness to pay to attention. avoid death or illness (upperbound measure). Comparability acrosscategories of damages CONCLUSION The use o f lower and upper bound measures o f Based on various methodologies - explained damages reflect the fact that different valuation briefly above and in more detailed throughout techniques are used. Inparticular, they introduce the report- used annual environmental a potential breach between categories o f degradation costs have been estimated to range damages measured using lower bound between 4.8 to 10 percent o f GDP, with a mean techniques and those measured usingboth lower 7 estimate o f 7.4 percent (or US$ 8.4 billion or IRR67,300 billion) in2002. The most significant negative impact on health i s caused by diarrhea diseases due to inadequate water supply, sanitation services and hygiene practices. The most severely impacted by diarrhea diseases are children under the age o f five years. Urban air pollution -mainly in Tehran but in other large cities as well- also has a significant impact on public health. The cost of natural resource degradation i s predominantly from land and forest degradation. Cropland salinity as well as rangeland, wetland and forest degradation and increased occurrences of floods due to soil erosion all have significant economic impacts. With regard to waste and coastal zone degradation, time and data limitations have prevented an in-depth estimate of these two sectors. Potential damage from suboptimal disposal of hazardous waste has not been included in the analysis. The assessment o f coastal zone degradation i s limited to fishery losses along the Caspian Sea. These two sectors would clearly benefit from a more thorough analysis inthe future. Because some damage costs have not been included in this analysis, it i s believed that the damage costs estimated inthis report i s likely to underestimate the total costs o f environmental degradation. Even with this possible underestimation, the amounts (7.4 percent of GDP) are substantial. As a reference point, they are 1.5 to 3 times higher than in other MNA countries The importance of the environment is embedded in Iran's constitution. Major efforts are being undertaken - primarily by the Department o f Environment - to protect the human and natural environment. This report suggests that Iran would significantly benefit from further action to restore and protect its environment. Further analysis and comparison between the costs and benefits of each environmental action will be necessary to identify priority areas o f intervention. 8 1.Introduction 1.1BACKGROUND primarily by the Department o f Environment (DOE), the quality o f the human and natural Iran's territory i s diverse, both in terms o f climatic variability and geological conformation. environment i s being degraded at a high rate. Rapid population growth and economic growth Iran's total land area is approximately 160 that i s not environmentally sustainable are both million hectares. Its altitude ranges fi-om 26 increasingpressure on the environment. meters below sea level - at the shores o f the Caspian Sea - to 5,671 meters at the summit o f Mount Damavand. Mean temperatures Major environmental challenges faced by the in January range from 20"Celsius along the sea of country are the degradation o f land and forest resources, as well as water and air pollution Oman to -2"Celsius in the northwestem region. Climatic conditions across the country range from hyper-arid (35 percent of the territory) to arid (30 percent), semi-arid (20 percent), 1.2 OBJECTIVE AND RATIONALE Mediterranean (5 percent) and wet (10 percent). The country has enormous deserts, several How much i s a cleaner environment worth? For policy makers, that question often goes largely mountain ranges, a large plateau and significant unanswered. It is not that the environment is forest areas. seen as unimportant. It is simply easier to This diversity makes Iran wealthy in terms o f compare the costs and benefits of tangible natural resources and biodiversity. The country projects such as airports or electrical grids than has more than 8,200 plant species - o f which weigh the merits and value of a landfill cleanup 1,900 are endemic (NBSAP, 2000) -500 species or a change inemissions legislation. of birds and 148 species o f mammals. There are The objective o f this sector note is to provide an more than 280 wetlands inIran, twenty o f which estimate of the cost o f environmental are listed in the Ramsar Convention2. The degradation in Iran. By putting numbers to wetlands are o f particular importance as they are environmental issues, it i s hoped that this study the resting grounds for several migratory birds, will provide an instrument for policymakers to such as the Siberian crane, flamingoes and better integrate the environment into economic pelicans -all listedas global heritage. development decisionmaking. The importance of the environment i s embedded Despite the difficulties involved in assigning inthe country's constitution. Article 50 ofIran's monetary values to environmental degradation, constitution states that "In the Islamic Republic such estimates can be a powerful means o f of Iran protection of the environment, in which raising awareness about environmental issues present and future generations should enjoy a and facilitating progress toward sustainable transcendent social l$e, is regarded as a public development. It i s far easier for decision makers duty. Therefore, economic and any other to incorporate and prioritize the environment activity, which results in pollution or when issues can be cast inclear economic terms. irremediable destruction of the environment, is Such assessments are particularly relevant in prohibited." Despite efforts undertaken light of mainstreaming efforts called for in the World Bank Environment Strategy.3 "The Conventionon Wetlands, signed in Ramsar, Iran, in 1971, is an intergovemmentaltreaty which provides the framework for national action and intemational cooperation for the conservation and wise use of World Bank. 2001a. Making Sustainable Commitments, wetlands andtheir resources". An EnvironmentStrategy for the World Bank. 9 The sector note comes in a crucial moment for countries was utilized to supplement the world's development. "Over the past 50 years, estimates for the cost of environmental humans have changed ecosystems more rapidly degradation included inthis report. and extensively than in any comparable period of time in human histoly, largely to meet rapidly Chapter 2 provides an overview o f the growing demandsfor food, fresh water, timber, methodologies applied in this report. Chapter 3 fiber andfuel. This has resulted in a substantial provides cost estimate related to water resource and largely irreversible loss in the diversity of degradation. Chapter 4 presents cost estimates life on Earth" (Reid et al., 2005). This i s one o f related to both urban and indoor air pollution. the major findings o f the MillenniumEcosystem Chapter 5 assesses the impact o f land Assessment. The development challenges the degradation. Chapter 6 presents the cost world faces cannot ignore the environmental assessment o f deforestation and forest costs, which are bound to become more and degradation. Chapter 7 provides a brief more pressing if human quality o f life i s to be assessment o f coastal zone degradation focusing fostered. mainly on the Caspian Sea. And chapter 8 presents the impact o f waste management as well as global impacts resulting form carbon 1.3 THEPREPARATION PROCESS dioxide emissions. This sector note i s part of a series o f studies on Annex Ipresents additional notes related to the the Cost Assessment of Environmental forest sector. Annexes I1and I11present detailed Degradation supported by METAP.4 The cost estimates in Excel format for easy program aims at using environmental damage reference. cost assessments as an instrument for environmental management. Seven studies5have The reference year i s 2002. To the extent already been completed in the Middle East and possible, all physical damage i s related to 2002 North Afi-ica region and various training courses and all prices are expressed in 2002 prices. have been offered to build local capacity in Calculations o f each damage cost are presented environmentaleconomics. inUS.dollars (US$), Iranian rials (IRR) and as a percentage o f gross domestic product (GDP). Preparation o f this sector note began in January In the main report, most cost estimates are 2004. Three missions were undertaken to Iran presented in U.S. dollars. In the annexes, all (January 2004, September 2004 and January calculations are expressed in both U.S. dollars 2005) to collect data and consult various sector and Iranianrials. ministries, universities and researchinstitutions. Duringthe preparation of this study, a review of relevant literature and documents was carried out. Data from numerous government docu- ments, statistical analysis, World Bank eco- nomic and sector work, and reports from several international agencies were utilized. For environmental issues for which sufficient data and analysis were not available, the team's local expert camed out primary research and data collection. In addition, analysis from other ~ ~~~ 4Mediterranean Environment Technical Assistance Program References: Sarraf, M.2004. Sarraf, M.,B. Larsenand M. Owaygen. 2004. World Bank, 2002a and 2003a. 10 2. Methodology 2.1 WHAT I S THE COST OFENVIRONMENTAL activities are having increasingly negative environmental consequences for the nation DEGRADATION? relative to their economic affluence. If the contrary i s the case, that Everyday decisions require information. For it suggests environmental consequences are being reduced example, entrepreneurs decide whether to invest in new machinery; workers decide whether to relative to the nation's economic affluence. accept ajob; and families decide where to go on vacation. Inthe same way, governments have to This report only shows one side of the coin. Any decide whether to spend more money on policy action that causes environmental damages also produces benefits to society. This i s the defense, hospitals, or protecting the environment. Ideally, implementing such ultimate objective o f public policy. The focus of the report is only on environmental damages. decisions should mean trading off the benefits o f Environmental degradation always occurs as a action with necessarycosts. byproduct o f development. Deforestation i s a An important firs step inmalungdecisions about result of changes in land use to agriculture for environmental management i s to calculate the example. Urban air pollution is the effect of benefits of policies and actions. Benefits are using faster and more comfortable ways of often referred as `damage avoided' by taking transport as well as the byproduct o f industrial production. The reader should bear in mindthat action. Through the report, benefits are referred to as damage costs and the reader should not be the report does not provide information on the confused by the terminology. Economic theory benefits derivingfrom the development process. can be helpful in computing the costs used for For example, concluding that air pollution costs the purposes o f this report. Here, the range o f every year 1.6 per cent o f GDP, does not tell techniques that are available to calculate the anything about the benefits o f those processes monetary value o f benefits are explored. This that leadto air pollution. chapter i s intended to be a guide through the The information about the cost of environmental mechanics and practicalities o f `environmental degradation i s however o f prime relevance valuation'. otherwise it will be neglected in decision malung process. Environmental costs are often 2.2 WHAT DOESTHISREPORTTELL? born by the poorest in society, which are often not in the position to be able to enjoy the This report provides first order estimates of the benefits o f development. The Millennium Ecosystem Assessment, recently completed, cost o f environmental degradation inIran. finds that "the changes that have been made to The final result can be understood as a measure ecosystems have contributed to substantial net gains in human well-being and economic of the lost welfare of a nation due to environmental degradation. In this report, the development, but thesegains have been achieved at growing costs in theform of the degradation cost of environmental degradation i s expressed as a percentage of GDP to provide a sense o f of many ecosystem services, increased risks of magnitude. It i s also useful to compare the cost nonlinear changes, and the exacerbation of of degradation to GDP to assess the relative poverty for some groups of people. These magnitude over time. If the cost o f degradation problems will substantially diminish the benefits as a percentage of GDP grows over time, it thatfuture generations obtainfrom ecosystems", Reidet al. (2005). suggests that the welfare loss from environmental degradation i s growing faster than GDP. This means that economic andhuman An attempt has been made to capture the most significant costs o f degradation. However, data 11 limitations are a constraint, implying that estimates in some environmental areas are not 1. Impacts on health and well-being o f the included. Hence, the total estimate of population (e.g.: premature death, pain and environmental degradation, as presented in this suffering from illness, absence of a clean study, is likely to understate the true cost of environment, discomfort) degradation to society. 11. Impacts on production (e.g.: reduced soil productivity and value o f other natural resources, lower tourismrevenues) 2.3 TYPE OFCOSTS ... 111.Impacts on environmental services such as loss o f recreation (e.g.: reduced recreational This report is organized according to the value o f lakes, rivers, beaches, forests) medium in which the degradation occurs. The iv. Direct damage (e.g.: damage caused by first column in table 2.1 contains the chapter floods) titles. The second and third columns identify the source o f the impact and the type o f impact. The The process o f estimating the cost o f fourth column identifies the valuation method environmental degradation involves placing a usedfor each impact. monetary value on impacts. The fourth column of table 2.1 summarizes the methods used in Table 2.1 Sources, impacts and valuation of the cost each case. of environmental degradation Chapter Source of damage Impact Technique While the assessment o f impacts requires LackLofwater Health HC: VSL: COI environmental science, natural resource science, supplyand sanitation health science and epidemiology, the valuation Groundwater Cropdecline CP o f such impacts, and the quantification o f the Water depletion consequences o f degradation, require Groundwater Health/ RC environmental economics and natural resource pollution Production economics. Water erosion, Cropdecline CP damsedimentation Indoorair Health HC; VSL; COI 2.4. MEASURING IMPACTS Urbanair -Lead Health Urbanair -PMI0 Health HC; VSL; COI Air HC; VSL; COI Urbanair - Discomfort CV Several methodologies and approaches have general Cropland Salinity CP been applied to provide quantitative estimates of Rangelands Services loss CP the consequences o f environmental degradation. Welands Services loss CP; RC; CV An overview o f the main principles is provided Forests Deforestation Floodsand RE here. erosion Goods and CP; RC; CV services lost Impacts on Health and Quality of Lve. Impacts Lackof collectionDiscomfort CV on health from environmental degradation are Waste Disposal Discomfort CV expressed as Disability Adjusted Life Years Over fishing and Fishery CP; RC (DALYs). This is a methodology that has been zones Coastal coastal productivity degradation developed and applied by WHO and the World Global C02emissions Various CP; RC; CV Bank in collaboration with international experts Env. impacts to provide a common measure o f disease burden Legend. HC: human capital approach; VSL: value of for various illnesses and premature mortalitya6 statistical l@ approach; COI: COGof illness; CP: changes Illnesses are weighted by severity so that a in production approach; RC: replacement cost approach; relatively mild illness or disability represents a CV: contingent valuation method; RC: remediation cost small fraction o f a DALY, while a severe illness The impacts (third column o f table 2.1) can be grouped into four categories: See Murray and Lopez (1996) for a more detailed explanationofthe DALY principle. 12 represents a larger fraction of a DALY. A year 2.5. MONETARY VALUATION lost to premature mortality represents one DALY, and future years lost are discounted at a Here a brief overview o f the main techniques fixed rate of 3 percent. used for valuation is provided. The notes in annex I1 provide further details. A range has For waterborne illnesses - associated with been used for most estimates to reflect inadequate water and sanitation services and uncertainties. An elaboration o f some health hygiene - 80 percent of DALYs lost presented impact valuation issues follows here. inthis report are due to mortality and morbidity in children under five years of age caused by Valuing health impacts. Health outcomes can diarrheal illnesses, while 20 percent are due to be grouped into mortality and morbidity. morbidity in the population above five years o f Mortality will be expressed interms o f DALYs. age. Each child death represents the loss o f 33 Morbidity will be expressed both in terms o f Years of Life Lost (YLL) or DALYs. DALYs (to reflect the value of pain and suffering) and in terms o f medical expenditures For urban air pollution, impacts on health are (to reflect cost o f treating illness in terms o f estimated based on ambient air quality data in doctor's visits and medications). Once the Iranian cities and international studies on the number o f DALY is estimated than it has to be negative impacts on health from air pollution. In multiplied by the value of a year of life lost. this report, each premature death due to air There are two approaches to valuation. The pollutionrepresents7.5 YLL or DALYs. human capital approachvalues a life at the level o f GDP per capita: if one year o f a person's life For inadequate solid waste collection, no i s lost, society loses, at the very least, her estimate of potential health impacts is provided contribution to production. This method in the report. The social cost of inadequate provides a lower bound o f a person's worth. An collection is estimated directly by the alternative method is the Value of a Statistical willingness-to-pay (WTP) approach. Life (VSL), which provides an upper bound monetary value of health damages. It measures Natural Resources. The main areas o f natural the willingness to pay to avoid death by resource degradation quantified inthis report are observing individual behavior when trading off agricultural land and rangeland degradation, healthrisks and money. coastal zone degradation, and some areas of water resources degradation. The value o f a statistical life methodexploits the fact that risk o f death i s implicit in everyday The consequences of land degradation are actions and decisions. So for example, when quantified in terms of productivity declines in accepting a job offer, we are implicitly valuing crop cultivation and rangeland forage yields. all the features o f the job such as salary, career development opportunities, friendliness o f the The cost o f coastal zone degradation i s estimated work environment and the healthrisk inherent in based on an assessment o f the lost catch due to performing the tasks assigned. It is not the same over fishing and degradation o f spawning sites. to work as truck driver for a florist or for a company producing explosives. Assuming that For water resources degradation the analysis o f health risks are reflected in the job market, the the consequences of water pollution is limitedto information about salaries will implicitly the incremental pumping costs associated with disclose information about people willingness to declining groundwater tables. As water pay for avoiding a small chance in the risk o f resources quality i s o f great importance for the death. agricultural sector inIran, further analysis inthis area i s considered important. The two elements neededfor the calculations are the marginal Willingness to Pay for reducing the risk of death and the size o f the risk reduction. 13 The following equation i s then used to calculate expenditure on replacing the good or service the value o f a statistical life. lost. For example, the depletion o f underground water results in extra expenditures to reach the VSL= WTP to avoidriskof death water table at deeper levels. In this case- the Reductioninrisko f death replacement cost is obtained by multiplyingthe price o f diesel for pumping by the quantity of This methoddoes not try to measurethe WTP to diesel necessary to pumpwater at deeper levels. avoid death with certainty, but uses statistical techniques to record human behavior in trading off risk o f dyingwith money. Box 2.1. I s it possibleto value life? One o f the valuation approaches used in the In the report, we use DALYs as the reference report uses the concept o f `value of a unitto measurehealth impacts. The VSL is then statistical life'. The VSL does not capture the dividedby 25 to obtain the Value of a Life Year. value o f an identifiable person but rather the The value of 25 is the number o f discounted value of a small change in the chance o f years o f life that are lost on average with the dying. That is, it does not ask individuals death o f an adult. how much they are willing to pay to save their own life (or any other specific person's The WTP estimates are used as an upper bound life) with certainty: presumably individuals value. As a lower bound, the human capital could be willing to pay everything they have approach i s used. It should be noted that the to avoid their own death or the death o f a WTP approach provides a cost of mortality in loved one. People face decisions involving this report that is about six times higher than the risks every moment o f their life, by smoking, approach of DALYs valued at GDP per capita. crossing a trafficked street, traveling by car Thus the lower bound estimate of the cost of a and using electrical appliances at home. The DALY lost due to adult mortality would be a `value of a statistical life' method uses gross understatement o f the cost o f rigorous econometric techniques to environmental degradation if WTP provides a disentangle the effect o f risks to life on the better representation o fwelfare cost. prices paid for goods and services and obtain in this way a monetary value of risk. The Society also incurs direct costs relatedto illness. measure obtained in this way provides a These are computed through the cost of illness maximum willingness to pay for health approach (COO. This approach estimates benefits. Many have expressed that the value treatment costs and the cost o f lost work days or o f life discerned in this way may seriously time provided by caregivers. In this case, the underestimate health impacts. However, in calculations involve the estimation of the many cases public policy decisions reflect different health end-points (such as the number much lower implicit values. o f hospitalizations, restricted activity days, doctor visits) and their multiplication by the relative unit costs. 2.6. THECOST OFDEGRADATION TIME AND Valuingproductivity loss. Losses in crop yields Environmental degradation in any given year linked to salinity or loss o f fodder due to produces costs that are felt both at present and in rangeland degradation are valued usinga simple the future. The approach used in the study is to multiplication of quantity lost by unit price. account for the present and future costs of Prices used are net o f subsidies. This i s in order degradation occurred in year 2002. In other to reflect the full opportunity cost of a good or words, the physical impacts refer to a particular service loss. year, while its economic consequences are likely to span into the future. So, for example, a death Replacement costs. Some impacts o f today results in the loss o f a person's environmental degradation are paid for by contribution to society for the number o f years 14 that person would have lived if degradation had not occurred. The DALYs calculations embody Figure 2.1 represents a hypothetical situation. this consideration. The costs of urbanair pollutionmanagement are lower than the benefits derived from reduced Inorder to make valuation ofnaturalresources mortality, morbidity and health treatment costs. losses consistent with the approach chosen, In order to decide whether air pollution degradation that occurred in the base year is management should take place, the benefits discounted for a period o f 25 years using a should exceed the costs (as inthe graph). Policy discount rate o f 4 percent. malungrequires information on both! The time horizon chosen refers to a generation's Figure 2.1 Comparing costs and benefits of time span, under the assumption that, on environmental management average, a person would enjoy the benefits o fthe I A environment for another 25 years, until hisher death. The discount rate chosen reflects the Net benefits Benefits social rate o f retum on investment (SRRI). of of air Growththeory literature establishesthat SRRI is intervention pollution given by: costs of mgmt SRRI =r + uc pollution Where `r' i s the pure rate o f time preference (or impatience), `u' is the elasticity o f the marginal utility of income and `c' is the rate of growth of per capita consumption. Estimates for industrial The reader should keep inmindthat the report is countries arrive at values in the range o f 2 to 4 designed to provide an idea o f the benefits o f percent. InIran, the rate o f growth i s presumably environmental management across different higher and a conservative value of 4 per cent has areas. While not providingan answer to decision been used. making, it provides a first step to identify key areas o f further analysis. 2.7. THE COSTS AND BENEFITS OF ENVIRONMENTAL MANAGEMENT The objective of this report i s to estimate the cost to society o f environmental damage in the areas o f water, air, land, waste, coastal zones, and the global environment. This provides a perspective on overall damage costs and areas o f the environment with the highest cost. For each area o f the environment, however, careful consideration needs to be given to the cost of remedial action and the cost o f such action in comparison to the benefits. This is the key to good decision making. One should refer both to the costs and the benefits o f a given environmental policy or management action, in order to decide whether the policy or management action i s worth from an economic point of view. 15 3. Water connections to sanitary sewerage, creating an environmental hazard. Another risk to public health i s the discharge o f untreated sewerage. In 3.1 OVERVIEWOF THE WATER SECTOR cities where connection to sanitary sewerage i s not available, sewerage i s often discharged Situated in West Asia, Iran is subject to highly through open rainwater drains (World Bank, diverse climatic conditions ranging from 2002b). extremely arid to extremely humid. Rainfall varies greatly according to geographic area - Inruralareas, and accordingto the most recent from 2,000 millimeters per year along the estimates provided by National Water and Caspian coast to under 50 millimeters in the Wastewater Engineering Company (NWWEC, Lout Desert. Average annual rainfall nationwide 2004) about 57 percent o f the population living i s 250 millimeters. Total precipitation levels in villages of more than 20 households has average 413 billion cubic meters (BCM) per access to "safe'" potable drinkmg water. With year, 117 B C M o f which replenishes surface and regard to sanitation, it is estimated that in 2000 groundwater flows, the remaining being lost to about 47 percent o f rural population had either evapo-transpiration (World Bank, 2004a). In sanitary or semi-sanitary toilets within addition to intemal renewable resources, there residence'. are about 13 B C M of surface water flow from other countries. This makes total annual This chapter focuses on quantifying the economic damage costs resulting from renewable water resources around 130 BCM. inadequate water supply, sanitation services, Total water resources per capita have fallen from hygiene practices and water resources 5,800 cubic meters in 1965 to about 1,910 cubic management and water pollution. Health meters in 2001. They are projected to decline to impacts related to inadequate water supply, less than 1,000 cubic meters by 2025. Iran i s sanitation and hygiene will be quantified in therefore likely to become a "water stressed" section 3.2. Potential damage costs resulting country according to international categorization. By far, the largest user of water '"Safe" drinking water is defined as (a) water that has been i s the agriculture sector (92 percent) followed by purified and chlorinatedand is delivered either througha the domestic sector (6 percent) andthe industrial pipeline system of directly; (b) water that is delivered sector (2 percent) (EarthTrends, 2003). from a sanitizedsource either through a pipeline system or directly; or (c) water delivred from a non-sanitized source but is boiled andchlorinatedbeforeconsumption. Groundwater resources play an important role in Iran's development as they contribute 54 percent * A Sanitary toilet is defined as having all 8 criteria below. o f total current withdrawal. However, they have A semi-sanitary toilet is defined as having the first 5 criteria below. The criteria are: (a) a walled cabinet with recently been subject to overexploitation. a door and roof; (b) a well cistem for collection of waste Groundwater extraction has increased from 20 and sewage; (c) water outlet either inside or nearby B C M in 1960 to more than 53 B C M in 2002- outside the toilet, with a house connected to the outlet 2003, exceeding safe yields. As a result, water point; (d) the floor of the toilet shouldbe slopedtowards the drain hole and should be easily washable; (e) the tables have been dropping at an average o f 41 drainpipe should be shaped like a swan's neck so that centimeters per year (Ministryof Energy, 2005). flies cannot have direct access to waste material; (0 the toilet bowl must be intact, without any cracks or defects, In urban areas, about 96 percent of the and must be washable; (g) must have either AC or a populationi s connected to public water supplies. meshedwindow that opens to the outside; @I) the walls of the cabinet must be washable to aheight of at-least 15 By contract, only 15 percent is connected to cm from the ground. This information was provided by public sanitary sewerage and only part o f the NWWEC in a report entitled "Report of Water supply sewage i s treated before disposal (World Bank, Sanitation and Hygiene in Rural Areas" and is based on 2002b). The remarkably high water supply demographic and health survey undertaken in October connection in urban centers i s not matched by 2000. 16 from over-pumping groundwater are presented morbidity due to diarrheal diseases are in section 3.3. Finally, section 3.4 presents presented. partial cost estimates associated with water erosion and dam sedimentation. It i s important Mortality (children under 5 years). This section to note that a range - with a lower and upper assesses mortality costs associated with diarrhea bound - i s presented to reflect the uncertainty diseases in young children. It will be limited to surrounding the estimates. It should also be children under the age o f five years becausethey noted that there are other aspects o f water are the most severely impacted by diarrheal resource degradation for which costs are not diseases. In2002, the total number of children in estimated in this chapter due to data constraints. Iran under the age o f five years was 8.5 million Therefore, cost estimates presented are likely to (SCI, 2004). The under-five mortality rate was underestimate total damage costs. 41 per 1,000 live births (World Bank, 2004d). Based on informationprovided byhealth experts in Iran, diarrhea is estimated to be responsible 3.2 HEALTH IMPACTS OFINADEQUATE for 12.5 percent o f under-five mortality. This WATER, SANITATIONAND HYGIENE impliesthat more than 8,600 children under five die annually from diarrheal disease. If adequate Sub-standard quality and an inadequate quantity water supply and sanitation services are o f potable water for drinking and hygiene provided and good hygiene practices are purposes, inadequate sanitation facilities and observed among the entire population, than sanitary practices, and inadequatepersonal, food about 85 percent of the cases (or 7,300 cases) and domestic hygiene have a cost to society. It is couldbe avoidedg. well known that these factors are associatedwith waterborne illnesses and mortality. The most Usingthe formula and assumptions inthe Global common o f these illnesses and the one with the BurdenofDisease (WHO, 2004), it is calculated most established linkbetween inadequate water, that the death o f a child under the age o f five sanitation, and hygiene is diarrhea. The World represents a loss o f 33 DALYs (disability Health Report 2002 shows that approximately adjusted life years) inIran. Thus diarrheal deaths 3.I percent of deaths (1.7 million) worldwide represent an annual loss o f about 246,000 are attributable to unsafe water, sanitation and DALYs. hygiene. Overall, 99.8 percent o f deaths associatedwith this risk factor are indeveloping Morbidity (children under 5years). Many more countries, and 90 percent of deaths are those o f cases of non-fatal diarrheal disease occur in Iran children. each year, causing discomfort to victims and imposing the cost o f treatment and the time o f Providing clean water and sewage collection and caregivers. Discomfort - and reduced well-being following good hygiene practice play an andrestrictedactivity -associated with diarrheal important role in reducing the risk o f diarrhea. illness i s also expressedinterms of DALYslost. According to Hutton and Haller (2004) and WHO (2004) they are likely to reduce diarrhea Based on demographic and health surveys illnesses by about 85 percent. This report uses (MOH, 1997) in Iran, it was reported that 22 that parameter to value the environmentally- percent of children under the age o f five had related burden of disease associated with diarrhea in the preceding 10 days." Given a diarrhea. It implicitly assumes that the remaining population o f children under five years o f age of 15 percent o f cases are not attributable to 8.5 million (SCI, 2004), the estimated number o f environmental reasons or not avoidable in cases o f diarrheal disease among children i s practice, giventhe country's conditions. Inadequate water, sanitation and hygiene 9 This is referred to as the "avoidance ratio" in the rest of account for considerable losses in Iran. In this the chapter section, the costs associated with mortality and lo The survey was conducted between the 7 and 17 of November 1997 17 about 50 million cases per year. Given (a) an techniques have been developed to provide a average duration o f diarrheal disease o f 4 days; monetary measure o f an individual's or (b) an avoidance ratio of 85 percent; (c) a household's willingness-to-pay (WTP) to reduce severity weight o f 0.11 (Murray and Lopez, the risk o f mortality. The sum o f WTP of 1996):'' and (d) an average weight o f 0.31 individuals and households i s then used as a (WHO, 2004), the estimated number o f DALYs measure of the cost to society of aparticular risk lost from morbidity in children under the age of o f mortality. This approach has increasingly five years i s estimated at 15,000 DALYs per been applied in many countries in Europe and year. North America for more than 20 years to improve safety standards and environmental Morbidity (population above 5 years). The regulations. The WTP approach has largely been incidence o f diarrheal disease among the appliedin studies o f adult mortality risk. population over five years of age is also accounted for. N o survey or study in Iran has A recent study in Iran (Farhoud, 2003) has assessed the prevalence o f diarrheal disease compared the results o f various WTP studies among the population over five years. For the -usingGNI12--to deriveavalue ofstatistical around the world and adjusted the results to Iran purpose o f this study, the prevalence ratio - measuring the ratio of children under five years life of US$251,000 in 2002. For a more detailed o f age with diarrhea to the population above five explanation o f the concept o f the value o f years o f age with diarrhea -will be based on the statistical life, refer to chapter 2. results obtained from studies conducted in Colombia, Vietnam and the provinces o f Qena Another valuation technique is the human and Damietta in Egypt. The average prevalence capital approach (HCA). This approach ratio obtained i s 5. Therefore, if 22 percent of estimates the cost of mortality as the loss of children under the age of five are likely to have lifetime income from the time of death. This diarrheal diseases over a IO-day period, then estimate is based on income earned fiom age 20 about 4 percent o f the population over the age of to 65, with income approximated by GDP per five is likely to have diarrheal diseases over a capita. IO-day period. With a population (over five years o f age) o f about 57 million, the estimated Valuing DALYs lost. For the purpose o f this number of cases of diarrheal disease is about 65 study, a DALY lost was valued usingthe WTP million per year. Based on (a) an average approach as an upper bound and the HCA as a duration of 4 days; (b) an avoidance ratio o f 85 lower bound13. These estimates resulted in the percent; (c) a severity weight of 0.11 (Murray valuation o f a DALY at US$10,50014 as an and Lopez, 1996); and (d) an age weight o f 1 upper bound and US$1,740 as a lower bound. (WHO, 2004), the estimated number o f DALYs The total number o f DALYs lost - combining lost from morbidity among the population mortality and morbidity) was approximately greater than five years of age is estimated at 328,000 in2002. Therefore, the total annual cost 67,000 DALYsper year. o f lost DALYs due to inadequate water and Valuation. Mortality and morbidity associated with diarrheal illness have a cost to individuals, GNI: GrossNational Income families, and society at large. The cost is not l3 The value per DALY using the VSLY approach is 6 only in the form of medical costs, but includes times the value of a DALY using the human capital (or the cost o fpain and sufferingand loss o f life. lost productivity) approach. It could be argued that it is not appropriate to use the former when valuing minor For mortality, a monetary cost cannot be placed illnesses such as a four-day episode of diarrhealdisease. WTP studies to avoid minor illnesses are not likely to on the loss of life. However, valuation produce such large multiples of lost productivity as one finds whenvaluing more seriousillnesses. I'The severityrate of 0.11 was assumed given a scale of 0 l4It i s assumed that one death corresponds statistically to (beinginperfecthealth) and 1 (representingdeath). 24 DALYs lost (see chapter 2 for adetailedexplanation). 18 sanitation ranges from a low of US$600 million severe diarrhea i s about US$1.25 .I5Thus, the to a high o f US$3,400 million (equivalent to total cost o f treating severe diarrhea in children average o f IRR 15 billion or 1.76 percent o f i s about US$170 million per year. GDP). Based onprevalence ratios estimated in studies Since there are many complex conceptual issues on Colombia, Vietnam and Egypt, it is estimated involved inthe valuation o f a child's life, neither that if 40 percent of children under five years o f the human capital approach nor the value of a age are taken to clinics for treatment, it i s likely statistical life provides a completely satisfying that about 22 percent o f the population over five solution. Therefore, the calculations made above years of age would be treated inhealth clinics as should be considered a first indication o f well (about 14 million cases). Using the same damage, while further research would certainly economic costs -estimated above - the be beneficial. estimated treatment costs are about U S 1 2 5 millionper year. More generally, the large range given above reflects the fact that two different valuation Inaddition, when a child is seriously ill,time is methods have been used. The lower bound taken from a caregiver, often a mother or estimate of damage was obtained on the relative, to look after the child. This time has an assumption that one year of life lost (due to opportunity cost, either in terms o f leisure or death or disability) causes a monetary loss other activities. For each case o f severe diarrhea, equivalent to an individual's average annual it is assumed that two days are taken by a income (approximated by annual GDP per caregiver to look after a child. This i s a capita). However, evidence suggests that an conservative assumption, given that on average individual's willingness to pay to avoid each case i s likely to last four days. This time is disability or death goes much beyond the valued using the average household income in amount implied by the human capital approach. rural areas o f about US$4.60 per day (SCI, As an approximation of willingness to pay, we 2004). The total cost o f lost time due to care use the "value of a statistical life" estimated in giving i s therefore estimated to be US$178 worldwide studies. We refer to this as the upper million. bound estimate. It implies a damage cost nearly six times higher than the one obtained with the Children with mild and moderate cases o f human capital approach, a difference confirmed diarrhea are usually not taken to health clinics. inother studies onthe same subject. According to MOH (1997) about 47 percent o f diarrhea cases (or 23 million cases) are treated at Valuing the cost of treatment and care giving. home using oral rehydration therapy (ORT). At Inthe case of morbidity, in addition to the cost an estimated cost o f US$1 per ORT treatment, of pain and suffering from illness -measuredby the total cost o f treatingmildand moderate cases DALYs- one should also add the medical costs o f diarrhea i s estimated at U S 2 3 million per o f treating diarrhea and the time spent by family year. members to care for sick children. Total health costs related to inadequate water Children with severe cases o f diarrhea are often supply, sanitation and hygiene are presented in taken to a health clinic for treatment. According table 3.1. to data provided by health care experts in Iran, about 40 percent of diarrhea cases are treated in health facilities (i.e. about 20 million cases). The economic cost of visiting a doctor is on average US$7.5 and the cost o f medication to treat Is Equivalent to about IRR 60,000 for a doctor's visit and IRR 10,000 for medication. 19 Table 3.1 Water: valuation ofhealth impacts in2002 Table 3.2 Underground water: sources and amount Water Low High suppliedin2001-2002 (millions ofcubic meters) Estimate Estimate Mortality(DALYs lost) Main Basins Wells Qanats US$millions 430 2,570 Mazandaran 4,100 400 IRRbillions 3,410 20,490 % of GDP 0.38% 2.27% PersianGulf&sea ofOman 10,600 1,100 UrumiehLake 2,300 200 Morbidity(DALYs lost) CentralPlateau 25,300 5,700 US$millions 140 860 EasternBorder 700 500 IRRbillions 1,140 6,840 % of GDP 0.13% 0.76% Ghara-Ghoom 1,900 300 Total 45,000 8,200 Cost of illness US$ million 520 520 IRRbillion 3,940 3,940 % of GDP 0.44% 0.44% Total Increase in underground water extraction. The US$millions 1,090 3,950 IRRbillions 8,490 31,270 rapid increase in the number o f wells has % of GDP 0.95% 3.47% contributed to a drastic increase in water extraction over the past three decades. In2002- 2003, water extraction (from wells and qanats) 3.3 UNDERGROUND WATER reached about 53.2 BCM. This figure was provided by the Groundwater Section o f the Groundwater plays an important role in Iran's Ministry of Energy. However it is important to development. Groundwater exploitation note that there i s no consensus on the exact constitutes nearly 54 percent of current total amount o f groundwater extraction inIran. Some water withdrawal. There are six main water sources estimate it at 50 BCM and others at 58 basins and over 600 aquifers. The main water B C M (World Bank, 2004a). basin is the Central Plateau, which supplies about 44 percent o f underground water According to the Groundwater Section o f the resources. MinistryofEnergy, the extraction of45 BCMof water from deep and semi-deep wells exceeded Before the 1960s, groundwater extraction was the safe yield (of 41.8 BCM) by 3.2 B C M in estimated at 20 B C M per year. Extraction was 2002. The amount of water over-extracted from mainly carried out by qanats (subterraneanwater eachbasin is indicated intable 3.3 below. canals) and natural springs (World Bank, 2004a). Today the bulk o f the extraction is Table 3.3 Over extraction of groundwater in main carried out through wells (see table 3.2). Since basins in2002-2003 (millions of cubic meters) 1970, the number o f wells has increased MainBasins Over-extraction significantly. Currently there are about 450,000 from each basin wells in Iran (124,000 deep wells and 326,000 Mazandaran semi-deep wells). PersianGulf& Sea of Oman UrumiehLake CentralPlateau 2,4 10 EasternBorder 70 Ghara-Ghoom 260 Total 3,240 20 Overexploitation o f groundwater inIranisnot as Headof the Groundwater Section at the Ministry severe as in some other countries (such as India, o f Energy,16to assess the change ingroundwater Mexico, and Yemen). Nevertheless, over- levels between 1991 and 2001 (third column of extraction takes place in about one-fourth o f table 3.4). The reason for these revised plain aquifers, mostly those located in the calculations is to confirm the reliability o f the Central Plateau, such as Mashad, Kerman, findings o f the first two columns intable 3.4. A Rafjsanjan, Esfahan and Qom. Inextreme cases sample o f 135 aquifers - considered - such as in the Hamedan aquifer - the representative of total aquifers in the country - groundwater table has dropped by 20 meters was selected. In 1991, the average groundwater (World Bank, 2004a). Severe decreases in level of these aquifers was estimated at 29 underground water levels in some areas - such meters. This dropped to 34 meters in 2001. This as Zarand - have damaged farms, gardens and means an average annual decrease of 0.5 meters, residential areas. In other areas, this has led to which is in line with the estimated long term the penetration o f salty waters into the aquifers annual change. For the purpose o f this study, and the `destruction o f soil quality (MOJA, long term average annual change was 2002). considered. Decrease in underground water level. The main Increase in pumping costs. To assess the effect of unsustainable exploitation o f damage costs resulting from decreasing underground water i s a decrease in the water underground water levels, the additional table and the eventual exhaustion o f the pumping costs needed to extract water from a resource. Over the past 30 years, excessive deeper level were calculated. The main exploitation of underground water - primarily additional pumpingcost i s likely to be additional through wells - has resulted in a decrease in fuel consumption (variable costs). The average water levels. Based on information provided by diesel consumptionrequired to extract one cubic the Groundwater Department of the Ministry of meter o f groundwater per meter depth is about Energy, the average long-term annual decrease 0.004 liters." inwater levelsis0.41meters(table 3.4). Considering a long-term annual decrease in groundwater levels o f 0.41 meters, this would result in an annual incremental consumption o f Average Average Average diesel of 0.002-liters per one cubic meter. MainBasins change long-term change 2002-2003 change 1991-2001 In 2001-2002, 45 billion cubic meters were extracted from deep and semi-deep wells in Iran Mazandaran 0.13 -0.24 (table 2). The safe yield i s considered to be 41.8 PersianGulf& -0.26 -0.26 Sea of Oman billion cubic meters (the extraction o f 3.2 billion cubic meters above the safe yield is considered UrumiehLake 0.72 -0.06 overexploitation, and i s not accounted for). The CentralPlateau -0.4 -0.47 annual damage cost of underground water EastemBorder -0.45 -0.25 -0.84 -0.79 -0.31 -0.41 -0.5 average l6Our appreciation goes to Mr. Javad Javari, Head of the Groundwater Section, Bureau of Water Resources (I)Groundwater Section, Bureau of Water Resources Investigation, Water Resources Management Company Investigation, Water Resources Management Company, at the Ministry of Energy. Ministry of Energy, 2005 (2)Calculations undertaken for a sample of 135 aquifers by This estimate i s based on an average consumption of the Head of Groundwater Section at Ministry of Energy in 0.15 liters of dieselto extract one cubic meter of water at 2005for this report. adepthof 34.8 meters in 2003. This estimateis based on calculations provided by Mr. Anoosh Noori Esfandiari, In the context of this study, a separate set of HeadofWater EconomicsBureau, Iran Water Resources calculations were conducted, with the help of the Company, Ministry of Energy, 2005. 21 overexploitation amounts to US$12 million cost of digging new wells to compensate for (table 3.5). overexploitation ranges from US$128 million to US$l58 million in2002. The total annual damage cost o f underground Safe yield of water extractedfrom wells 41.71 billion m3 water depletion in terms o f incremental fuel Average consumption of diesel per one 0.004 liter costs and well replacement is estimated at meter depth to extract one cubic meter of US$332 million (or IRR 2.643 billion or 0.29 water percent of GDP). Average annual decrease of ground- water 0.41 m levels Groundwater pollution. In addition to damage Marketprice of one liter of diesel" US$O.18/1 resulting from groundwater overexploitation, the Total annual incrementalcosts US12 million costs associated with groundwater pollution must also be estimated. Groundwater pollution Considering a time horizon o f 25 years and a i s the result o f several factors including surface social discount rate of 4 percent, the average water pollution, untreated wastewater discharge annual decrease o f 0.41 meters would result ina through bores, and leachate from un-silted present value incremental cost of around landfills. To date, specific data on the extent and US$189 million in2002. type of groundwater pollution in Iran i s not available. However, for the purpose o f this Well replacement costs. In the previous study, a small survey was commissionedby the sections, the cost of pumping water from deeper National Water and Wastewater Engineering levels was assessed to approximate the damage Company to calculate the number o f wells costs of groundwater overexploitation. However, replaced due to groundwater pollution. In 26 in addition to these costs, overexploitation of provinces surveyed (see annex I11 for more groundwater also results in abandoning wells details), about 1,800 new wells - for potable and the digging o f new ones. Between 1996 and water - were developed in the Third 2003, about 28,000 wells were replaced in the Development Plan and 250 were abandoned country, with an average of 3,500 wells per because of water pollution. That i s an average of year.'' Usually, wells are replaced due to a 62 wells abandoned per year. Based on decline in underground water levels resulting replacement costs ranging from US$43,000 to from overexploitation or worn out equipment. US$53,000 (explained above). the cost o f According to expert opinion at the Groundwater replacing 62 wells per year i s around US$3 Conservation Bureau in the Ministry o f Energy, million per Year. It i s important to note that this 85 percent o f average annual replacement i s due analysis is limited to the cost o f replacing wells to the decline in underground water levels. The and does not represent the overall damage cost unit cost of digging a new well ranges from relatedto undergroundwater pollution. US$43,00OZ0to US$53,000.21 As a result, the The diesel price is based on Singaporewholesale prices 3.4 WATER EROSIONAND DAM (average price in December 2002). Singapore is a major SEDIMENTATION refinery center, considered to be operating at industrybest practicelevels. The price is widely used as abenchmarkfor pricing inthe Asia-Pacific region. Reference:United States Iran has 151 dams in operation with a capacity EnergyInformation Administration. o f 25 billion cubic meters (BCM). More than 90 Dataprovidedbythe Groundwater Sectionofthe Bureau percent o f this water - or 23 B C M - is currently of Water Resources Investigation, Water Resources used for irrigation (World Bank, 2004a). Water ManagementCompany,Ministryof Energyin2005. from storage and diversion dams is used to 2oReference: expert opinion providedby Mr. Anoosh Noori Esfandiari, Head of Water Economics Bureau, Iran Water 21 Information provided by Mr. Elahi Panah from the Resources Company, Ministry of Energy, 2005. (2003 National Water and Wastewater EngineeringCompany pricesare adjustedto 2002). inMarch2005. 22 irrigate 22 percent of total irrigated areas (i.e. 1.6 million o f 7.4 millionhectares). The watershed areas of dams under operation (a) Average yield ofwheat on irrigated 3.42 t/ha total some 10.6 million hectares.22Over the last land(NationalCoastalProfile, 2001) four decades, intensive deforestation and rangeland overgrazing, in addition to other (b) Average yield ofwheat onrainfed 1.09 tiha land(National CoastalProfile, 2001) factors, have resulted in soil erosion in (c) Incrementalproductivity of 2.33 t/ha watershed areas. According to the Ministry of irrigation water (c) = (a)- (b) Jihad and Agriculture (MOJA, 2004) soil Water requiredto imgate 1haofwheat 4,140 m3 erosion i s estimated at 30 tons per hectares per fie1ds' year and sedimentation at 10tons per hectare per Water productivity (ton of wheat/m3) 0.0005 t/m3 year. Based on the same source, dam World price ofwheat US$170/ton sedimentation i s resulting in a loss in reservoir Productivity of irrigation water uS$O.I 0/m3 storage capacity o f 236 million cubic meters per year. Inother words, every year, one per cent of Assuming that dams are utilizedat full capacity, potential dam capacity i s lost due to the average annual loss o f 236 cubic meters o f sedimentation. dam reservoir storage capacity results inthe loss o f around 118,000 tons o f wheat, with an Inthis report, the damage costs resulting from estimated value o f US$22 million. Using a dam sedimentation will be assessed in terms o f social discount rate o f four percent, the net the potential loss in irrigated crops. Since a present value o f the damage costs due to dam significant portion o f irrigated land (31percent) sedimentation in 2002 for a time span of 25 in Iran is cultivated with wheat (World Bank, years totals US$369 million. 2004a), this study will focus on the potential wheat yield loss. In addition to the loss in irrigated area, dam sedimentation results in dredging activities in As presented in table 3.6, the average irrigation networks. In 2002, operating costs productivity o f one cubic meter of irrigation were estimated at US$1.6 million (Ministry o f water is about US$O.lO (in terms o f wheat EnergyDatabank, 2003). production). The total annual damage cost o f dam sedimentation, therefore, amounts to US$370 million (or IRR 2,950 billion or 0.33 percent of GDP). Another cost associated with sedimentation i s the shortening o f dam life and the necessity o f building new dams. However, no information was available to enable us to calculate the additional infrastructure costs resulting from a shorter dam lifespan. Therefore, the estimates provided in this section are believed to underestimate the total cost o f water erosion and dam sedimentation. 22 Ministry of Energy Databank. 2003. "Information about Siltation in Irrigation and Drainage Networks." Water ResourcesManagementCompany. 23 Soil and Water Research Institute. 1997. Estimation of Water Needs for Main Field Crops and Horticulture. Volume I: FieldCrops. 23 3.5 TOTAL DAMAGE COSTS Table 3.7 presents the environmental damage costs associatedwith water pollution, inadequate potable water, sanitation and hygiene, groundwater depletion and water erosion. In total, estimated costs are US$3.200 million (or IRR 25,500 billion or 2.82 percent of GDP) per year. It should be noted that there are likely to be other aspects o f water pollution and water management for whichcosts are not estimated in this report. Pollution of rivers and lakes by industry, sewage and agnculture - as is the case along the Karoon fiver - reduce the river's recreational value and associated quality of life for Iranian residents. However, no estimate was provided in this report due to a lack of data. Another aspect i s agricultural water management. Continuedpollution o f surface and groundwater, and the over-extraction o f aquifers could pose a serious threat to agricultural development inthe longrun. Table 3.7 Water: annual damage costs (mean estimate, 2002) Impacts millions billions Healthimpactsmorbidity) 4,000 0.44 Healthimpacts (cost of illness) 495 3,940 0.44 Groundwater depletion 335 2,670 o.29 andpollution Damsedimentation 370 2,950 0.33 Total 3,200 25,500 2.82 24 4. Air 4.1 OVERVIEW OF URBAN AIR POLLUTION o f private cars that enter the city center (by allowing vehicles with odd and even license Air pollution is one of the most significant plate to enter on alternate days). It has launched environmental issues facing Iran, especially its a ten-year comprehensive plan to reduce air capital city, Tehran. The major cause o f air pollution in Tehran, Isfahan and other major pollution in Tehran i s exhaust from 2.4 million cities. Unleaded gasoline was introducedin2001 motor vehicles. Most vehicles are over 20 years and diesel fuel with a minimal amount o f sulfur old, with poor fuel efficiency and no catalytic also became available. Since 2000, all new converters. Many o f these cars are domestically Iranian-made cars are equipped with catalytic produced. Cars spewing black smoke are a converters. Since 2002, the Department o f the common sight in the streets of Tehran. The Environment and the Ministryo f Industrybegan problem is compounded by topographical the installation o f catalyzers and Compressed conditions (mountains to the north and east) and Natural Gas (CNG) systems inpublic vehicles. climatological factors (sunshine, frequent temperature inversions) that trap pollutants over An attempt is made inthis chapter to capture the the city. Tehran's high altitude also makes fuel health impact o f air pollution in major urban combustionless efficient. cities in Iran. The methodology used i s explained step by step and the results are The index o f air pollution, Pollutant Standard presented at the end o f the chapter. More details Index (PSI)24,reported 282 "unhealthy" days in about cost estimates are provided in annexes I1 2000.25On January 2, 2005, the pollution index and 111. reached 168 - close to "very unhealthy" levels. As a result, schools were closed and children, the elderly and the sick were advised to stay 4.2 MEASURINGIMPACT OF URBAN AIR THE indoors. By comparison, on the same day the POLLUTION ONHEALTH PSIinNew York was 52 and inBangkok 57.26 There is substantial research evidence fi-om In response to record levels of air pollution in aroundthe world that outdoor urban air pollution Tehran and other major urban cities in Iran, the has significant negative impacts on public government has recently taken steps to tackle the health, resulting in premature death, bronchitis, problem. It has, for example, limitedthe number respiratory disorders, and cancer. A comprehensive review o f such studies is provided in Ostro (1994). The air pollutant that 24 The PSI is an indexing system developed by US EPA to has shown the strongest association with these measure pollution levels o f the major air pollutants. It is health endpoints i s particulate matter (PM),'7 used to report to the public an overall assessment of a and especially fine particulates o f less than ten given day's air quality. The PSI is a composite indicator computed from ambient levels of ozone, nitrogen microns in diameter (PM,,). Research in the dioxide, sulfure dioxide, carbon monoxide and UnitedStates inthe 1990s and most recently by particulate matter. Once a day the highest concentration Pope et a1 (2002) provides strong evidence that o f each o f the five pollutants is identified and converted it is even smaller particulates (PM,.,) that have into a value on the PSI scale. A PSI o f 100 corresponds the greatest health effects. Gaseous pollutants to the ambient air standard established under the Clean Air Act. A PSI value in excess of 100 means that the (SO2, NOx, COYand ozone) are generally not ambient air concentration violates the standard and the thought to be as damaging as fine particulates. pollutant is in the "unhealthy" range". A PSI value in However, SO2 and NOx may have significant excess of 200 corresponds to a "very unhealthy" health consequencesbecausethey can react with situation For more information refer to: www.ascc.org 25www.atiehbahar.com ~______ 26www.aljazeerah.com 27Also called total suspended particulates (TSP). 25 other substances in the atmosphere to form Table 4.1 Air pollutants inmajor cities, 2002 particulates. Cities I Average Average Average ~ PMIO TSP PMlO This report will focus mainly on the impact of fine particulates (PMlo and PM2.s)on health. It Tehran 100 100 will also briefly address the impact o f lead Mashad 85 Isfahan 102 102 pollution and the loss of recreational value due Shiraz 152 76 to air pollution. Tabriz 69 69 Ahwaz 162 81 Health effects of fine particulate (PMloand Karaj 100 Other cities 77 PM2.5) There are five steps to quantify the health Unfortunately, monitoring o f PM2.5 i s not impacts of air pollution. First, pollutants need to available for cities in Iran. It has therefore been be identified and their concentrations measured. necessary to convert PMlo to PM2.s based on Second, the number of people exposed to a observed ratios from the United States. The ratio pollutant and its concentration needs to be depends on various factors: the topography o f calculated. Third, the health impacts from the city (arid, semi-arid, agricultural, etc.) and exposure should be estimated based on the type of emission sources (fuel combustion, epidemiological data. Once the health impacts industrial emissions, waste burning, mobile are quantified, the value o f this damage can be sources, etc.). Since large urban cities in Iran estimated (steps four and five). such as Tehran, Mashad, Isfahan, Shiraz, Tabriz Ahwaz andKaraj have highvehicle emissions, it Step 1:Monitor air pollutants i s plausible that the P M ratio inthese cities falls in the range of 0.55-0.75 (as in some eastern Air quality monitoring inIranian cities is sparse. parts o f the United States). For smaller cities - The government has made major efforts to build with populations less than one million persons - a monitoring network, but additional work still it is plausible that the P M ratio falls inthe range needs to be done. The main cities equipped with of 0.4 - 0.5 (as in some parts o f the Midwest in monitoring stations are Tehran and Isfahan. the UnitedStates). Monitoring data for PMlo were obtained for Tehran, Isfahan and Tabriz based on existing Step 2: Determinethepopulation exposed stations. Monitoring data for TSP were obtained for Shiraz and Ahwaz. As PMlo i s a component The second step in estimating health impacts is o f TSP, it is possible to estimate the levels of to determine how many people are exposed to a PMlo where TSP is available. No monitoring pollutant. Most city population estimates were data exist for Karaj and Mashad, in these two taken from the Statistical Center of Iran (2004). cases, extrapolation from cities with similar It was assumed that 90 percent of Tehran's conditions was used as an approximation. Other population i s exposed to air pollution, while 80 cities represent all cities in Iran with a percent o f the population o f all other cities was populationranging from 0.1 million to 1million exposed to air pollution.29 persons. PMlo levels are based on average projections for all cities estimated by the Some health outcomes affect only certain Development Economics Research (DEC) group segments of the population such as adults or at the World Bank.28Most data obtained refer to children. As only total population data i s 2002. available at the city level, the number o f adults and children in each city had to be estimated. 29 Air pollution experts' advice was used to establish the 28www.worldbank.org/nipr/Atriudmapping.html population exposed to air pollution ineach city. 26 This was done by applying national averages to a city's population. Mortality. Pope et a1 (2002) provides the most comprehensive and detailed research study to Step 3: Establishing dose response coefficients date on the relationship between air pollution and mortality. The study found a statistically The third step i s to determine the health impacts significant relationship between levels of PM2.5 that result from exposure to PMlo and PM2.5. For and cardiopulmonary and lung capcer mortality this, the study relied upon scientific literature. rates, controlling for various factors (age, Based on the current status of worldwide smoking behavior, education, marital status, research, the risk ratios, or dose response body weight, occupational risk factors, etc.). coefficients from Pope et a1 (2002) are likely to Therefore, in order to apply the mortality be the best available evidence for the mortality coefficient in table 4.2, baseline data on total effects o f ambient particulate pollution (PM2.5). annual cardiopulmonary and lung cancer deaths These coefficients were applied by the World are required. These data were obtained from the Health Organization in the WorldHealth Report Ministry of Health (MOH) in Iran.30Data for 2002 (WHO, 2002b), which provided a global cardiopulmonary and lung cancer deaths for estimate of the health effects o f environmental 2002 are based on the averages o f 18 provinces risk factors. For morbidity effects, dose response surveyedby the Ministryo f Health. coefficients from Ostro (1994) and Abbey et a1 (1995) have been applied. Ostro (1994) reflects A threshold level for PM2.5 o f 7.5 ug/m3has a review of worldwide studies, and Abbey et a1 been applied. Below this level, it is assumed (1995) provides estimates of chronic bronchitis there are no mortality effects. This is the same associated with particulates (PM,,). Mortality procedure as applied by the World Health and morbidity Coefficients are presented intable Organization (WHO, 2002b). No threshold level 4.2. While mortality effects are based on PM2,5, hasbeen applied to morbidity. the morbidity effects assessed in most worldwide studies are basedon PMlo. Morbidity. Morbidity health endpoints considered are chronic bronchitis, hospital Table 4.2 Urban air pollution dose-response admissions o f patients with respiratory coefficients problems, emergency room visits (or hospital AnnualHealthEffect Dose- per 1ug/m3 out-patient visits), restricted activity days, lower response annualaverage respiratory infections in children and respiratory coefficients ambient concentration symptoms. These are the most common health Of: endpoints considered inworldwide studies on air Mortality(% change in 0.8% PM2.5 pollution. In the absence o f incidence data for cardiopulmonaryand Iran, coefficients are expressed as cases per lungcancer mortality) 100,000. It should be noted that it would be Chronic bronchitis(per 0.9 PMlO preferable to have incidence data and use 100,000 adults) Respiratoryhospital 1.2 PMIO coefficients that reflect percentage change in admissions(per 100,000 incidence. However, these are not readily population) available for Iran. Emergencyroom visits 23.5 PMlO (per 100,000 population) The health effects o f air pollution can be Restrictedactivity days 5,750 PMlO converted to disability adjusted life years (per 100,000 adults) (DALYs) to facilitate a comparison to health Lower respiratoryillness 169 PMlO effects from other environmental factors and inchildren(per 100,000 between mortality and morbidity using a children) Respiratorysymptoms(per 18,300 PMIO common indicator. DALYs per 10,000 cases o f 100,000 adults) Source: Pope et a1 (2002) r mortalitv coefficient. Ostro (1994) andAbbey et al. (1995) for mordidity Coefficients. 30www.mohme.gov.ir 27 various health end-points are presented in table urban air pollution. Cases of less severe health 4.3 below. impacts are also presented intable 4.4. Table 4.5 shows how many deaths could be HealthEffect DALYslost per averted inmajor Iranian cities if PMlo emissions 10,000 cases were controlled. Mortality 80,000 Chronic bronchitis (adults) 22,000 Table 4.5 Estimated health impacts of urban air Respiratoryhospital admissions 160 pollution inmajor Iraniancities, 2002 Emergency roomvisits 45 City I 1 Population Deaths Deaths Restrictedactivity days 3 averted averted Lower resp. illness in children 65 Respiratory symptoms (adults) 0.75 GreaterTehran 5,320 Mashad 1,100 Isfahan 1,140 Shiraz 450 6% Tabriz 2 530 5% Step 4: Health Impacts In terms of annual DALYs lost, mortality accounts for an estimated 55 percent, chronic Usingthe approach described above, the annual bronchitis around 14 percent, restricted activity health effects of ambient particulate air pollution days (RADS) 13 percent and respiratory in major cities in Iran were estimated and are symptoms 10 percent. presented in table 4.4 below. More detailed information is presented inthe annexes. Step 5: Monetary Valuationof Health Impacts Having quantified the health impacts o f particulate emissions, it i s possible to measure Healthcategories Total Cases Total economic losses due to air pollution. There are DALYs several approaches to valuing the health impacts Prematuremortality 13,200 105,600 o f air pollution. Chronic bronchitis (adults) 12,500 27,500 Respiratoryhospitaladmissions 28,600 500 Valuing DALYs lost. As discussed in chapters Emergency roomvisits 560,300 2,500 2 and 3, a DALY lost will be valued using the Restrictedactivity days 83 million 24,800 HCA approach as a lower bound and the WTP Lower resp. illness (children) 1.6 million 10,300 as an upper bound. For the lower bound, GDP Respiratorysymptoms (adults) 263 million 19,800 per capita o f US$1,740 will be used. For the Total 191,000 upper bound, VSL measured through WTP methods (Farhoud, 2003) o f US$10,500 will be used. The total number o f DALYs lost Urban air pollution i s estimated to cause around (combining mortality and morbidity) was 13,200 premature deaths annually. Estimated approximately 191,000 in 2002. Therefore, the new cases o f chronic bronchitis are about 12,500 annual cost o f DALYs lost due to air pollution per year. Annual hospitalizations due to ranges from US$330 million to US$2 billion. pollution are estimated at 28,600 and emergency room visits/outpatient hospitalizations at Cost of illness. Inaddition to pain and suffering 560,300. Moreover, every year every adult resulting from illness -already captured through suffers 2.1 restricted activity days owing to DALYs - one should also add the cost of treating illnesses and lost work days. Interviews were conducted in Iran among health experts in 2004/2005 to identify the treatment costs o f 3'Dueto rounding, numbersmaynot add upexactly. various respiratory diseases. The following costs 28 were provided and reflect an accurate economic However, a study in Rabat-Salk in Morocco cost for treatment by most privately-owned (Belhaj, 2003) assessed households' WTP for clinics andhospitals. improved air quality3'. The study revealed a willingness to pay ranging from 67 to 82 dirhams per household in 1995. While most o f Health problems Unit costs Unit costs this WTP is likely to be associated with health (US$) (Rials) concerns, ten percent i s retained to reflect the Hospitalization(for 75 600,000 cost of discomfort. This figure was adjusted to respiratoryillnesses) Iran (using the GDP per capita differential) and Doctor visit 13 100,000 adjusted to 2002 prices. It was applied to Emergencyvisits 50 400,000 households of the seven main urban cities. This Lost work day (including 8 32,000 amounts to about U S 4 4 million to 54 million housework) peryear. Lost caregiver time 8 32,000 Linkagesto previouswork Based on costs providedin table 4.6 the cost o f treating respiratory problems and the value o f Inthis report, the total impact of air pollutionis work days lost was estimated at US$262 million estimated at around 1.3 percent o f GDP in 2002. in2002. It is interesting to mention that a study recently completed by the World Bank (2004e) on the Impact of lead on children's health impact o f the energy sector on the environment in Iran, assessed the damage costs of urban air The Government o f Iran recently took major pollution. The Energy and Environment Review steps to eliminate lead pollution. In 2001, it (EER) used a different methodology -than the introduced unleaded gasoline and in 2005 it one applied in this report- to compute the requiredall gasoline sold to be unleaded. There damage cost from air pollution. The EER relied i s no comprehensive monitoring data for lead on a technique called ExternE widely used by levels in Tehran, though average concentrations the European Union (EU). This methodology in 2002 were estimated to be 0.67 ug/m3based looks at total emissions o f four major pollutants on information provided by the Air Quality (PMlo, SOX,NOx and CO) and applies damage Control Company in Tehran (AQCC). This cost (per ton o f pollutant) estimated in EU average is much lower than in previous years. countries - that are adjusted to Iran using According to Bahrami (2001), lead purchasing power parity (PPP) estimates o f per concentrations in dense traffic areas reached 3.8 capita GDP. In the EER annual damage costs ug/m3 in 1998. Exposure to lead can have fi-om urban air pollution in 2001 were estimated significant impacts on health, especially the at approximately 1.6 percent o f GDP. neurologcal development of children (reduction in intelligence). Based on lead concentration in 2002, health impacts have been estimated at US$18 million to US$35 million. Further detailed are provided inannexes I1and 111. Measuring loss of recreational value due to urban air pollution While the greatest percentage o f the cost of 32 This study assesses households' willingness to pay for a urban air pollution i s associated with health 50 percent reduction o f air pollution caused by road effects, air pollution also causes discomfort, and traffic in Rabat-Salk using contingent valuation and reduces visibility and scenic beauty. No data are hedonic price methods. Both empirical analyses are based on the same set of individuals. A sample of 400 available to assess the costs of discomfort and households was interviewed (out of a total of 235,000 reduced visibility and scenic beauty in Iran. householdsin bothcities). 29 4.3 MEASURINGIMPACT OF INDOOR AIR THE Use of biomass for cooking in Iran. In Iran, POLLUTION 786,000 tons o f oil equivalent of biomass are usedevery year (WB, 2004d). This is equivalent Overview. The use of wood or other biomass to nearly three million metric tons o f biomass. fires for coolung i s closely associated with Assuming that a household, using solid biomass indoor levels o f particulate matter. for coohng, consumesthree metric tons per year Epidemiological studies (see Smith et al. (2000) then one million households are using biomass. for a good review) show that acute respiratory This is equivalent to 7.8 percent o f total infections (ART) and chronic obstructive households in the country. This value is used as pulmonary diseases (COPD) are strongly related an approximation o f the exposure rate to indoor to indoor air pollution. smoke. A major shortcoming o f the data i s the lack o f detail about cooking methods. Data on PMlO indoor concentrations is not Epidemiological studies show that health recorded in country statistics. Available studies outcomes strongly depend upon the type o f make use o f detailed healthsurveys or rely on ad stove used, the existence o f chimneys, and hoc experiments. Other studies take another having a home's lutchen ina separateroom. approach, that is, they measure the relationship between household characteristics and the Mortality from respiratory infections. The likelihood of a particular disease occurring inthe methodology also requires baseline data on exposed population. The parameter that mortality. Baseline data on ART and COPD expresses, for example, the likelihood of dying deaths are available for the EMRO-BWHO sub- due to COPD in a house consuming solid region. We used the same mortality data and biomass for cooking is termed `odds-ratio' and applied it to the Iranianpopulation. i s the key element o f the analysis. The data i s summarized intable 4.7. Everyyear, Figure 4.1 Comparing the likelihood of respiratory some 6,000 children under the age o f five die illnesses under differentbiomass use assumptions [y] due to lower respiratory infections (LRI). Among female adults, it i s estimated that nearly Consumptionof biomass 14,000 die to LRIor COPD. Table 4.7 Estimated mortality o f children and female adults from LRIand COPD inIranin2002 Nlness Group Baseline Deaths Lower Respiratory Children under 5 6,000 Infection years of age Lower Respiratory Adult female (>15 6,200 Infection Years) ChronicObstructive Adult female (>15 7,800 PulmonaryDisease years) InIran, there are noavailable statistics onindoor Source: WHO,2004 concentrations of P M10. Thus, the analysis used in this report relies upon the odds-ratio used in Illness from respiratory infections. In order to other international studies. There are two obtain baseline data on morbidity, the essential data requirements to apply the odds- population at risk has to be multiplied by the ratio method to Iran: the first is to calculate the incidence rate o f the illness considered. Two population living in households that use solid weeks' incidence o f ARI in children is 24 per biomass for coolung; the second is baseline cent33(UNICEF website). The incidence o f AFU levels of mortality and morbidity inIran. 33 This information has been obtained from the UNICEF website. The data sources for this information are DHS, MICS andother nationalhouseholdsurveys. 30 for the female population over 15 i s estimated to An estimated total of 43,000 DALYs are lost be 2 per cent (World Bank staff calculations due to indoor air pollution every year. The based on WHO tables for Years of Life with valuation part uses a value per DALY ranging Disability). The incidence of COPD on the from a lower bound, estimated by GDP per female population over 15 i s taken from capita and an upper bound, estimated by the Shibuya, Mathers, Lopez (2001). Baseline value o f a statistical life calculations (see chapter morbidity data i s summarized intable 4.8. 2 for detailedinformation). Table 4.8 Estimated morbidity o f children and Indoor air pollution causes about 3 million cases female adults from LRIand COPD inIranin2002 of LRIin children under five years o f age every Illness Group Baseline year. UNICEF estimates that 93 per cent o f Casesof cases are taken to an appropriate healthprovider. illness This number is then usedto compute the cost o f Lower Respiratory Childrenunder 5 35,109,000 illness linkedto indoor air pollution (table 4.10). Infection years of age Lower Respiratory Adult female (>15 5,960,000 It is assumed that each case of LRIrequires a Infection years) day o f caregiver's time. This time i s valued Chronic Obstructive Adult female 015 18,000 usingthe average rural household wage income PulmonaryDisease years) (US$4.60 per day). Source: WHO,2004, C K E F website,Shibuya,Mathers, Lopez (2001) Table 4.10 Cost of illness from indoor air pollution inIranin2002 Health costs of indoor smoke. The odds-ratio US$ adopted inthis study assume that the probability I Numbers millions o f contracting a given respiratory illness ifusing Cases(LRIin 3,23 3,422 solid fuels is twice as high as the probability if children) not using solid fuels (odds-ratio i s 2.3). This Casestaken to health 3,007,083 assumption is based on Smith et al. (2004). A provider 39 major simplification i s being done here, since Days of caregivers 3,233,422 15 using solid fuels does not mean -per se - that lost people are more exposed to indoor air pollution. Total 54 Source: WHO, 2004, 6 JICEF website, Shibuya, Mathers, Table 4.9 Mortality, morbidity and DALYs lost due Lopez (2001) to indoor air pollutionL inIranin2002 Odds- No. of deathsdue DALYs Estimated total damage costs range from indoor ratio to indoor air air pollution range from US$128 million to pollution US$500 million per Year (equivalent to an Mortality average IRR 2.500 billion, or 0.28 percent o f LRIchildren 2.3 552 18,230 GDP) in2002. LRIadultwomen 2.3 726 7,980 COPD adult women 2.83 770 6,160 Sub-Tota 2,048 32,370 4.4 TOTAL DAMAGE COSTS Morbidity LRIchildren 2.3 3,233,400 5,383 Table 4.11 provides a summary o f damage costs LRIadult women 2.3 548,9 00 3,770 associated with urban and indoor air pollution. COPDadult women 2.83 2,200 1,170 Sub-Tota 3,784,500 10,320 Tota 42,700 Source: For Odds-rati0 Smith et al. 2004. For DALY per 8: type of death: WHO, 2r7104 31 Air US$ Rials GDP millions billions % Indoor air pollution Mortality 200 1,600 0.17 Morbidity 60 500 0.06 Cost of illness 55 430 0.05 Urban air pollution Particulates Mortality 640 5,100 0.57 Morbidity 520 4,100 0.46 Cost of illness 260 2,100 0.23 Lead 25 200 0.02 Recreational loss 50 390 0.04 Total 1,810 14,420 1.60 32 5. LandResources 5.1 OVERVIEW OFLAND Figure 5.1 Threats to landresources inIran RESOURCESINIRAN With a land area o f 160 million hectares, Iran is [T] one o f the largest countries in the world. The Economic key word to describe the country's territory is acrivitics I [-] I "diversity," both in terms o f climatic variability [ T I and geological conformation. Landresources are categorized into: (a) forests which occupy seven percent of the country's area and constitute 20 m Sec. 5.3 Sec. 5.2 Sec. 5.5 percent of forests in the Middle East and North Africa region; (b) arable land; (c) crop land; (d) pasture land; and (e) deserts and savannas. 5.2 CROPLANDSALINITY In2002, apcultural activities contributed 15.2 percent of GDP and provided almost one-quarter Salinity i s a natural phenomenon. The term is o f employment (World Bank, 2004a). In terms used to describe areas o f land with high salt of irrigated land, Iran stands fifth worldwide, concentrations. Plants and living organisms are after China, India, Pakistan and the USA. killed or their productivity severely reduced in Currently, about 7.4 million hectares are areas with highlevels o f salinity. Concentrations irrigated, some 34 percent with surface water o f salt into land and water develop naturally, but and 66 percent with groundwater (World Bank, the process can be enhanced by manmade 2004a). activities. In Iran, a major driver i s irrigation in dry land areas. All irrigation water contains salt. The relationship between environmental As croplands are irrigated and water evaporates, degradation and impacts on the rural salt is left behind.Ifthere is no drainage, salinity environment are various and complex (figure increases until the land becomes unproductive 5.1). The main cause o f land degradation i s and agricultural activities must be abandoned. likely the change in land use from forest (or Salinity i s expressed using the electric wetlands) to agricultural land. The impact is not conductivity o f soils, measured in decisiemens only in the direct loss of forest products but in per meter (dS/m). Table 5.1 (first two columns) the loss of forest services such as the prevention associates levels o f salinity with electric o f erosion and salinization. To quantify land conductivity. degradation, one could focus on drivers, such as deforestation, overgrazing, erosion and Salinity in Iran. Salt-affected soils are salinization. An alternate approach, and the one widespread inthe country, particularly incentral used here, i s to consider the recipients o f Iran, where salinity i s one o f the main factors degradation, that is, forests, wetlands, cropland, threatening sustained food production. Slightly- rangeland and cities. Figure 5.1 could be made to-moderately salt-affected soils (ECe= 4-16 more accurate by adding connectors between dS/m)34 cover about 25.5 million hectares and drivers and recipients o f impacts, but the soils with high salinity (ECe= 16-32 dS/m) representation is intended to identify issues cover some 8.5 million hectares. Slightly-to- rather than accurately describe the linkages. moderately salt-affected soils are mostly formed Degradation of forest resources i s more on the piedmonts at the foot of the Zagros and thoroughly detailed in chapter 6. This chapter Alborz mountains. Lands with severe to extreme focuses on croplands (section 5.2), rangelands (section 5.3), wetlands (section 5.4) and cities (section 5.5). 34dS/m is decisiemens per meter and is a measure of electrical conductivity (EC). 33 salinity are mostly located inthe central plateau, the Khuzestan and southern coastal plains, and the Caspian Coastal Plain (Moameni, 1999). Irrigated Cropping Salinity Yield crops pattem threshold decline Irrigated agricultural lands and their degree of (share of (dS/m) Per salinity are presented intable 5.1. Much of these irrigatedland) 1dS/m lands suffer from various levels of salinity. As Pulses 8% 1.5 15% much as 1.11 million hectares are reported to Fodder 11% 2 7% Fruits 14% 2 15% have soil salinity exceeding 32 dS/m. Even the Citrus 2% 2 15% most salt tolerant crops, such as cotton, wheat, Vegetables 5% 2 10% barley and sugar beet, would have severe Maize 2% 2 12% difficulties insuch saline conditions. Potatoes 2% 2 12% Rice 9% 3 12% Soybean 1% 5 20% Salinity Level dS/m Area % Wheat 31% 6 5% irrigated Sugar beet 3% 7 5% (million Barley 9% 8 5% ha) Cotton 3% 8 5% No salinity 0-4 2.67 36% Slight salinity 4-8 0.87 12% Moderatesalinity 8-16 1.18 16% Strongsalinity 16-32 1.55 21% There are no comprehensive data available o f cropping pattems inrelation to specific levels o f Very strong >32 1.11 15% soil salinity. To estimate the cost of salinity, it salinity i s therefore necessary to make a simplifying Total irrigatedland 7.4 100% assumption. Farmers are likely to adapt to Source: Moameni.,2004 salinity conditions. Optimal adaptation, if salinity was the only soil characteristic affecting Assessing degradation through changes in crop choices, would imply that all the salt productivity. The main consequence o f cropland sensitive crops (from pulses to potatoes in table salinity i s onproductivity. Table 5.2 presentsthe 5.2) are cultivated on the land that has salinity irrigated cropping patterns in Iran and the soil lower than 4 dS/m (see table 5.1). Rice, soybean salinity thresholds for the different irrigated and some wheat would then be cultivated on crops. The third column o f the table presents the land with 4-8 dS/m. The remaining wheat under percentage decline in yield per 1 dS/m over cultivation would be found on land with 8-16 salinity threshold. dS/m and on some land with 16-32 dS/m. All sugar beet, barley and cotton cultivation would also be on landwith 16-32 dS/m. These cropping pattems are inpractice unlikely, but provide an opportunity to conservatively estimate the cost o f salinity. An assumption also needs to be made regarding the land with salinity exceeding 32 dS/m. As a lower bound this land i s ignored in the cost estimation. The upper bound assumes that the land is unproductive and implies a loss corresponding to net farm income if the land had minimal levels o f salinity. 34 The estimated annual costs of soil salinity are exceeding 32 dSlm (unproductive land), and at presented in table 5.3. The estimate is based on US$2,450 million (equivalent to around IRR the cropping patterns discussed above. The 19,500 billion or 2.16 percent o f GDP) if that salinity threshold values and yield decline land i s included in the cost estimation. As a coefficients in table 5.2 were applied to those conservative approach, the salinity damage cost cropping patterns at yield levels expected to excluding the unproductive land will be prevail inthe absence of salinity. This provided considered. the total quantity o f yield losses, which were thenmultipliedbycropprices. As aconservative approach, it is assumed that there are no yield 5.3 RANGELAND DEGRADATION losses on land with salinity in the range o f 0-4 dS1m. Therefore, no decrease in yield was Iran's rangelands total about 90 millionhectares. attributed to the crops assumed to be cultivated The main source o f degradation i s represented on this land (pulses, fodder, fruits, citrus, by the number of head of livestock exceeding vegetables, maize, and potatoes) as shown in the carrying capacity o f available rangeland and table 5.3 (for more details, see annex 111, Soil overgrazing. Other factors relate to untimely Salinity). grazing (early or late grazing), inefficient management o f range and livestock in The yield levels in the absence of salinity were transhumance; competitive utilization o f range derived fiom World Bank (2001a) and FA0 among transhumant groups, fuel c~llection,~~ yield statistics on Iran. World prices were ploughing and expansion o fthe area o f low yield applied for wheat and barley, and the world rainfed farms on slopes. price o f rice (Thai) was adjusted by a factor of 1.3 to reflect Iranian rice quality premium Overgrazing. The number o f animal units36 in (World Bank, 200la). Iranian producer prices the country i s nearly 83 million. Rangelands can were applied to the other crops, as reported by meet the requirements o f only 37 million animal FAO. units for a period o f seven months, so there are about 46 million animal units in excess on rangelands (Badripour, 2004). Unsustainability Irrigated Average yield Pricehon Total loss o f production is an inevitable consequence crops losses (inUS$) (inmillion which in tum causes declining trends in the (inmillionton) US$) pastures, transformation o f good pastures into Pulses 0 0 poor ones and of the latter into non-productive Fodder 0 0 pastures, leadingto more desertification (MOJA, Fruits 0 0 2002). Citrus 0 0 Vegetables 0 0 Monitoring changes in rangeland quality. Maize 0 0 Overgrazing has deprived valuable flora species Potatoes 0 0 o f reproduction and has replaced them with Rice 0.75 325 245 aggressive species. Vegetative cover is one o f Soybean 0.02 281 6 the major factors affecting the degree o f soil Wheat 3.07 170 522 erosion. In this report, rangeland degradation Sugar beet 5.45 35 191 Barley 1.34 140 188 will be assessed based on its change in Cotton 0.27 408 112 productivity. Biodiversity losses o f valuable Total 1,265 species will not be taken into consideration. Total estimated annual cost o f salinity i s 35Approximately 5.4 million cubic meters o f range shrubs estimated at US$1,265 million (equivalent to are cut-off or uprooted annually to provide fuel for rural around IRR 10,000 billion or 1.1 percent o f people. GDP), not including the land with salinity 36Animal unit: a sheep o f 45 kg which requires 276.5 kg TDN (total digestive nutrient) per year. 35 Therefore, damage costs should be considered a to US$11 million (table 5.5). This figure lower boundestimate. represents the damage cost associated with the Classifications o f 1975 shows that out of 90 average annual physical loss o f the resource million hectares of rangeland, 14 million (average annual change in hectares from good hectares were in good to fair condition, 60 and fair rangelands to poor rangelands between million hectares were in fair to poor condition 1975 and 2000). and 16 million hectares were in poor to very poor condition. Over the past 30 years, the Table 5.5 Damage cost of rangeland degradation in condition of rangeland has drastically worsened. 2002 Results of a recent survey o f rangeland shows that rangeland in good condition decreased to Goodfair Fairlpoor,erPoor/ 9.3 million hectares, rangelands in fair condition Productivity I decreased to 37.3 million hectares, while (kg DM/ha)38 290(a) 92 @) 26 (c) rangelands in poor condition have increased to 25 years change inarea -4,7 -22.7 27.4 43.4 million hectares (table 5.4) (millions ha) Average annualchange (millions ha) -0.18 -0.9 1.11 Change in productivi~ Quality Good Fair/ Poor/ Total (kg DM/ha) 264 (a-c) 66 @-c) fair poor verypoor Area in 1975 14 60 16 90 Annual total loss 49.63 59.92 Areain2000 9.3 37.3 43.4 90 (millions kgDM) Total changein II -4.7 -22.7 27.4 0 Total loss (barleyequiv. I area inmillions ofkg) 35.73 43.14 Source: The ThirdAsian ThematicProgram Network on Barley world price RangelandManagement and SandDune Fixation. Yazd, (inUS%kg) 0.14 0.14 Iran, 2001. Total loss(US% millions)I 5 6 Change inproductivity. Productivity interms o f dry matter (DM) on different qualities of rangeland i s presented intable 5.5. The decrease Using a social discount rate of four percent, the in the quality of one hectare of rangeland from net present value o f the damage cost (flow of good-fair to poor-very poor is associated with a benefits in the future) resulting from a physical decrease inproductivity o f264 kilograms o fDM change inthe quality o f rangelands inyear 2002, per hectare. The change in productivity for for a time span of 25 years, amounts to US172 rangelands passing from fair-poor to poor-very million (equivalent to IRR 1,373 billion or 0.15 poor i s 66 kilograms o f DM per hectare. It is percent of GDP) assumed that one kg o f DM is equal to 0.72 kilograms of barley.37 To compute the annual loss o fproductivity for 2002, the 25-year change 5.4 WETLANDS DEGRADATION in productivity is divided by the number of years. The underlying assumption i s that Overview. Much o f Iran's geographic area falls productivity has declined ina linear fashion. into the arid, semi-arid or semi-dry category. In these climatic conditions, the presence o f With a world barley price o f US$140 per ton, wetlands, marshlands and water bodies plays an the annual damage cost of overgrazing, interms important role in sustaining the natural o f a decrease inrangeland productivity, amounts environment. There are more than one hundred sizable wetlands in Iran, twenty o f which have been listed in the Ramsar Convention's "List o f 37Reference: Opinion expert provide by Mr. E. Eskandari Shiri, Director General of Range Technical Bureau, 38 The Third Asian Thematic Program Network on Forest, Rangeand WatershedManagementOrganization, Rangeland Management and Sand Dune Fixation. Yazd, MOJA, 2005 Iran, 2001. 36 Wetlands of International Importance." covering upper lands, fish farming and mining activities. 0.7 percent o f the country's territory (MOJA, The total estimated degraded areas of these 2002). In the early 1970s, Iran was the first wetlands amount to 250,000 hectares. country in the Middle East to carry out a national wetlands inventory. A total of 286 This study limits its assessment to the first type wetlands were identified, 33 of which were o f damage. The value of damage inthis case can considered to be o f intemational importance be obtained by multiplying the total service (IUNC, 1995). Recent studies by Iran's value o f a hectare of wetland by the extent o f the Department o f Environment have raised the damage. Thus, given the difficulty in assessing number of wetlands of internationalsignificance the physical damage linked to pollution, no to seventy-six (DOE, 2005). estimate i s made. Threats to wetlands. Wetlands in Iran are Yet, inmost regions o f the country, many of the increasingly under pressure due to human remaining wetlands are in relatively good activity. Undoubtedly the most serious threats to condition. This i s due in large part to the active wetlands have been their drainage and policy o f wetland conservation pursued by the reclamation for agriculture, industry and urban govemment of Iran since the late 1960s, and the development, and the diversion of water supplies establishment o f an effective network o f for irrigation. In addition, increased siltation is protected areas which include many o f the becoming a problem in some wetlands. Siltation country's most important wetlands. and erosion are caused by deforestation and overgrazing inwater catchments. Valuing wetland services. A study conducted by Hormozgan University and published by the In some wetlands, heavy grazing of marsh Department of the Environment in 2001 vegetation by domestic livestock i s inhibiting (Bagherzadeh Karimi, M, 2001), assessed the natural plant succession, and causing permanent economic value o f services o f three types o f damage to aquatic plant communities as highly wetlands inIran(table 5.6). palatable species are grazed to extinction. Some mangroves in the Persian Gulf have been degraded by excessive utilization for fuel wood and fodder. Many wetlands, especially those downstream o f large urban centers and major farming areas, have been polluted with domestic sewage, herbicides, pesticides, fertilizers, industrial effluents and other waste products (IUCN, 1995). For practical reasons this study distinguishes between two types o f damage: (1) damage arising from man-driven droughts such as dam construction and agricultural activities; (2) damage from pollution. Many wetlands in Iran (like the Ramsar sites of Anzali Mordab, the ShadeganMarshes and other internationally important wetlands such as Lake Zaribar, Ghara Gheshlaq Marshes, Akh Go1 and Hashelan Marshes) are being damaged by pollution. Sources are sewage pollution, agricultural drainage with high salinity, sedimentation resulting from deforestation in 37 column 9). This figure i s a lower bound estimate as it excludes damage from pollution. Type and name of wetland Type Type Type (1) (2) (3) Usinga social discount rate o f four percent and a Hara Inland Amir Chogh kalaye 25-year time horizon, the net present value o f akhor the damage cost (flow o f future benefits lost) Protectionof biodiversity and] ?dh resulting from a loss o f 23,321 hectares o f genetic resources I -.- 132 132 wetlands in 2002 (based on annual average) Hunting and fishing 703 640 679 equals US$350 million (equivalent to IRR2,800 Ecotourismand cultural billion or 0.3 percent o f GDP). heritage 5 2 2 Supplyofwood and fodder* 270 2 136 Other Ramsar sites, namely Hamoun-i Puzak, Microclimate regulation, air Hamoun-i Sabari and Hamoun-i Hirmand, refreshmentand wind break 104 52 52 covering an area of 60,000 hectares completely Water supplyand regulation 7 17 driedup due to dam construction inAfghanistan Transportation 10 inareas bordering Iran. The damage cost of this Medical, industrial and degradation (assessed at around US$6 million nutrimentalplants* * 37 15 18 Handicraftproduction 15 62 124 per year) is not included since it was caused by extemal factors. Azote fixation 102 31 51 Protectionof coasts 25 Total (US$/hdyear) I 1,620 940 1,210 Source: Baghenadeh Karimi, M.2001. "TheEconomic Valuation of Wetlands of Iran". Hormozgan Universityfor the Department of Environment, Islamic Republic of Iran. * Type (I)is based on Forest Chapter estimate, Type (2) and (3) are based on Karimi's study. ** Only the value of nutrimentalplants has been calculated. Despite achievements in conservation, at least four Ramsar sites and five other intemationally important wetlands have undergone degradation and drought during the last three decades, mainly due to dam construction and agncultural activities. As a result, a certainpercentage o f the area o f these wetlands has dried out (table 5.7 column 4). For example, Yadegarlu and Dorgeh Sangi Lakes have completely disappeared while the size o f other wetlands has been reduced. For each wetland, the area lost i s divided by the time span o f degradation to obtain a yearly degradation rate. The average annual loss totals some 23,300 hectares(table 5.7, column 7). As a final step, the annual loss for each wetland i s multiplied by the value o f services estimated intable 5.6. The total damage cost of this loss is assessed at US22.4 million for 2002 (table 5.7, 39 The values in Iranian Rials of 2001 were adjusted to 2002 prices and convertedto U.S.dollars. 38 Name of Type* Area (ha) Percentage Area Degradation Annual Value of Total loss wetland dried up degraded time span degradation service (US$ (ha) (years) (ha) (US$/ha/year) 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 (2) 108,000 25% 27,000 25 1,080 940 1.02 and Kamjan Marshes Yadegarlu and (2) 500 100% 500 10 50 940 0.05 Dorgeh Sangi Lakes 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 (2) 200 60% 120 20 6 940 0.01 Marsh Huralazim (2) 35,000 20% 7,000 23 304 940 0.29 jnated Under the Ramsar Convention.'' Islamic Republic of Iran *Type: (I):similar to Hara Wetland; (2): similar to Inland Choghakhor Wetland.Information on the Typeof Wetlandand percentage of area degradedprovided by Mr.Masoud Baghenadeh Karimi, senior expert on wetlands andfocal pointfor the Ramsar Convention in Iran. Department of Environment in 2005. 39 5.5 FLOOD DAMAGE EROSION AND construction across the river bed, and earthen dam construction without the application o f Flooding has increased duringthe last decades in appropriate standards contributed to the severity Iran. The number of floods recorded in the o f the flood impact. Another flood occurred in 1980s and 1990s is more than five times the the province in 2002, leading to 45 deaths and number recorded in the 1950s and 1960s (table economic damage of US$2.7 million (DOE, 5.8). Poor land use management and 2004). deforestation can contribute to the frequency and intensity of floods. An exceptionally rainy Complete figures for the damage resulting from period can result in more flooding due to the flooding are not available. However, data changes in land use. Iran's forests have been analysis o f some floods surveyed over 15 years severely degraded over the last decades (see (between 1987 and 2002) revealed an average chapter 6). Forest clearing for apculture, annual damage cost (in terms o f infrastructure) firewood and charcoal production reduced forest of US$164 million and an average human loss area from 19.5 million hectares to 12.4 million assessed at 154persons per year (table 5.9). hectares over the last 57 years. Vegetative cover i s one of the major factors influencing the degree o f soil erosionand floods. Year Humanlosses Damage Cost (in Table 5.8 Number of recorded floods in Iran in the (inpersons) US$ millions) last five decades 2002 55 62.7 Decade 1 Number o f Percentage o f the 2 0 0 1 ~ ~ 400 77 1999 6 n.a. 1998 419 1990s 1,341 41% 97 1997 1980s 1,046 32% 42 25 1970s 1 432 13% 1996 41 15 1995 1960s 251 8% 131 194 1994 10 1950s 192 6% n.a. 1993 504 1,000 Total 3,262 100% 1992 119 143 1991 40 29.4 1990 11 n.a. The country's most damaging floods occur in 1989 0.3 the Caspian region. Logging operations on the 1988 25 n.a. steep slopes o f the northem part o f the Alborz 1987 347 n.a. Annual range are considered a major cause.4o For 154 164.4 Average instance, in the southeast Caspian Sea in Golestan province, a major flood occurred in 2001. This was estimated to have been the most severe flood in Iran in the last 100 years. The To assess the economic value o f human loss, damage affected 5,000 squarekilometers of rural deaths are converted into disability adjusted life and urban areas, killed more than 400 people years (DALYs). Each premature death and resulted in US$77 million in economic represents 24 DALYs4' and each DALY i s damage (DOE, 2004). valued following the methodology described in chapter 2. With a DALY value ranging from a The Golestan flood o f 2001 occurred under lower bound o f US$1,738 to US$10,456, the special circumstances. Natural phenomena and man-driven activities impacted it 4'Reference: DOE, 2004 simultaneously. Human activities including 42The number of D A L Y s lost per death (due to flooding) i s deforestation, inadequate road construction, assumed to be equivalent to the number of DALYs lost especially inthe main Golestan river basin, road due to non-intentional injuries (such as fires, accidents, etc.). The latter is based on WHO tables (WHO, 2004). There are no statistics that track the age distribution of 40 Caspian Environment Program Web site flood victims. 40 value o f human losses per year (in terms of damage for reasons that follow. Erosion may statistical life losses) resulting from floods also contribute to crop productivity declines and ranges from US$6 million to US$39 million, this has not been estimated due to a lack o f data. with an average o f US$22.5 million. Thus, the Damage to wetlands includes only losses due to total annual average damage cost of flooding, in drought. It does not consider the damage caused terms of human losses and damage to by chemical pollution, organic loads and infrastructure, amounts to US$187 million (that erosion. Finally, flood damage only refers to is, US$164.4 million plus US$22.5 million). reported costs and deaths. Human and economic This should be considered a lower bound losses are likely to exceed the figures presented. estimate because it is limitedto assesseddamage o f surveyed floods. Non-oil growth in Iran requires careful land resource management. Estimates provided here Bearing inmindthe complexity o f flood-causing are apioneering assessment o f the benefits that a factors, allocating a damage cost to the conservation policy couldhave inthe longrun. responsibility o f manmade activities in flood occurrence i s difficult. However, it is believed Table 5.10 Land: annual damage costs (mean that the dramatic increase in the number o f estimate, 2002) floods over the last three decades i s closely Impacts US% IRR GDP related to increased deforestation, which took millions billions % place over the same time period. Estimating the Croplandsalinity 1II 1,265 10,070 1.11 impact of deforestation on increasing flood Rangelanddegradation i70 1,370 0.15 damage requires valuing the annual damage Wetlands loss 350 2,800 0.3 caused by floods and quantifyingthe impacts of Floods 150 1,190 0.13 Total 1,935 15,430 1.70 deforestation on these damages. Neither of these steps couldbe completed, thus no estimate could be made. Talung into consideration that the number o f floods recorded in the 1980s and 1990s i s more than five times the number recorded inthe 1950s and 1960s and assuming that this five-fold increase is totally related to manmade activities (particularly deforestation), then one-fifth of annual damage can be related to natural causes and four-fifths to manmade activities. This would amount to US$l50 million, four-fifths o f US$187 million, (equivalent to IRR 1,190 billion or 0.13 percent of GDP). 5.6 TOTALDAMAGE COSTS Table 5.10 presents the environmental damage costs associated with land degradation in 2002. Intotal, the estimated cost totals US$ 1.9billion (equivalent to IRR 15,430 billion or 1.7percent o f GDP). Estimates include cropland salinity, rangeland degradation, wetland loss and flood damage. The numbers are likely to underestimate total 41 6. Deforestation and Forest Degradation With 8,200 plant species, of which 1,900 are of the high rate o f forest degradation in the endemic, Iran i s considered a unique country in country. terms o f its plant diversity and genetic reserves (NBSAP, 2000). Climate diversity makes the Five distinct forest regions are identified in Iran country's forests heterogeneous, ranging from and shown intable 6.1: humid and semi-humid to semi-arid and arid. This forest diversity provides a wide range of Caspian (Hyrcanian) forests, situated in the benefits, including increased biodiversity value north, cover about 1.85 millionhectares, or 15 andwater and soil conservation. percent of Iranian forests. They are humid forests and the only forests in the country Despite these benefits, Iran's forests have been suitable for industrial wood production. severely degraded during the last half century. e Arassbaran forests, located in the northwest, Forest clearing for agriculture, firewood and cover about 144,000 hectares - only one charcoal production reduced drastically the percent of total forest area - and comprise forest area; while overgrazing and over-hunting semi-humid forests. These forests are mainly are believed to be responsible for decreasing used for fuel wood. forest quality. Zagros forests, located in the west, cover This chapter estimates the costs of deforestation about five million hectares, or 40 percent of and forest degradation in Iran. It first gives an the country's forest areas and comprise semi- overview of the country's forest sector, focusing arid forests. These forests are especially on forest areas and functions, and on important for their protective roles (water institutional and economic aspects (section 6.1). supply, climate regulation, etc). Itthen discussesthe mainproblemsaffecting the Irano-Touranianforests, located inthe central country's forests (section 6.2). The estimates of plateau, comprise the arid forests. They cover the costs of deforestation and forest degradation about 3.3 million hectares, or 27 percent o f are then presented (section 6.3) and summarized the forest area, divided into mountain and (section 6.4). plain forest types. These forests are often highly degraded and sparse and are important for water and soil conservation. 6.1 OVERVIEW OFTHE FOREST SECTOR Khalijo-Omanian vegetation, located in the southem part o f the country, makes up arid Forest cover in Iran i s estimated at 12.4 million tropical forests and covers about 2.1 million hectares, or about 7.4 percent o f the country's hectares, or 17 percent o f total forest cover. area:3 Per capita forest cover (about 0.2 hectares per capita) i s close to the estimated average for the Mediterranean region, and is only one-third o f the world average. Moreover, commercially usable forest area in Iran is only about 0.02 hectare per capita.44This scarcity i s one cause4' 43 Forests and Ranges and Watershed Management Organization, quoted by the Statistical Centre o f Iran, 2004. 44Calculated with reference to a total population o f 65.4 million in2002 (World Bank, 2004d). 45See Annex I,note 1 42 Forest policy in Iran aims at forest conservation Forest Forest area Growing Increment Biomass through management, afforestation and repions (000 ha) stock community forestry. During the last decades, I (m3/ha) (m3/ha) (t/ha) considerable attention was given to Caspian 1,850 280 2-8 100-110 implementing afforestation, silviculture, road Arassbaran 144 40-55 0.7 n.a. construction, and wood transport projects. Zagros 5,000 14 0.4 8 However, forest policy has largely failed to Irano- 3,300 n.a. n.a. 5 conserve the country's forests: overexploitation Touranian o f industrial wood by logging companies and o f Khalijo- 2,100 n.a. n.a. 2 Omanian forests by rural communities (for fuel wood and Total 12,394 n.c. n.c. n.c. grazing) has contributed to forest destruction (NBSAP, 2001b). Deforestation and forest degradation has occurred especially in the Caspian and Zagros forests, accounting for more than 55 percent of total forest area. Since 1962, forests have been entirely owned by the state.46The Ministry o f Agriculture (Jehad- 6.2 DEFORESTATION AND FOREST e-Suzundegi) is responsible for forests, which DEGRADATION are managed by its Forest, Range and Watershed Organization (FRWO). Forest Understanding changes in forest cover i s management i s based on plans, though they difficult because, as in other countries, the term have beenprepared only for the Caspian forests. "deforestation" has been used in different ways At present, the area under management is about (Pagiola, 2000) to describe: the complete loss of 1.3 million hectares (of which plans for 914,000 forest cover; the reduction o f tree crown cover hectares have been activated) and the rate o f below a given proportion o f land cover (UN- forest utilization is about 1.46 cubic meters per ECEEAO, 2000); and the loss o fprimary forest hectare (Sagheb-Talebi et al., 2004). alone. This term i s often used to describe the permanent (long-term) loss o f forests but Forest contributions to the national economy are sometimes includes temporary losses as well, estimated at 1.6 percent of GDP for 2002 (SCI, The term "forest degradation" has also been 2004) - ifonly wood products are considered - defined in several ways. Definitions generally compared to agnculture's contribution of about refer to reductions in the productive capacity o f 12 percent (World Bank, 2004b). Such a forests (Watson et al., 2000). difference i s not surprising, however, considering that the gap can be even greater in In this paper, data insufficiency makes it other MENA countries.47 O f course, wood difficult to use a precise definition. However, in represents only a small proportion of the total broad terms, deforestation is understood as a value o f forests. A study o f forest values in complete and long-term loss o f forest cover. At Mediterranean countries found that wood the same time, forest degradation is defined as accounts for less than 15 percent of the total "changes within the forest class that negatively forest value in most eastern Mediterranean affect the stand or site and, in particular, lower countries o f the Middle East and about 35 the production capacity." Accordingly, percent of the total forest value in the northern degradation is not reflected in estimates o f Mediterranean (Croitoru and Merlo, 2005). deforestation (FAO, 1995). Deforestation in Iran i s mainly caused by forest conversion to agncultural lands and other land uses, and clear cutting for wood. It i s interesting 46Before 1962, 80 percent of forests were privately owned, however, the govemment decided what could or could to note that in Iran, unlike many other MENA not be cut (World Bank, 1994). countries, fires are not a major cause o f either 47See annex I,note 2 deforestation or forest degradation (box 6.1). 43 Though it is commonly agreed that deforestation In addition to deforestation, Iranian forests are has been a major threat to Iran's forests, there i s largely affected by degradation. This i s primarily no consensus on the extent of annual due to past and present wood overexploitation, deforestation. FRWO data show4' that from overgrazing, and sometimes over-hunting. These 1944 to 2000, total forest area diminished from threats are found throughout the country, but 19.5 million to 12.4 million hectares. If these with different intensities ineach forest zone. For figures are real is ti^:^ this is equivalent to an example, in Caspian forests, past wood average deforestation rate of about 125,000 overexploitation reduced forest biomass from hectares per year, or 0.8 percent annually. This 300 tons per hectare to about 100 tons per estimate should be regarded with some caution: hectare (National Coastal Profile, 2001). the annual deforestation rate may vary Grazing is a major problem: about 4.4 million. considerably over a long period; therefore, the head of livestock graze in these forests and average rate calculated over a 57-year period overgrazing now affects more than 52 percent o f does not necessarily reflect the deforestation rate the Caspian forest area (Sagheb-Talebi et al., occurring inmost recent years (e.g. inthe last 10 2004). According to their state o f degradation, years). Caspian forests can be divided in three broad groups: Other deforestation figures are reported in relation to different forest zones: for instance, 1.Very degraded forests: forests that cannot Caspian forests have shrunk from 3.4 million to regenerate naturally and where the stand i s 1.9 million hectares over the past 22 years, an less than 100 cubic meters per hectare average o f 45,000 hectares per year (CEP, (about 496,000 hectares). 200la). In addition, the average deforestation 2. Degraded forests: forests covered by young rate in Zagros forests appears to be twice as masses o f saplings and whose stand i s 100 much as that in the Irano-Touranian forests.'' to 200 cubic meters per hectare. Operations Based on the above-mentioned figures, this to replant these forests are needed (about would correspond to a deforestation rate o f 480,000 hectares). about 54,000 hectares per year in the Zagros forest and 27,000 hectares per year in Irano- 3. Good and high quality forests: the stand Touranian forests (table 6.2). exceeds 200 cubic meters per hectare (about 856,000 hectare). InZagros forests, firewood overexploitationand overgrazing have been major factors in Forest sub-region Deforested Percentage Percentage degradation. Due to pasture land scarcity, more area (ha) of sub- of than 14.6 million livestock graze in forest areas region countryS (about 2.9 head per hectare o f forest), forest area forest area endangering wildlife due to food shortages, soil Caspian 45,000 2.4 0.3 degradation, and erosion (Sagheb-Talebi et al., Arassbaran n.s. n.s n.s. 2004). Zagros 54,000 1.1 0.4 Irano-Touranian 27,000 0.8 0.2 Khalijo-Omanian n.s n.s ns. Total 125,000 1.0 1.0 48See Annex I,note 3 49See Annex I,note4 50See annex I, note 5. 44 depending upon the alternative forest uses.51 Most fires in Iran are caused by arson. Other Secondly, the paper focuses on gross losses causes include land-use change, the carelessness without considering the possible benefits of o f hunters and pickers, and opium and oil alternative land uses that replace forests. smuggling. The number of fires affecting both Thirdly, the NPV of damage cost is calculated pastures and forests increased from 15 in 1982 based5' on a time horizon o f 25 years and a to about 772 in 1995 (Alexandrian and Esnault, discount rate o f four percent, so as to allow 1998). comparability with the estimate5 in other chapters. According to Allard (2001), the most fire-prone provinces are Kordestan, Golestan and It should be noted that valuation efforts were Khuzestan. Fires usually affect large areas of subject to data constraints. In these cases, pastureland, and then extend into sparse forests. benefits transfer o f estimates from other MENA Fires that start in or around forests are usually countries with similar environments was surface fires and only seldom crown fires; applied. The following subsections present these among them, fires in coniferous forests are most estimates together with the valuation approaches significant. used. The Bureau o f Conservation and Protection's database (report 2340.54:83-05-03) reports that Costs of deforestation about 405 forest fires affect about 4,300 hectares per year (average during2000-2003). More than (1)Direct use values 99 percent o f this area is affected by surface fires, which do not cause either deforestation or Timber. Timber i s only important in Caspian degradation. Therefore, the annual losses due to forests. These forests have already suffered forest fires could be considered practically nil. greatly from misuse. The potential mean annual However, fires have increased over the past increment (MAI),once about seven cubic meters years (e.g. due to drought), thus they can per hectare, is now only three meters per hectare become a serious problem inthe future. (National Coastal Profile, 2001). Therefore, valuation assumes that any hectare of deforested landtoday forgoes a potential sustainable annual 6.3 COSTS OF DEFORESTATION AND FOREST harvest of three cubic meters per hectare. DEGRADATION Considering that half o f this figure i s timber (and the rest firewood) with an average Forests provide a wide range o f benefits, stumpage price o f about53 US$150 per cubic including direct-use values (timber, firewood, meter, this is equivalent to an annual loss o f non-wood forest products, etc.), indirect use about US$225 per hectare o f forest under values (watershed protection, carbon management plan (an average o f US$l58 per sequestration), option, bequest, and existence values (biodiversity, potential future recreation). 51Extractive benefits that rely on standing trees (timber, This section attempts to estimate the impact of firewood) are likely to be lost completely. NWFP deforestation and degradation on each forest benefits may not be lost completely, however; some benefitto the extent that data allow. NWFPs may actually improve with less forest cover. Similarly, benefits such as watershed protection are likely to be only partially affected, as these benefits also Valuation i s based on a few assumptions. First, depend upon soils, slope, and other factors. Assuming a estimating the cost of deforestation assumes that complete loss o f benefits is thus a strong assumption, all forest benefits on the deforested area are lost likely to result to a certain degree o f damage over- estimate. Lack o f data prevents a more precise analysis. for a long-term period. This i s a strong assumption, because in reality, deforestation 52See annex I,note 6. 53 affects forest benefits to different extents, All price estimates for timber and firewood are drawn from the expert opinion o f M. Seifollahian, member o f the HighCouncil o f Forests and Forestry Organization o f Iran. 45 hectare of Caspian forests). This corresponds to Hunting. No data were found regarding hunting an annual loss o f timber o f about US$10.1 benefits in Iran. Therefore, we use the hunting million. benefit estimated in Turkey, o f about US$1 per hectare of forests (based on Turker et al., 2005). Firewood. Firewood overexploitation affects Valuation was based onhuntingpermitprice and primarily Caspian forests, but also the Zagros license fees. While hunting occurs only in and Irano-Touranian forests. Based on a rate o f designated areas within forests, this estimate firewood overexploitation o f about 1.5 cubic represents an average value calculated in meters per hectare of Caspian forests and a relation to the entire forest area. This explains its stumpage price o f US$30 per cubic meter, the low value compared to other estimates. annual future loss o f firewood is about US$45 Accordingly, the annual loss o f huntingbenefits per hectare of Caspian forests. on the total deforested area i s about US$125,000. It is assumedthat inZagros and Irano-Touranian regions, the potential sustainable harvest is the Recreation. There are few studies estimating MAI.This is about 0.4 cubic meters per hectare benefits from recreation and eco-tourism in for Zagros and about 0.7 cubic meters per protected areas (forest parks) in Iran (see e.g. hectare for Irano-Touranian. Using a stumpage Sharifi, 2004). Based on the cost o f travel price o f about U S 1 0 per cubic meter, the approach, the recreational benefits in several annual future loss o f firewood is about US$4 per forest parks were estimated at54US$6 per person hectare in Zagros forests and about US$7 per per year. ICM (2000) reports an annual number hectare in Irano-Touranian forests. Applying o f 3.3 million visitors to Iran's coastal areas of these estimates to the deforested areas in each Mazandaran and Golestan. Assumingthat half o f forest region, the total annual loss of firewood i s the visitors enjoy the recreational benefits of about US$2.4 million. forest parks and other protected areas, this is equivalent to an average benefit55of US$13 per Grazing and other NWFPs. Grazing and other hectare o f forest in these areas. It i s reasonable non-wood forest products (NWFPs) are to assume that deforestation occurs inforest area important forest benefits countrywide. However, recreational point o f view - than forest parks. It that area likely to be less valuable - from a no reliable data was found on these values. The literature includes a wide variety o f estimates. i s therefore assumed that the recreational value Lampietti and Dixon (1995) reviewed a range o f o f deforested area i s likely to be 50 percent the studies and found values as low as US$5 per value o f forest parks -US$6.5 per hectare. hectare per year and as high as US$422 per Therefore, the annual loss of recreational hectare per year, with many studies clustering benefits on deforested areas i s about around a value o f about US$70 per hectare per US$812,500. year (about US$80 per hectare per year in 2002 values). Here, we use the benefit estimated in Overall, the direct-use values lost annually to Turkey o f about US$20 per hectare per year deforestation are about US$15.9 million. (based on Tiirker et al., 2005), as it is more likely to be applicable to Iran's conditions (none (2) Indirect use values of the studies found in Lampietti and Dixon's review i s from the MENAregion). Ofthis value, Loss of plant nutrients. Physical valuation is about US$15 per hectare is grazing benefit based on two steps: (1) estimating annual soil whereas US$5 per hectare is the value o f other minor NWFPs such as mushrooms, medicinal plants and forest fruits. Based on these 54 Morteza Sharifi, Forest and Range Organization, Head estimates, the total annual loss of grazing and ExpertofParks, personalcomments,2005 other NWFPs on the deforested area in Iran i s s5Basedon environmentally-managedforest areas (national about US$2.5 million. parks, wildlife reserves, protected areas) of 176,800 hectares in Golestan and 586,000 hectares in Mazandaranprovinces(CEP, 2001b). 46 loss due to deforestation, wood over-collection cost o f substituting nutrients would be US$7.3 and overgrazing in forests; (2) estimating the million. quantity of nutrients lost annually inthe quantity reported instep 1. Agricultural losses. Estimates for agricultural losses due to upstream deforestation were not Soil erosion is a major problem inIran, affecting found in Iran. However, a valuation study in about 43 percent o f the country's area56(FAO, Tunisia (Daly-Hassen and Ben Mansoura, 2005) 1996, based on GLASOD database). Two estimated that forests contribute to an increase in estimates o f annual soil loss were found: about annual agncultural benefits o f about US$9 per one billion tons, reported by the World Bank hectare of cultivated land (based on the change (1995), and about 1.5 billion tons, given by FA0 in productivity approach); this corresponds to a (1996). This paper considers conservatively the protective value o f about US$10 per hectare o f lower value. Various sources (e.g. FAO, 1996; forest in Tunisia. It should be noted that the NBSAP, 2001a) argue that deforestation i s a protective value o f forests ranges widely from major source o f soil 10s~;~'in particular, FA0 site to site, depending upon factors such as (1996) indicates that wood overexploitation is climate and soil type. Therefore, this value the most significant cause o f soil erosion in Iran should be regarded as a crude estimate for the and is responsible for about 46 percent of total average value o f the forest protection function. erosion;58 it gives other important causes as Assuming that deforestation damage to overgrazing (24 percent) and deforestation (23 downstream agriculture inIran i s similar to that percent). However, the source does not specify inTunisia, the annual cost of agricultural losses how these figures are calculated. In the absence inIranwould total US$1.3 million. o f more detailed information, valuation in this paper conservatively assumes that deforestation Dam sedimentation. This impact has been contributes only about5' 1.8 percent to soil covered inchapter 3. erosion annually, about 18million tons. Protection of water reserves. A study carried No comprehensive study was found regarding out by the Tarbiat Modarres University in 2000 average nutrient content in soil in Iran. (Mayan, 2000) estimates the benefits of However, ifwe assume that soil nutrient content protecting underground water reserves at: i s similar to that o f Turkey, about6' 0.1 percent US$17 per hectare of Caspian forest; US$8 per nitrogen (N), 0.15 percent pentoxide (P205)and hectare o f Zagros forests; andUS$37 per hectare 0.154 percent potassium (K20),the losses of in Irano-Touranian forests. Assuming these nutrientsis about 72,720 tons. figures are realistic,63 and using the deforested areas per each forest type, the total annual loss Monetary valuation i s based on the substitute o f water reserves protection would be about cost method (or the replacement cost method6'), US$2.2 million. usingas a proxy the cost of fertilizers that would be necessary to substitute for the loss o f Water purification. Mayan (2000) estimates the nutrients. Using an average market price of annual benefits o f water purification at" US$87 fertilizers oe2USSO.1 per kilogram, the annual per hectare in each forest region: the Caspian, Zagros, and Irano-Touranian. This results in an annual loss o f water purification function due to "SeeannexI,note7 deforestation o f about US$10.9 million. "SeeannexI,note8 '*See annex I,note 9 Damages due to floods. This is covered in "SeeannexI,noteIO chapter 5. 6o Environment Foundation of Turkey, 1995 quoted by Bannand Clemens, 2001 61 See annex I,note 11 63See annex I, note 13 62 See annex I, note 12 64 See annex I,note 13 47 Carbon. Physical estimates of carbon losses are Monetary valuation i s based on the shadow price drawn from Iran's national communication to method, considering average prices currently the United Nations Framework Convention on adopted by the carbon markets. A World Bank Climate Change (UNFCCC). They are based on review o f the state and trends o f carbon markets the 1996 revision o f the International Panel on found quantity-weighted average prices for Climate Change (IPCC) methodology. This Kyoto-compliant emissions reductions to be methodology was used to prepare the country's between US$12.9/tC and US$18.l/tC, national inventory o f greenhouse gases, basedon depending on who took the risk o f Kyoto not specific recommendations and coefficients. being ratified (World Bank, 2003b). Using the Accordingly, the net emissions o f greenhouse prices o f US$13/tC and US$18/tC, the annual gases from the forestry sector include:65 cost o f carbon losses due to deforestation inIran ranges from US$l11 millionto US$153 million. C02 emissions from forests and other This paper uses the average value, US$132 changes in the stocks o f woody biomass million. This estimate already represents a stock (19.5 million o f tCO2) - correspond to the value (NPV) linked to the present deforestation. difference between C02released from wood exploitation (industrial wood harvested from In summary, indirect use values annually lost commercial forests in the Caspian region due to deforestation total some US$153.3 and fuel wood consumption from other million. Note that this estimate does not include forests) (about6620.7 million tC02) and C02 damage due to dam sedimentation and flooding, uptake due to the increase in forest area by covered inother sections. afforestation, tree plantation around villages and the establishment o f parks and green areas (about671.2 million tC02). (3) Option, bequest and existence values C02emissions from forest conversion (11.9 million of tC02) - considers an annual Option value of pharmaceutical products. No conversion of about 45,000 hectares of estimate was found for Iran. Most efforts to commercial forest area with a resulting value undiscovered pharmaceutical drugs have biomass change from 183 tdm/ha (before focused mainly on tropical forest ecosystems, conversion) to about 10 tdm/ha (after with estimates ranging as closely as US$O.9-1.3 conversion). The estimate i s obtained6* by per hectare per year (Mendelhson and Balick, aggregating the C02 amount immediately 1995) and as widely as US$O.Ol-21 per hectare released from burning (about 9.3 million per year (Pearce and Puroshothaman, 1995). tC02) and that released through decay and Such estimates are scarce inmost Mediterranean decomposition (about 2.6 milliontC02). countries. The only estimate, o f US$6.3 per hectare of forest, was found for Turkey (Ban and Other non-C02 gas emissions from forest Clemens, 2001). Valued on the basis of the rent conversion through burning, totaling about capture approach,69 this estimate is similar to 161,560 t C02-equivalent(tC02e). that provided for Mexico (Adger et al., 1995). Applyingthis estimate to total deforested area in Overall, net emissions are estimated to be about Iran, it results inan annual loss o f US$787,500. 31.5 million tC02e,or about 8.5 million tC (after applying the conversion factor o f 0.27). Biodiversity conservation. Mayan (2000) estimates the annual benefits o f biodiversity conservation at" US$16 per hectare in Caspian forests, US$8 per hectare in Zagros forests and US$16 per hectare in Irano-Touranian forests. If See annex I,note 14 these figures are realistic, it would result in an 66See annex I, 15 note 67See annex I, 16 note 69See annex I,note 14. 68See annex I,note 17 70See annex I,note 13 48 annual biodiversity value loss due to Table 6.3 Economic losses due to deforestation (US$ deforestation o f about US$1.6 million. per hectare o f deforested areaper year) Cultural value. Iranian forests are attributed Type of value Caspian Zagros Touran Irano- average` Country cultural value for their traditional and historical significance. Mayan (2000) estimates the Direct usevalues cultural value o f US$2 per hectare per each Timber 225 n.a. n.a. 81 forest type (Caspian, Zagros, Irano-Touranian). Firewood 45 7 19 Accordingly, the total annual loss o f forest 4 cultural value on the deforested area would be Grazing n.c. n.c. n.c. 15 about US$250,000. Other NWFPs n.c n.c n.c 5 Hunting n.c n.c n.c 1 Overall, deforestation results inan annual loss o f Recreation n.c n.c n.c 6 about US$2.6 million o f option, bequest and Indirect usevalues existence values (conservative estimate). Plantnutrients n.c n.c n.c 58b In summary, total annual losses (direct and Agricultural n.c n.c n.c 10 indirect use values, option, bequest and uroductivitv existence values) due to deforestation are about Protectionof 17 8 37 18 US$ 171.9 million. This corresponds to an undergroundwater average loss o f US$1,375 per hectare of Water Durification 87 87 87 87 deforested area (table 6.3). Carbon n.c n.c n.c 1056b Total annual losses comprise annual flows of damage costs (US$40 million) and the annual stock value of carbon (US$132 million). Usinga Biodiversity 16 8 16 13 social discount rate of four percent, the NPV o f conservation the annual flows for a time span o f 25 years Cultural value 2 2 2 2 totals US$628 million. Adding the value o f I 1375c carbon, the total NPV of the deforestation cost i s acalculated in reference to: the deforested area in each about US$760 million. region for timber, firewood, protection of underground water; total deforestedarea for the rest This estimate is a result of deforestationand other forest degradation Total doesnot addup exactlydue to rounding. n.a. = not applicable; n.c. =not calculated Costs of forest degradation At present, only 1.3 million hectares of forest in the Caspian Sea region are commercially exploited. In these areas, potential annual growth i s estimated'l at about 7 cubic metersper hectare, while actual maximum annual growth i s about three cubic meters per hectare. The difference o f four cubic meters per hectare i s mainly a result o f past wood overexploitation. If a degradation time span of fifty years i s " Dorostkar, 1988; quoted by the Caspian Environment Programme,website [accessed February20041. 49 considered, this would translate into an average Figure 6.1 Costs ofdeforestation and forest annual loss o f MA1 of about 0.08 cubic meters degradation inIran per hectare. We assume that the current over- 200.0 harvest will reduce future MAIat the same rate as past over-harvest (about 0.08 cubic meters per 180.0 hectare). This results in a total loss of 104,000 160.0 cubic meters annually (1.3 million hectares 140.0 multiplied by 0.08 cubic meters per hectare). @ 120.0 Considering an equal distribution between - .o 100.0 S timber and firewood and an average stumpage - .- price o f US$l50 cubic meters for timber and E 80.0 US$30 per cubic meter for firewood, this i s 60.0 equivalent to a total annual loss of about US$9.4 40.0 million (about US$7 per hectare of degraded forest) . 20.0 0.0 Using a social discount rate of four percent, the Deforestation Degradation NPV of the damage cost (flow of benefits RBiodiversity and cultural value forgone in the future) resulting from a loss o f I3Pharmaceutical drugs 0.08 cubic meters per hectare of Caspian forest Carbon for a time span of 25 years totals US$147 Water protection andpurification million. ElAgricultural productivity 0Plantnutrients Huntingandrecreation 0GrazingandotherNWFPs 6.4 TOTALDAMAGE COSTS W Timber and firewood Estimated annual flows o f damage costs are estimated at US$50 million and the annual stock Overall, losses due to deforestation and forest value o f carbon at US132 million. Usinga four degradation are felt differently by different percent social discount rate and a 25-year segments of society: firewood and grazing are horizon the net present value of deforestation usually losses to forest users; water protection and forest degradation i s estimated at US$906 and purification and agricultural productivity are million annually. Once again, the overall figure costs for downstream populations; recreation i s an underestimate, since other important losses, and biodiversity affect visitors; and carbon such as floods and reservoir sedimentation, have losses as a global public good affect the not been included to avoid double counting. international community. This distributional Were these values considered, the total annual issue has important policy implications in the cost o f deforestation and degradation would country. increase to US$ 1.4 billion. In summary, the NPV of damage cost from Even without considering these values, figure deforestation and Caspian forest degradation i s 6.1 suggests that losses of protective forest about US$906 million (or IRR 7,212 billion or functions on deforested areas are more 0.80 percent ofGDP). significant than timber and other extractive values. Among them, carbon loss alone stands out with about 73 percent o f total annual damage. Such a high share is representative not only for the substantial annual damage as a global public "bad," but especially for being a stock value (much higher than the value o f annual flows o f other forest benefits). 50 7. CoastalZones 7.1 OVERVIEWOFIRANIAN COASTALZONES breeding grounds for the incipient shrimp industry. Plants living on the seabed near the Iran's geography includes 2,900 lulometers o f shore support turtles and other marine life. The coastline, which contribute to the climatic and area's natural beauty has attracted scientists and uniquenatural complexity ofthe country. To the researchers, ancient civilizations - evidenced north, for 900 lulometers, Iran borders the through remains - and a variety of biological Caspian Sea, a resource it shares with species. Azerbaijan, the Russian Federation, Kazakhstan and Turkmenistan. To the south, for 2,000 The Gulf constitutes a narrow water body. At its kilometers, it borders the Persian Gulf, one o f narrowest point (the Strait o f Hormuz), the Gulf the world's most strategic waterways due to its i s only 34 miles wide. Its narrowness i s importance in world oil transportation, and the inverselyproportional to its strategic importance Oman Sea. as a waterway for oil tankers. Nearly 90 percent o f the Persian Gulfs oil transits the Strait o f The Caspian Sea i s the world's largest inner Hormuz and coastal areas and island territories lake. The Iranian Coast includes three littoral in the Gulf have been long disputed by the provinces: Gilan, Golestan and Mazanderan countries in the area, the most famous o f all whose dense forest and intensive rice cultivation being the Iraq-Kuwait conflict inthe 1990s. provide a strilung contrast to the dry plateau south o f the Alborz range. The Caspian side o f Major environmental disruptions along Iranian the Alborz is characterized by a multitude o f coasts have been triggered by massive, valleys and rivers draining into the Caspian Sea. unrestrained urban and industrial development, The area hosts a wide variety o f landscapes, the long Iran-Iraq War, which causedirreparable biodiversity and many recreational opportunities environmental damage, over-fishing and water such as skiing and trekking, mountaineeringand infrastructure development. ecotourisminthe sub-tropical coastal region. The Caspian Sea area i s among the most While popular among Iranians, tourism in the populous regions in Iran and the coastal area Caspian does not attract many international most subject to quantifiable economic costs. tourists. Beach activities are limited: swimming While degradation inthe Persian Gulf is deemed and sunbathing are segregated according to high owing to oil operations, infrastructure gender due to Islamic law. A major economic development and wars, it i s not possible to activity i s fishing. Iranian fisheries have been provide a monetary measure for it. This chapter building a reputation for sustainable fishing, concentrates on the Caspian coastal zones. trying to keep up with the rapid depletion of Sections 7.3 to 7.5 quantify the cost of sturgeon and bony fishes (particularly Kilka), environmental degradation to fisheries in the the two main species present. Caspian. The next section describes qualitatively the situation in the Persian Gulf and Sea o f The Persian Gulf separates Iran from the Oman. Arabian Peninsula. The coast includes the provinces of Khuzestan, Bushehr, Hormozgan and Sistan and Baluchestan. Despite low 7.2 POLLUTIONINTHE PERSIANGULFAND precipitation, the climate i s humiddue to special THE SEA OFOMAN climatic conditions, creating a unique environment. The Persian Gulf i s populated by Coastal pollution along the southern coast o f coral colonies and plant species crucial in the Iran is one o f the major causes o f habitat sustainability o f global life. Mangrovesprovide destruction and biodiversity reduction. Estuaries and coastal wetlands such as mangrove forests 51 are very vulnerable to water pollution. Habitat offshore operations and tanker accidents. Such fragmentation i s an increasing problem in the inputs are a great threat to the marine coastal regions. Wildlife sites have become environment. Major fishing grounds are near oil fragmented because of increased coastal production areas and transportation routes. development, effectively removing and Destruction of spawning grounds and nurseries fragmenting scarce habitats. Major sources o f are one o f the major threats to biological coastal pollution include the ballast water o f oil- resources in the Persian Gulf and the Sea of tankers, off-shore oil exploration facilities, Oman. heavy metal pollution caused by import and export activities and thermal pollution from the Finally, over-fishing and illegal fishing by retum water in cooling systems of large international fishing vessels i s a major source of industrial facilities (such as power plants). concern. Limited bottom trawling is still used for shrimp catches, which seriously threaten Industrialpollution. Heavy industries are major seabed habitats. contributors to the pollution load in the marine environment and are the main source of the chemical oxygen demand pollution load. Light 7.3 THECASPIAN SEA industries include agricultural and livestock production and food and beverages, which are The Caspian Sea i s the largest inland water body contributing generally to the bio-chemical in the world. The total length of the Caspian oxygen demand loads. The refinery in Bandar coast is nearly 6,380 lulometers and i s shared Abbas is known to be the largest refinery in the between five countries; Iran (992 kilometers) world. Some o f Iran's largest heavy industry and four nations o f the Commonwealth o f plants are located in five industrial complexes Independent States, the Russian Federation, and five cities inthe Karunbasin. The amount o f Kazakhstan, Turkmenistan and Azerbaijan. industrial effluent discharge varies from 0.03 cubic meters per hour for Fakr Khorramshahr About 130 rivers o f various sizes drain into the chemical company to 14,640 cubic meters per Caspian with an annual freshwater inflow o f hour for the Abadan refinery, which discharges about 300 cubic kilometers (km3).The main waste into the Arvand River.The most polluting tributary i s the Volga River in Russia (80 industries in order of quantity o f industrial percent o f the total volume of inflow) while sewage discharged into the Karun Basin are Iran's rivers contribute an inflow of four to five cellulose-processing industries, chemical and percent (CEP, 2002b). petrochemical plants and, most significantly, food processing and steel industries. About 130 fish species inhabit the Caspian Sea. Fishresources are commercially divided in two Residential pollution. About 151.7 million groups: sturgeons and bony fishes. The bony cubic meters per day o f sewage enters the Karun fishes are divided into kilka and other species. and Dez rivers by cities. The contamination load Fisheries in Iran have put a great emphasis on ranges from 277 tons per year for nitrates to the sustainability o f the resource. The 448,500 tons per year for total dissolved solids. department o f fisheries has established clear regulations on fishing methods and conducts Oil pollution. About 1.2 million barrels o f oil regular monitoring. However, declines in the are spilled into the Persian Gulf and Sea o f fish stock have been dramatic and large amounts Oman annually. The level o f petroleum o f money are spent every year to sustain the fish hydrocarbons in the area exceeds that in the population through artificial breeding. The North Sea. Oil pollution may be found anywhere causes o f degradation are linked to a lack o f in the marine environment and results from international cooperation and enforcement, operational discharges due to shipping, river leading to poaching, construction o f run-off, natural seeps, atmospheric inputs, infrastructure and man-driven introduction o f coastal refineries, the petrochemical industry, invasive species (particularly for kilka fish). 52 This report focuses on sturgeon and lulka, the Figure 7.2 Economic valuation of fishery two fisheries that have experienced the most degradation dramatic decrease in annual recorded catches of fishery over the past decade (figure 7.1). Recorded degradation sturgeon catches have declined from 1,710 tons in 1993 to 643 tons in2002. Kilka catcheshave tripled from 1993 to 1999, collapsing in the three years following. productivity method Lost catch Figure 7.1 Iranian Sturgeon and Kilka Production in the Caspian Sea (intons) 1800 100,000 1600 90,000 1400 80,000 1200 70,000 1000 60,000 Kilka 50,000 (tons) 800 40,000 7.4 THESTURGEON FISHERY 600 30,000 400 20,000 In Iran, the sturgeon fishery is a government monopoly managed by the Iranian State Fishing Company (SHILAT). Sturgeons, which spawn inthe rivers of the Caspian basin, are the most 1-*-Stureeon-cKilka I economically valuable fishes. The caviar derived from sturgeon roe is one o f the most expensive products, by weight, on the world commodity markets. Market prices range from US$35 to Source: SHILAT, 2002 US$75 an ounce depending upon source and type o f sturgeon. Iranian Beluga72caviar is the Quantifiing the economic cost of fishery degradation. To value the monetary impact of a most expensive. fishery collapse, two major types of information are important (figure 7.2). Firstly, degradation Threats to the Sturgeon fishery. The most pressing threat for sturgeon i s widespread means lost catch. There i s a direct impact upon poaching throughout the Caspian to feed the fishing income derived from a shnking fishery. This approach is often referred to as "change in international demand for caviar. The collapse o f the Soviet Union meant the dismantling o f its productivity" and i s similar to the valuation centralized fishing authority and the formation method used to quantify losses in agricultural o f the newly independent states. This led to the yields. Often the impact o f degradation i s partly masked by a government's intervention to development of large-scale, organized poaching, considered to be one o f the main factors remedy the damage. This is the case in Iran, responsible for the dramatic decline inofficially- where the department of fisheries has spent large amounts of money in fisheries restoration and recorded catch in the CIS as well as in Iran (figure 1). Uncontrolled poaching inthe Caspian artificial breeding. This approach is often has devastated sturgeon populations that were referred to as the "remediation cost" method. already in decline. Despite efforts to develop regulations for sturgeon catches in the Caspian Sea basin, an international agreement between the four former Soviet republics and Iran has not yet been signed. Sturgeon poaching inthe newly '*Belugais the largeststurgeon species inthe Caspian. 53 independent states increased dramatically, often pollution, reduced reproductive capability resulting in poor-quality caviar since female hasbeen noticed. sturgeons are caught at a very early age. Markets in the United States and Europe have Being a migratory species in the Caspian Sea, experienced a detrimental rise in illegal trade habitat degradation and poaching activities in accompanied by a decrease in product quality one country affect sturgeon catches in other (Abdolhay, 2005). countries. The Caspian Sea sturgeon fisheries may follow the destiny o f the sturgeon fisheries Poaching arises largely due to the lack of job of the Black Sea and NorthAmerica. The World opportunities incoastal areas, combinedwith the Wildlife Federation already designated the presence o f illegal networks o f caviar exporters. Beluga sturgeon the fourth most endangered It is estimated that poachers take about 12times species on earth (CEP, 2002b). the volume o f the officially recordedcatch inthe Caspian Sea. The sturgeon catch in the Caspian There are two monetary impacts arising fi-omthe Sea has declined from 25,000 tons per year to sturgeon fishery collapse. The first one i s linked 1,000 tons. Russian specialists believe that to the lost fish catch. Ifover fishing and coastal illegal fishing increases the official catch by a degradation hadnot occurred, fish catch in2002 factor of eleven - by a factor o f eight offshore would be higher. This i s accounted for in the and by three times for rivers (CEP, 2002b). next paragraph. The second impact i s the remediation effort undertaken by the Sturgeons are also under stress due to natural government to sustain the fishery through habitat degradation including(CEP, 2002b): fingerlings release. If this mitigation had not taken place, the catch levels would be even 0 Reduced access to spawning sites beginning lower, so the cost paid by the government must inthe 1930s-causedbythe construction of be taken into account as well. weirs, mostly for agricultural purposes, followed by the construction o f large dams QuantiJSing the lost catch. To value sturgeon on Russia's Volga River inthe 1960sand on fishery degradation, it i s necessary to quantify the Kura (Azarbaijan) and Sefid Rud rivers lost yearly catches. If degradation had not in the early 1970s. Up to 90 percent of occurred, catches under sustainable fishing Beluga spawning grounds are estimated to would be at a higher level. We call such levels belost dueto damconstructioninrivers.73 the "potential" maximum sustainable yield. The difference between this and the actual yield will 0 Destruction of natural spawning grounds give us the lost catch. due to quarry operations such as gravel and sand mining; stabilization o f river banks and N o data are available on the potential sustainable construction o f pumps for agncultural annual sturgeon catches without natural habitat development. degradation inthe Caspian and without poaching activities. However, based on statistics, the 0 Chemical and organic pollution from annual catches in Iran fi-om 1978 to 1990 industrial activities and oil exploitation as averaged 2,000 tons (Taghavi, 1996). Going well as agricultural (pesticides and back in time, catches were at even higher levels. fertilizers) sources. Pollution has In the 1960s, annual catches in Iran increased accumulated in some parts o f the sea (such continuously, reaching a peak o f 3,000 tons just as in Baku, Azerbaijan). As a response to before the construction o f the dam on Sefid Rud River in 1971 (CEP, 2002b). Major natural habitat degradation in the Caspian (mainly through dam construction) took place in the 73 The reproductionof Belugaoccurs in theserivers:Volga and Terek (Russian Federation), Ural (Khazakhstan), 1960s and early 1970s, resulting in lower fish Kura (Turkmenistan) and Sefid Rud (Iran), with the yields, thereafter. Volga beingthe mostimportant. 54 The 2,000-ton yield is considered the lower considered a reflection o f the losses resulting bound estimate of the "potential maximum from habitat degradation and poaching activities. sustainable yield." It already incorporates the 1960s and 1970s degradation from infrastructure development into spawning grounds. The 3,000- 7.5 THEKILKAFISHERY ton yield is considered an upper bound for sustainable yield. It is the yield that would have While economically less important than been possible without infrastructure sturgeon, kilka, a species of bony fish, is a major development. As a result, an average of 2,500 contributor to Iranian fish production and a key tons per year will be used as our "best estimate" element in the sturgeon food chain. Kilka of potential annual sustainable sturgeon catches. species have been fished in Iran since the early Under this consideration, the loss o f sturgeon 1970s, but the boom in catches was experienced catch for 2002 would be 1,857 tons (2,500 only in the past decade when there was a major minus 643). expansion inthe kilka fishingfleet. The average percentage of caviar production out Threats to the kilkafishery. The hlka fishery is o f meat production i s assessed at 15 percent threatened by the combjelly, Mnemiopsis leidyi, (based on Keiwan, 2003). This i s equal to a loss an invasive species introduced by humans. It of 278 tons o f caviar for 2002 (1,857 tons arrived in the Caspian in the late 1990s, carried multiplied by 15 percent). At an average export bythe ballastwater of ships traveling the Volga- price o f US$533 per kilogram, this results in a Don canal, linkmg the Black Sea to the Caspian loss of US$148 million. Sea. The invasive species spread through the entire sea and i s most concentrated along the Measuring remediation costs. Numerous Iranian coasts. The comb jelly grows quickly sturgeon hatcheries were created as mitigation (being able to double its size in one day), for lost spawning habitat as a result of dam reaches maturity in two weeks, and reproduces construction inthe former Soviet Union and Iran rapidly. (Sefid Rud, Gorgan Rud and Tajan rivers). Artificial breeding o f sturgeon species and Following the invasion o f the comb jelly, the fingerlings release started in Russia in 1955. In kilka fish catch deceased dramatically since Iran, the process began in 1972. The production 2000 (figure 1). The catch o f 2001 and 2002 and release o f sturgeon fingerlings continued present 76 percent and 44 percent o f the average with the establishment of eleven centers in annual catchbetween 1993 and 1999. Russia and three hatchery centers in Azerbaijan and five in Iran. Hatcheries played a crucial role Quantifiing the lost catch. As with sturgeon, an in the rehabilitation and restoration of sturgeon assumption has been made about the potential stocks. Based on expert opinion from the Iranian maximum sustainable yield of lulka had Fisheries Department at the Ministry o f degradation not occurred. This i s estimated as Apculture and Jihad, 85 percent of Iranian the average annual catch of kilka between 1993 sturgeon catches are related to fingerlings and 1999, that is, before the introduction o f the release. As an average, the survival of hatchery- comb jelly. The level calculated i s equal to produced fingerlings to the commercial fisheries 61,000 tons. As a result, the loss catch o f kilka i s estimated at one to three percent. The in 2002 amounts to 35,000 tons (61,000 minus production cost o f each fingerling is US$0.50 26,000 tons). Assuming an average wholesale (Abdolhay, 2005). No data were available on price of US$0.20 per kilogram, this results in a sturgeon fingerlings release for 2002. Therefore, loss o f US$ 6.8 million. the average annual release for the last recorded years, 1997, 1998 and 1999, has been usedhere. The average release during these years was 22 million fingerlings (CEP, 2002b). This results in a total cost of US$11 million. This amount i s 55 7.6 TOTALDAMAGE COSTS Based on the above, the damage cost to Iran resulting from natural habitat degradation and poaching activities inthe Caspian region as well as the manmade introduction of an invasive species amounts to US166 million for 2002 (or IRR 1,323 billion or 0.15 percent of GDP). This figure represents the damage cost o f degradation inthe Caspian Sea anditsriver sources for 2002. Table 7.1 Annual damage costs o f fishery degradation (mean estimate, 2002) Category of loss Sturgeon-lost catch Sturgeon remediationcosts Kilka-lost catch 56 0.01 Total 1 166 1,323 0.15 The results presented here are considered inlight o ftwo important caveats. The table does not include the losses o f non- timber forest products related to mangrove and coastal environment degradation. It does not consider recreation losses. It does not measure the loss o f existence values. It is difficult to quantify such impacts. Moreover, the report does not consider the lost ecosystems in the Persian Gulf, where degradation from oil activities and infrastructuredevelopment may be high. Thus, the results presented here are to some extent an underestimate of damage. Another important caveat i s that the cost o f degradation cannot be imputed totally to Iranian activities. Poaching activities appear to be more prevalent in the Commonwealth of Independent States than in Iran. The degradation o f spawning grounds for sturgeon is more relevant interms of area degraded in the CIS. Thus, assigning a portion ofthis cost to Iranis difficult. 56 8. Waste and Climate Change 8.1 WASTESECTOR Another study by Belhaj (1995) assesses households' WTP to improve waste collection Municipalwaste. Approximately 53,000 tons of and street cleaning in the cities o f Rabat and waste i s produceddaily inIran. (equivalent to 20 Salt in Morocco. An average WTP o f Dh 40 million tons per year). Average daily waste (US$4.70) per household per month. Adjusting production in the country was 0.82 kilograms this figure to 2002 prices and accounting for per capita in 2002 (DOE, 2004). Waste GDP per capita differentials between Morocco generation varies across the country. Some and Iran, this results in a WTP o f US$7.30 per provinces, such as West Azerbajian, generate up household per month for 2002. to 1.4 kilograms per capita per day, while others, such as Khoozastan and Booshehr, generate as A lower bound of US3.30 per household per little as 0.4 kilograms per capita per day. month and an upper bound o f US$7.30 will be used to evaluate households' WTP to improve Collection rates in large cities with populations waste collection and street cleaning in Iran. over 500,000, have improved significantly over These adjusted WTP were applied to the portion the past decades to reach 90 and even 100 o f the population without adequate waste percent collection. Smaller urban cities with collection. It was applied to five percent of populations of 25,000 to 500,000 inhabitants households in large urban cities, 30 percent of have a collection rate averaging 70 per~ent.'~ households in smaller urban cities and to 45 Collection rates in rural areas range from 50 to percent of rural households. It should be noted 60 percent. This rate depends upon the village as that when waste collection i s inadequate, it some are estimated to have 100 percent impacts not only households without collection, collection rates whereas others have 40 percent. but also their neighborhoods. This is becausethe resulting increase in odors, rodents and insects The damage cost, or cost to society o f affects everyone. However due to a lack of data inadequate waste collection and street cleaning on the extent of the population affected, this can be estimated by the willingness to pay o f analysis will be limited to the population individuals and communities for improved waste estimated to be without adequate waste collection services. In the absence o f any study collection. inIranon the WTP to improve waste collection and street cleaning, damage cost estimates are Based on the methodology described above (and based on studies in other countries. Altaf and described in greater detail in annexes I1and 111), Deshazo (1996) estimate households' WTP for the total willingness to pay to improve waste improved waste collection in Gujranwala in collection and street cleaning inIran is estimated Pakistan using a contingent valuation method to range from US$145 million to US$325 they surveyed nearly 1,000 households in 1990. million per year (or an average o f IRR 1,872 Of the households surveyed, 71 percent were billion or 0.21 percent o f GDP) in2002. willing to pay an average o f 11.2 rupees (US$0.52) per household per month. Adjusting Hospital waste. Average daily hospital waste this figure to 2002 prices and accounting for production in Iran ranges from 390 to 470 tons GDP per capita differentials between Pakistan per day (DOE, 2004). Average daily per capita and Iran, this results in a WTP o f US$3.30 per waste production i s about 10.4 grams, with household per month for 2002. people in Kordestan province producing the highest amount o f waste (49 grams per capita 74 According to the opinion of waste expert at the World per day) and the people o f Ilam province BankinMarch2005 producing the least (2 grams per capita per day). 57 Nationwide, about 58 percent of hospital waste prepare a technical design.75The proposed new i s buried. Thirty percent of it i s stored and site will be located in Houshang about sixty to incinerated and seventy percent is only stored seventy kilometers from the city center. It has (DOE, 2004). Due to a lack o f data, it was not the capacity to receive three million tons of possible in the course of this study to assess the waste per year and a lifetime o f approximately potential environmental damage resulting from fifteen years. It has been designed as a simple, improper storage and disposal o f medical waste. cost effective landfill that meets environmental concerns. The proposed landfill will include Industrial waste. Industrial waste production basic landfill design, a bottom liner (to control has grown rapidly over the past decades. Waste leachate and avoid polluting the surrounding production doubled between 1995 and 2000. In environment), a leachate collection and 2000, the total amount of industrial waste treatment system, a gas collection and treatment generated by industrial workshops o f ten or system, replanted vegetation, site closure, more employees reached eight million tons aftercare requirements and operation, and site (DOE, 2004), representing an average o f 22,000 supervision and monitoring. The gate fee tons per day. The iron and steel industries are resulting from these investments and operation the largest producers of industrial waste. Some i s about US$5.70 per ton o f waste. waste is stored inside facilities, while some i s transported to dedicated disposal sites. A lack of The difference between the gate fee o f the information regarding industrial waste disposal current landfill that does not address and the extent o f treatment has prevented environmental concems and the proposed new computation of a damage cost for this study. landfill that incorporates environmental concerns i s about US$4.70 per ton o f waste. Landfills. Most municipal waste generated in This difference represents the incremental Iran i s sent to landfills that are generally well investment cost to minimize environmental managed, but designed with few environmental damage. Although it does not assess the direct considerations. For the purpose o f this report, a damage costs resulting from "unsanitary" comparison betweenthe costs of landfills "with" landfills, this difference provides an and "without" talung into consideration approximation o f the cost o f protection and will environmental concerns will be done. The be used as a proxy for damage costs. This difference in cost i s then applied to municipal difference was applied to total municipal waste waste generatedto reflect the incrementalcost to generated yearly in Iran. The result is about avoid environmental damage. US$90 million per year (or IRR 730 billion). The following observation should be warranted: The first landfill considered i s the one currently given the rough nature o f this estimate, it is serving the Greater Tehran area. It is located at recommended that even further analysis be Kahrizak, thirty kilometers from the city center. undertaken to assess the damage cost of The landfill can accommodate all waste "unsanitary" landfills on the environment. generatedinthe city. The gate fee is estimated at about US$1 per ton. This fee includes waste Loss in recreational value in the northern reception, waste dumping and minimal soil provinces. The three northern provinces: Gilan, cover. The fee excludes the price o f land and Golestan and Mazandaran are important from a any profit generated. touristic point o f view. It i s estimated that about five million visitors from other parts o f the The current landfill in Kahrizak is expected to country make a trip every year to one o f these reach its maximum capacity by the end of 2006. Therefore the Organization for Waste Recycling and Composting (OWRC) has commissioned a feasibility study to select an alternate site and ''BC Berlin. 2004. "Tehran Solid Waste Management Project: Landfill Preparation Study, Final Report," prepared for the Organization for Waste Recycling and Composting(OWRC) and the World Bank. 58 provinces.76 Tourists are attracted to these Using an average expenditure of US$35 per day provinces since they are well located, the and an average time spent o f three days per trip. landscape i s interesting and the area i s That would result in a potential revenue decline historically important. The provinces also have a ranging from: US$50 millionto US$lOO million good climate and border the Caspian Sea to the annually. south and the Alboz Mountains to the north. However, inrecent years, some two million tons Table 8.1 summarizes various impacts o f solid waste has been dumpedonto riverbanks, associated with sub-optimal waste management near the sea or in the nearby forested areas practices and their associated damage costs. (Sabour, 2002). Leachate from the waste, with However, as noted previously, damage high levels of BOD and COD, now pollute associated with the limited treatment and surface water. Groundwater i s also at risk from disposal o f industrial and hospital waste has not contact with a contaminated plume77spreading been included in the analysis. It i s therefore from polluted surface waters and upper soil expected that these results are likely to layers. Pollution of water bodies i s impacting underestimate total damage costs. aquatic life (Sabour, 2002). The "spoiled" environment i s beginning to impact decisions to Table 8.1 Waste: annual damage costs (mean visit the area. Duringpreparation o fthis study, a estimate, 2002) few informal interviews were conducted among Rials visitors to the Caspian area and a strong willingness to pay a premium to avoid further Municipal waste 1,870 environmental degradation was expressed. collection However no formal study or survey has been Unsanitarylandfills Waste dumpingin 630 0.07 conducted to assess the impact of the decline in Northernprovinces I "environmental quality" on domestic tourism Total I 407 3,230 0.36 andrelatedrevenues. A study conducted in the Tropical North 8.2 GLOBAL IMPACT FROM cozEMISSIONS Queensland in Australia, which is primarily a nature-based destination for both domestic and The international community has become international tourists, revealed that a decline in increasingly concerned that certain gases the region's environmental condition from released into the atmosphere - COz often the "unspoiled" to "somewhat spoiled" could result largest - are causing an increase in global in a decline in visitor expenditure by thirty temperatures. The latter i s then likely to result in percent (Huybers and Bennett, 2003). Applying sea-level rise, increased drought frequency, a similar scenario to the three northernprovinces melting glaciers, and other environmental o f Iran, one could assume that the impact o f changes. "somewhat spoiling" the environment through waste dumping could result in a decrease in Greenhouse gas emissions in 1994. Iran visitor expenditure inthe range o f ten to twenty prepared a national inventory o f both direct percent (a range lower than thirty percent has greenhouse gases (COz, CH4, NzO) and indirect been applied to reflect the fact that the northern greenhouse gases (NOx, CO, NMVOC) for 1994 provinces are not exclusively nature-based (UNDP, 2003). Accordingly, total C02 destinations). emissions from different sectors were about 342 million tons. Total COz equivalent emissions were estimated at 405 million tons. As an oil producing country, Iran emits large amounts o f '` Reference: Annual Statistics of the provinces of greenhouse gases in the energy sector. Figure Mazandam, Gilan andGolestanfor 2001-2002. 8.1 shows the contribution o f each sector to 77 A plume is a well-defined, usually mobile, area of COz+quivalent emission. contaminationfound in surfaceor groundwater. 59 Figure 8.1 Greenhouse gas emissions in C02 of Kyoto not beingratified (World Bank, 2003). equivalent in 1994 Usingthe prices of US$13/tC and US$18/tC, the annual damage cost o f carbon emissions is estimated from US$1.3 billion to 1.8 billion (or approximatelv IRR 12,300 billion or 1.36 63 Energy percent o f GDP) IEB Industry It's important to note that the above damage 0Agriculture resulting from C02 emissions - and hence Forest climate change - are likely to be at a global and W Waste not a local level. For this reason, they are kept separate from the estimate of environmental degradation presented in other sections of this report. Greenhouse gas emissions in 2002. Based on projections inIran's National Communication to the United Nations Framework Convention on Climate Change (UNDP, 2003), total COz equivalent emissions are expected to reach 645 million tons in 2002. Since the impact of carbon released from the forest sector was computed in chapter 6, the contribution o f the forestry sector will be deducted from the total to avoid double counting. Therefore, total C02 equivalent emissions in 2002 (without the contribution of the forest sector) are estimated at 609 million tons (or 164 tons of carbon, since each ton of COzcontains 12/44 tons of carbon). How are these emissions affecting climate change? Are 100 percent o f Iran's emissions increasing global warming? Or are emissions from Iran such a small portion of global emissions that they cause negligible damage? For purposes o f the current study, the latest recommendations from Kyoto (requesting a 60 percent reduction in current global COz emissions) will be applied to Iran. 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The same report also Chapter shows that in the Irano-Touranian forest region, the area covered by juniper forests (1) Actually, the situation is more complex: (Juniperus polycarpus) diminishedfrom 3.4 besides being scarce, most forests and their millionhectaresto 500,000 hectares over the benefits are publicly owned. Therefore, last fifty years; this corresponds to an forest users, most o f whom are poor, have average annual deforestation rate o f about little incentive to conserve forests. Rather, 60,000 hectares for this forest type. These they prefer short-termbenefits such as clear- figures are considered too high to be cutting for wood, overgrazing and considered for the most recent period. conversion to agriculture. The institutional Calculations consider the ratio of average and regulatory framework i s quite weak, deforested areas between the two types o f thus enforcement measures to limit illegal forests. activities are rarely applied. This (6) It usually considers the impacts o f overexploitation usually results in a high deforestation and forest degradation on both rate o f forest degradation and depletion. current and future generations. This phenomenon is common in most MENAcountries. (7) Of which two percent of the country's area i s affected by strong erosion, 15 percent by (2) For example, in Turkey, the forestry moderate erosion, and 26 percent by light contribution is only 0.5 percent o f GDP, erosion compared to agriculture's 13 percent contribution (Turker et al.,2005). (8) Overgrazing in high stocking areas has resulted in serious erosion and loss of (3) Meanwhile, FA0 (based on official national vegetation and soil in many parts of the sources) reports no annual forest change Caspian area which are now sensitive to between 1990 and 2000. This figure is desertification (Caspian Environment explained by very broad descriptive Programme, 2000, 2002a). Soil erosion in assumptions: plantations are reported to the Zagros mountains has increased from 2 have increased and deforestation of natural to 3 tons per hectare to approximately 10 forests is assumed to be low (FAO, 2003). tons per hectare over the past several Considering the recognized importance of decades (GEF/"DP, 2001). Forest the deforestation issue in Iran, a zero conversion to agriculture and overgrazing in deforestation rate would be s~rprising.~' forests are the main causes o f soil erosion in (4) Some local experts argue against the this region. A study assessing soil erosion reliability of the 1944 inventory and sustain and sediment yield processes in Rose Chai that the current annual deforestation rate i s sub-catchement o f Western Azerbaijan about 50,000 hectares per year, or 0.4 shows an annual erosion rate ranging from percent per year (Sagheb-Talebi, 2004, 3.5 tons per hectare per year to 7 tons per personal comm.). hectare per year (Najmoddini, 2003). (5) The N B S A P (2000) reports that Zagros (9) In fact, this i s the highest share among all forest area has fallen from 12 million Central Asian countries (FAO, 1996). (10) Following FA0 estimates, 46 percent of total soil loss is due to deforestation, or 460 78 The difference may be due partly to the use o f different forest areas. FA0 gives a figure o f about 7.3 million tons per year. But this erosion i s the millionhectares, or 4.5 percent o f the country's area. result o f all past deforestation (of 7.1 million 66 hectares). We assume that new deforestation The estimates seem quite high; however would increase erosion in proportion to the (13)details of their calculations were not area affected. Annual deforestation o f provided, therefore, we are not able to assess 125,000 hectares would increase deforested their validity. areas by 1.8 percent. (11)environmental The replacement cost method values (14)Iran's Aside from the figures reported below, national communication reports under damage using the cost o f the heading "GHG emissions from forestry replacing lost ecosystem services: either the sector" two additional estimates: about 0.46 cost o f restoring the ecosystem so that it million tC02 as net emissions from the once again provides the service, or the cost conversion of pastures, farmlands and other of obtaining the same service inanother way managed lands (other than forests); and a (as in this case: using artificially applied figure of 0.47 million tC02 as net uptake nutrients to replace lost soil nutrients). One from the spontaneous regeneration o f should be aware of the limitations of this grasslands as a result o f the abandonment of valuation method. Using it to estimate the managed lands such as farmlands, orchards, value o f an entire ecosystem results in an pastures, and other lands (other than forests). underestimate of the damage, as As they are not referring to forests, these replacements rarely replace all services estimates are not considered inthis chapter. coming from the original ecosystem. However, when it is applied to estimate the The report gives no explanation o f how value o f a specific service, it usually results (15)this estimate was calculated. It only in overestimates. The replacement cost specifies that it refers to all legal and illegal method is generally considered to provide harvest o f industrial wood from commercial valid estimates as long as (i) the replacement forests and fuel wood from other forests. service i s equivalent in quality and However, it corresponds to an annual magnitude to the ecosystem service; (ii) the emission o f about 5.6 million tC, or about replacement i s the least costly way o f 0.45tCha o f forests. This coefficient i s replacing the service; and (iii) people would relatively highifcompared to the estimate in be willing to pay the replacement cost to Turkey (0.35tCha o f forests; UNECE-FAO; obtain the service (Shabman and Batie, 2000), probably due to the highincidence of 1978). However, few have verified whether illegal cutting (not accounted for in Turkey these conditions hold (and indeed we are byUNECE-FAO). unable to do so here). Despite these caveats, The report does not explain how this in this particular case, we believe our (16)figure was calculated. However, it shows an estimate can be taken as a conservative increase in forest area o f about 491,000 estimate or minimum value o f the damage hectares (afforested area, tree plantations caused by erosion, because: (1) we are around villages, parks and green spaces). conservatively assuming that only about one The estimate would then correspond to an percent o f all erosion i s due to forest-related annual carbon increase o f about O.7tCha. causes; and (2) this valuation only takes into This indicator is similar to that annually account nutrient losses, without any effort to sequestered in deciduous trees o f other estimate other erosion damage. Middle East countries, such as Lebanon (Lebanon Ministryo f Environment, 1999). (12)of The estimate is based on the f.0.b. price fertilizers supplied by Iran on the world market of about US$95 to US$107 per ton (17)regarding The report gives no further explanation the way in which these estimates (IFDC, 2002). The resulting estimate i s low were calculated. However, based on the ifcomparedtotheaveragepriceoffertilizer given data, it appearsthat (1) the annual loss in Turkey, which ranges from US$0.45 per o f dry matter due to forest conversion would kilogram to US$2 per kilogram (Bann and be roughly about [180-10]*45,000 = 7.8 Clemens, 2001). million tons o f dry matter. Using a carbon 67 conversion factor of 0.5 (UNECE-FAO, 2000), it would result in(to) a loss of 3.6 million tC, which corresponds to about 13 million tCO,. Therefore, the results o f the reported calculations appear to be realistic, even though the assumptions and detailed calculations were not specified. (18) The approach used the following parameters: the number of forest species yielding medicinal products; the royalty rates that would be payable to the host country; a coefficient of rent capture; the likely value of internationally traded pharmaceutical products; and the forest area. 68 Annex III WATERAND SANITATION(2002) MORTALITY (Z 5 years of age) Source Quantity Unlts Total population SCI, 2004 65,368,000 Proportionof child population(4years) SCI, 2004 12.9% Population<5 (total) 8.439.647 Underfive mortality rate (per 1,000) WDI, 2004 0.041 Annual under five deaths (all causes) 69.205 per year Childdiarrheal diseasedeaths IranExperts 12.5% of child mortality rate Childdiarrheal disease mortalityrate 0.005 Annual child diarrheal diseasedeaths 8,651 Percentof cases avoided per capitaper year if cleanwater and adequatesanitation is providedto the entire populationand hygiene practices are fully observed. Huttonand Haller,2004 85% Annual childdiarrhea deathsfromlack of WS&S and cleanwater 7,353 DALYsper child death. MurrayLopez, 1996 33 discounted years of life 10s DALYs from child diarrhealdlsease deaths 246,180 peryear MORBIDITY(e5 years of age) Quantity Units Populationof children (4years) 8.439.647 Diarrhealprevalencein children (< 5 yrs of age) in last 10days MOH, 1997 22% Total casesof diarrhea 48,407.400 Average length per episode 4 days Total diarrheadays per year 193,629,600 days Percentof cases avoided per capita per year if cleanwater and adequatesanitation is providedto the entirepopulationand hygienepracticesarefully observed. Huttonand Haller.2004 85% Total diarrheadays per year relatedto lack of WS&S andcleanwater 164,585,160 days DALY(disability seventy weight) MurrayLopez, 1996 0.1 1 DALY (ageweight) WHO, 2004 0.31 DALYs from child diarrheal disease morbidity 15,213 peryear MORBIDITY (>5 years of age) Quantity Units Population(>5 years) 56.928.353 Diarrhealprevalencein people (> 5 yrs of age) in last 10days Authors' calculations" 4% Total cases of diarrhea 65,305,000 Average length per episode 4 days Total diarrheadays per year 261,220,000 days Percentof casesavoidedpercapita per year if cleanwater and adequatesanitationis providedto the entire populationand hygiene practicesarefully observed. Huttonand Haller, 2004 85% Total diarrheadays per year relatedto lack of WS&S andclean water 222,037,000 days DALY (disabilityseventyweight) Munay Lopez, 1996 0.11 DALY(ageweight) WHO, 2004 1.oo DALYsfrom dlarrheal dlsease morbidity (> 5 years old) 66,915 per year COST OF ILLNESS Quantlty Units Cost of treatment, ORT (slyears old) Number of diarrheacases per year (c5 years) as calculatedabove 48,407,400 Percentof cases treatedwith ORT" MOH. 1997 47% Casestreatedwith ORT 22,751,478 Unit cost of ORT treatment Iranianhealthexperts 1 US$ percase Cost of ORTtreatment 22,751,478 US$ Costof treating severe cases of dlarrhea Inhealthfacility (<5years old) Percentageof casestaken to healthprovider 40Y0 Total cases of diarrheatreatedin healthfacility 19,362,960 Cost per treatment (Basedon Rials60,000 for doctorvisit and Rials 10,000 for medication) Iranianhealthexperts 8.75 US$ Costof treatingdiarrheain healthfacilities 169,425,900 US$ Cost of treatment of severe cases of dlarrhea Inhealthfacility (z 5 years old) Percentageof casestaken to healthprovider 22% Total cases of diarrhea treated in healthfacility 14285.469 Cost per treatment(Basedon Rials60,000 for doctorvisit and Rials 10,000for medication) 8.75 Cost of treatingdiarrhea in healthfacilities 124,997,852 Loss of caregivers' tima to treat diarrheal cases (6years old) Percentageof cases involvingcaregiver'stime 40% Numberof casesof diarrhea"" 19,362,960 Value of one day lost lo caregiver (basedon average household wage incomein ruralareas) SCI. 2004 Cost of lost time due to caregiving(assuming two days of care 4.6 US$ giveh time per case) 177,786,421 US$ Total 494,961,651 * Discountedyearsof life lost havebeenadjustedto Iranbytakinginto accountthe average life expectancy. *' Prevalenceratio(POPunder 5 years/population over 5 years) for diarrhealdiseases does not exist for Iran.The abovewas estimated basedon ratiosfoundinVietnam, Columbiaand Qena and DamiettaIn Egypt, "*ORT = Oral RehydrationTherapy ""It was assumedthat severe casesof diarrheawould requiretwo days of caregivers' time.This is a conservativeassumption, given that on average eachcase is likelylo last 4 days. Annex I11 'OLLUTIONOF WELLS 'rovince name No. of wells dug and No. of wells Average expenseof Average expense of Total expenses equippedduring the which are out of digging and digging and of new wells in Third Development use because of equippinga well in equipping a well in 2002 prices Programfor drinking pollution (2000- 2004 (Million Rials) 2002 Drices (Million (Million Rials) water 12000-2004) 2004) Rials)* lormozgan 25 3 500 361' 1,084 ihaharmahal- 45 13 400 lakhtiari 289 3,757 anjan 11 5 550 397 1,987 .astAzerbaijan 138 17 350 253 4,299 orestan 12 3 700 506 1,517 ;horn 29 4 270 195 780 iemnan 25 2 1500 1,084 2,168 :horasan 320 40 550 397 15,895 am 12 6 800 578 3,468 :ashan(city) 29 6 360 260 1,561 Vest Azerbaijan 26 6 450 325 1,951 lazvin 37 7 400 289 2,023 ushehr 29 2 450 325 650 'azd 18 10 214 155 1,546 ;olestan 38 4 1100 795 3,179 :hohgiluye & 9 0 800 Ioyerahmad 578 0 lazandaran 14 0 300 217 0 ehran 632 50 600 434 21,675 :ordestan 17 7 350 253 1,770 iistan & 36 4 302 laluchestan 218 873 rrdebil 25 4 400 289 1,156 larkazi 42 10 600 434 4,335 rhuzestan 7 9 500 361 3,251 ihiraz ( city) 21 5 1200 867 4,335 :erman 52 4 450 325 1,301 ars 140 26 1100 795 20,664 'otalfor 4 years 1790 247 584 422 105,223 werage peryear 448 62 26,306 'his data"was proviied by Mr. Elahi Panah'(Nationa1Water and Wastewater Engineering Company) in March 2005 AoDlvina an average inflation rate of 15.5 Percent * . Annex I11 URBANAIR POLLUTION(2002) ParticUlateS - Source Iran TehranArea Greater Mashad lsfahan City Shiraz Tabrir Ahwaz b r a ] cities. Other ICrudedeath rata (per 1,000 population) SCI. 2004 6.5 6.3 6.6 5.8 6.4 6.5 5.4 6.3 6.5 Cardiopulmonary(CP)and LungCancer(LC) mortality (%ofalldeaths)" MOH 32% 32% 32% 32% 32% 32% 32% 32% AnnualaveragePMlO(ug/m3)^" DOEIAQCC 100 85 102 76 69 81 100 77 AnnualaveragePM2 5 (uglm3Y 60 51 61 46 41 49 60 35 PM2.5 thresholdlevel(udm3) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Total population(millionsr"" WDi & SC1.2004 65.4 10.0 2.5 2.5 1.2 1.5 1.0 1.1 12.8 Adult population>= 15yn (millions) SCi, 2004 39.5 6.1 1.5 1.o 1.5 0.7 0.9 0.6 0.7 7.8 Child population<=14yrs (miilions) SCI, 2004 25.8 4.0 1.0 0.5 0.6 0.4 0.4 5.1 Exposedtotal population (millionsr""' 9.0 2.0 2.0 0.9 1.2 0.8 0.9 10.3 Exposedadult population >= 15yrs (millions) 5.4 1.2 1.2 0.6 0.7 0.5 0.5 6.2 Exposedchiid populationem14 yrs (millions) 3.6 0.8 0.8 0.4 0.5 0.3 0.3 4.0 lmpam DALYs Healthend-points Units per1 Cases Cases Cases Cases Cases Cases Cases Cases Totalcases il0,OOO Total U d m j cases DALYs Prematuremortality(PM2.5) %change in CP and LC mortalitv 0.8 5,324 1,095 1,140 454 528 342 516 3.801 13,200 80,000 105,60 Chmnicbmnchibs(PM10) per 100,000 adults 0.87 4.760 900 1.090 360 430 350 460 4.150 12,520 22,000 27.50( Hospitaladmissions(PM IO) per 100,OOOpop. 1.2 10.850 2,050 2,490 870 990 790 1,050 9,470 28,560 160 500 Emergencymomvisits (PM101 per 100.000pop. 23.54 212,900 40,200 48.900 17.000 19,400 15,500 20,600 185,800 560,300 45 2,500 Resbictedactivihldays(PM IO) per 100,000 adults 5750 31,461,000 5,940,000 7,220,000 2,513,000 2,864,000 2285,000 3,048.000 27,458,000 82.789.000 3 24,80( Lower respiratoryillness in children(PMIO) per 100,000childre 169 604.000 114,000 139.000 48,000 55,000 44,000 58.000 527.000 1.589.000 65 10,30( Respiratorysymptoms (PM 10) per 100,000adults 18300 100,126,000 16,903,000 22,979,000 7,996,000 9.1 13.000 7,272,000 9.702.000 87,367,000 263.480.000 0.75 19,80( 191.00 * "Othercities"includecities with a populationof 0.lmillion to 1 millioninhabitantsin 2002 based on the 1996census and appl*ng averagepopgmwthrate (SCi. 2004) "Data forcardiopulmonaryand lungcancerare basedon informationfmm MOH(w.mohme.gov.ir) and representaveragefor 18pmvincesin iran Cardiopulmonarydeaths includedeathfrom asthma,heartattack,pneumonia, etc. "'PM10 levelsforTehran, lsfahanand Tabrizare basedon availabledatafmm monitoringstations.Datafor Mashadare assumedto beappmximateiyequalto the averagefor isfahanand Tabriz. PMlOlevelsfor Shirazand Ahwazwereobtainedfrom dust datamnvertedto PMlOusinga factorof 0.5. Levelsof PMlOfor Karajwere assumed to besimilarto thoseof Tehran PMlOlevelsfor-other cities-are basedon avewe PM10forall citiesWith a populationfmm 0.1 millionto 1million in Iran,obtained fmm Wodd Bank DECestimations(www.worMbank.orgIniprlAbiu~mapping.htmi) -*Measures of PM2.5 do not existfor Iran.Approximationswareobtained by convertingPM10levels usinga wnverslon factorof 0.6for Tehran, Mashad, Isfahan.Shiraz,Tabriz.Ai" and Karaiand 0.45for "other cities' '-*population projectionsfor Iran. KarajandAhwar for2001 are basedon the censusof 1996(SCi. 2004)and the averagepopulationgmwth rate Populationestimatesfor the GreaterTehran Area (area2300km2).Mashad, Isfahan.Tabrizand Shiraz are fmm the WikipediaEncyclopediaw.en.wikipedia.oq I*****90%was assumed for the GreaterTehran Area (expertopinionat Ministryof Health,JanO5)and 60%for othercities VALUATIONOF MORBIDITY:COST OF ILLNESS Particulal - Costs InUS$Per Case Unit Chronic Hospital Emergency LRI in Units Cost bronchltls admlsslons room vlslts children RADS Cort of Illness Hospitalization perday 75 206 Doctorvisits pervisit 13 229 Emergency visits pervisit 50 138 Valueof lostwork days (incl. householdwork) Perday 8 373 Valueof lostcaregiverbme' perday 8 8 1.2 Icost-ofdllness per case IUS) 947 532 66 21 2.0 Chronic Hosoital Emeraenw LRI In TOTALCOST (ANNUALCASES) bronchnlr adrnisrlons r o o m k t i chlldren RADS TOTAL Costof medicaltreatmentUS$ 7.180.000 12,916,583 26,155,779 19,962,312 66.215.00 Costof time lostto illness US$ 4,871,000 2284,198 8,962,436 12.708.648 165.534337 194.161.00 Total 11,851,000 15.200.780 37.118215 32.670.959 165,534337 262,375,OO Averagewage rate in urbanareas (SCI. 2004) Costof illness (hospitalization,doctor vislts, emergencymomvisits)isbasedon informationfromdoctorsin iran Chmnicbronchitis(C5): Estimatedcost is basedon monthly doctorvisitfor 25%and tnice-a-yearvisits for 65%of individualswithCB: emergency doctorvisitonce a yearfor 30%of individuals.and averageWay hospitalizationonceayear for 2.5% of individuals;and 5 workingdays lostperyear for 35%of individuals. NOTE: Costsare discountedat 10%for a periodof 15years. reflectingthe chmnic natureof the illness, Dataare basedon flndingsfmm the UnitedStatesand Europe(Schulman.Ronca. and Bucuvaias. Inc2001and Niedenanet al l! Hospitaladmissions:Estimatedwst is basedon an averageof t\w days of hospitalizationand hholostwork days. Emergencymomvisits:Estimatedcost is basedon costof doctorvisitand 112day of work Restrictedactivitydays (RADS):Estimatedwst is basedon 1work day lostper 10 RADS. URBAN AIR POLLUTION(2002) Lead(Pb) - GreaterTehran Key parameters Source Iran Area IPooulation(mill) SCI. 2004 65.4 10.0 A d h papLialfOnr15 yr (mIll SCI. 2004 39.5 6.05 Adult populaton40-60 yrs lm Ill SCI 2004 9.2 1.40 Cnildrenpop,labon c=14 yn (milli SCI 2004 25.8 395 Annual average Pbambient wncentranons(L AQCC 067 ~xposedpapilauon(mill)90% or to1 9 Exposed addt male DOP 4060 yn (mill1 1.26 Exposed Ch ldren POP lm1lIl 3.56 DALYsper DALYr Impactsper CasesGreater 10,000 Greater Healthcategories Units 1udm3 Tehran cases Tehran 1Q oss (points1 per 1chiid 0.975 46.765 drpenenson (cases) per 1mill adultmales 72600 74&9 100 747 Non-faralneanattacks(cases) per 1milladuit males4060 yl 340 81 1,000 8 Prematuremom ry per 1milladult males40-6Oyr 350 83 100.000 633 Doseresponse coefficients(impactsperuglm3)are fmmOStm (1994). based on a surveyof studies.Thesestudiesassessedthe impactsof lead on adultmales.However for the purposeof mis currentstudy. aduit female havealso beenincluded. Healthimpactsare assumed negligiblefor concentrationsbelow0.5 ugh3 (i.e. estimatedbasedon observedlevels iess0.5 ugIm3). The coefficientfor ioss in intelligence(10)is basedon longterm exposure. The lossis thereforedividedby 14to wnvert to annuallossesin childrenages0.14 years There are no comprehensivemonitoringdataof PbinTehran for 2002. The ambient concentrationused hereis basedon dataavailable for 1998I1999(AQCC). lYs importanttonotethatother sources (BahramiA, 2001) indicatelevelsof lead in 1996of 3.82ugIm3 Annex I11 INDOORAIR POLLUTION(2002) Key parameters Source Iran Total population(millions)2002 WB, 2004d 65,540,000 Underfive mortalityrate (per 1,000live births)2002 WB, 20046 41 Ruralpopulationshare 2000 SCI, 2004 38.5% Exposedpopulationshare (populationequivalentsas a % of total population)' WB staff 7.8% Prevalenceof ARI in childrenunder-5 Unicef 24% Prevalenceof ARI in >5 population WB staff 2% Populatione5 (total) SCI, 2004 8,439.647 Population>15 (female) SCI, 2004 20,317,400 Disabilityweight (ARI) WHO 0.28 Durationof ARI episode(days) WB staff 7 % of under-fiveswith ARItaken to a health care provider 11998-2003) Unicef 93% Days of caregiver's time per case WB staff 1 Exposed Mortality NBD population Odds ratio Deaths deaths PP OR PAR Indoor air YLL Lowerrespiratoryinfections childrene 5yrs old 5,997 7.8% 2.3 0.092 552 18,230 Chronicobstructivepulmonarydisease adultfemales (> 15yrs old) 6,164 7.8% 2.83 0.125 770 6,160 Lower respiratoryinfections adultfemales (> 15yrs old) 7,881 7.8% 2.3 0.092 726 7,980 TOTALloss per year 2.048 32,370 Exposed Casesof Illness Morbldlty Casesof illness population Odds ratio per year peryear PP OR PAR Indoor alr YLD Lowerrespiratoryinfections childrene 5yrs old 35,108,932 7.8% 2.3 0.092 3,233,400 5,380 Chronicobstructivepulmonarydisease (newcases) adult females (> 15yrs old) 17,811 7.8% 2.83 0 125 2,200 1,170 Lower respiratoryinfections adultfemales (> 15yrs old) 5,960,535 7.8% 2.3 0092 548.900 3,770 TOTALlossper year 3,784,500 10,320 TOTAL 42@0 Cost of illness <5 population Units Unit cost Total Healthcare providervisits (93%of cases) 3,007,100 admissions 13 US$ 39,092,300 Caregiver'stime 3,233,400 days 4.6 US$ 14,844,200 53,936,500 'Smith estimates6.1% for EMR-B PAR=PP'(OR-1)/(PP'(OR-l)+l) DATA: The NationalBurden of Disease(NBD)for IRANis estimatedbasedon extrapolationof Burdenof Diseasedata by WHO andWorld Bankfor similar countries,using 18%of child mortalitydue to lowerrespiratoryillness,2% of adultfemale mortalitydue to chronicobstructivepulmonary disease(COPD),and 3% of adultfemale mortalitydue to lower respiratoryinfection. The odds ratios (OR)are from Smith(2000)and reflecta reviewof internationalstudies. The exposed population(as a share of total population)to indoor air pollutionfrom biomassfuel is basedon ruralpopulationshare and total biomassfuel use (WDI. World Bank). METHODOLOGY The methodologypresentedin Smith (2000)has beenapplied here. The methodology is basedon NationalBurdenof Disease(NBD)statistics for illnessesldiseasesthat are associatedwith indoorair pollution,and odds ratios(OR)from internationalstudies that reflectthe increasedrisk of iliness/diseaseassociatedwith the indoor useof biomassfuel. DALYsare basedon discountedyears of lifelostfor eachdisease. Only mortalityis includedas Smithestimatesthat DALYsfrom morbidityare insignificant relativeto mortality. DALYsare only estimatedfor children less than five years of age and adultwomen because these groupsare likelyto spend disproportionatelymoretime indoorsthan schwl childrenand adult men Annex 111 POPULATION PROJECTIONused for WASTE COLLECTIONESTIMATE 1996 2002 Census Projection* Urban cities with population> 500,000 persons GreaterTehranArea 6,758,845 10,000,000 Esfahan 1,266,072 2,540,000 Mashhad 1,887,405 2,500,000 Tabriz 1,191,043 1,500,000 Shiraz 1,053,025 1,185,877 Karaj 940,968 1,059,683 Ahwaz 804,980 1,000,000 Qom 777,677 875,791 Kermanshah 692,986 780,415 Sub-total 21,441,765 Urban citieswith population< 500,000 persons Orumiyeh 435,200 490,100 Zahedan 419,518 472,400 Rasht 417,748 470,500 Hamadan 401,281 451,900 Kerman 384,991 433,600 Arak 380,755 428,800 Arbdedil 340,386 383,300 Yazd 326,776 368,000 Qazvin 291,117 327,800 Zanjan 286,295 322,400 Sanandaj 277,808 312,900 BandarAbbas 273,578 308,100 Khorramabad 272.815 307,200 Eslamshar 265,450 298,900 Borujerd 217,804 245,300 Abadan 206,073 232,100 Dedul 202,639 228,200 Kashan 201,372 226,800 Sari 195,882 220,600 Gorgan 188,710 212,500 Najafabad 178,498 201,000 Sabzevar 170,736 192,300 Khomeinishahr 165,888 186,800 Amol 159,092 179,200 Neyshabur 158,847 178,900 Babol 158,346 178,300 Khoy 148,944 167,700 Malayer 144.373 162,600 Bushehr 143,641 161,800 Qaemshahr 143,286 161,400 Qarchak 142,690 160,700 Qods 138,278 155,700 Sirjan 135,024 152,100 Bojnurd 134,835 151,600 Maragheh 132,318 149,000 Birjand 127,608 143,700 llam 126,343 142,300 Bukan 120,020 135,200 MasjedSoleyman 116,883 131,600 Saqqez 115,394 130,000 Gonbad-e-kavus 111,253 125,300 Saveh 111,245 125,300 Mahabad 107,799 121,400 Varamin 107,233 120,800 Andimeshk 106,923 120,400 Khorramshahr 105,636 119,000 Shahrud 104,765 118,000 Marvdasht 103,579 116,600 Zabol 100,887 113,600 Shahr-e-kord 100,477 113,200 Other urban citieswith populationsbetween 25,000 and 100,000each 7,570,000 8,525,000 Sub-total 19,682,100 I*Populationprojectionsare basedon the averaDe populationgrowth (ratesreportedinthe censusesof 1991and 1996 ' ' 2% Annex III Cost of Soil Salinity Irrigated crops Salinity level (dSlm) Ha Barellne Threshold Yield decllnePredlctedyield (tonlha Yield losses (millon ton) Pricdton Average total loss% of GDP Low High (mllllon) yield dSlm per 1dS/m Low Hlgh Low Hlgh US S (million US$) (1) (1) (2) (3) (4) (5) Rice 4 6 0.57 5.5 3 12% 4.84 3.52 0.38 1.13 325 245 0.22% Soy beans 4 6 0.07 3 5 20% 3 2.4 0.00 0.04 281 6 0.01% 4 6 0.14 5 6 5% 5 5 0.00 0.00 170 0 0.00% Wheat 8 12 118 5 6 5% 4 5 3 5 0 59 177 170 201 0 18% Wheat 16 20 063 5 6 5% 2 5 1 5 158 221 170 321 0 28% Sugar beat 16 20 022 45 7 5% 248 158 446 844 35 193 0 17% Barley 16 20 067 4 8 5% 2 4 1 6 107 161 140 186 0 17% Cotton 16 20 022 2 5 8 5% 1 5 1 0 22 033 408 112 0 10% Unusableland(6) 111 I 1 04% Total Loss (not including"unusable" land) 1.11% Total Loss (including"unusable" land) 2 16% (1) "Low" corresponds to the low bound Of salinity levelas indicated inTable 5.1 inthe report (with referenceto Mmmeni 2004). "High" is in the low-to-mid range of the salinityrange. (2)Tons per hectarefor salinitybelow threshold. These yields are derived from the World Bank report (200412 and FA0 statistics. (3) Salinitylevelbelowwhich salinitynormallydoes notaffect yields (4) Percentyielddeclineper dS/m above threshold salinity level (5)Priceof wheat and barleyare world prices. Priceof riceis Thairicewith a 30% markup on Iranianrice(premiumquality)as doneinthe IranIrrigationImprovement Project, ICT (WB. 2001a).The other prices are Iranianproducer prices in 2002 reportedby FAO. Exchange rateused is IRR7960 per US $ (6) This is landwith salinity> 32 dS/m. it is highlyunlikelythat this landcan be cultivatedany longer. Eventhe mostsaline tolerant crops havea maximumtolerance of less than 30 dS/m. Net incomeper ha has been usedto value the loss of "unusable"land, applyinga rangeof IRR7-10 million. This is inthe rangeof net incomefor various crops (WorldBank, 2001a). Note 1:As e conservativeapproach, it iS assumed that there are no yield losseson landwith salinity in the range of 04 dS/m. This land, end the cropsassumedto cultivatedon this land, is excludedfrom the of crops used in the estimationof the cost of soil salinity. Note2: The thresholdvalues and salinity-yieldresponsecoefficients are from the intemationalempiricalliterature. See for instance: i) FA0 (1998). FA0 Irrigationand DrainagePaper 58. PreparedbyAllen, R. et al. ii) Gratten. Zeng andShannon, Roberts (2002). Riceif moreSensitiveto SalinitythanPreviously Thought. CalifomiaAgriculture,Vol. 56, Number56. November/December. lii)Kotuby-Amacher,J. et al(1997). Salinityand PlantTolerance. UtahSate University. UnitedStates Note3 The irrigatedareas of the different crops are based on the World Bank report (20040 Optimaladaptation. if salinitywas the Only Soil characteristic affectingcropchoices. would implythat all the salt sensitivecrops are cultivatedon the landthat has Salinitylower than4 dS/m. Rice, so@eanand some wheat would then be cultivatedon landwith 4-6 dS/m. The remainingwheat under cultivationwould befound on landwith 8-16 dS/m andon some landwith 16-32dS/m. All sugar beet, barleyand cotton cultivationwould also be on landwith 16-32dS/m. Annex 111 EFORESTATIONand FOREST DEGRADATION (2002) Physical Unitof Price or Monetary Ipeforest benefit estimate measure unit value estimate Valuation method eforestation irect usevalues -Timber - Firewood 67,500 m3/year 150 10,125,000 Stumpage price 108,000 m3/year 30a; 10b 2,430,000 Stumpage price -Grazing 125,000 ha 15 1,875,000 Benefitstransfer: substitutecost method (Turkey) -Other NWFPs -- Hunting 125,000 ha 5 625,000 Benefits transfer: market price (Turkey) 125,000 ha 1 125,000 Benefits transfer: permit priceand licence fees (Turkey) Recreation 125,000 ha 6.5 812,500 Costof travel direct use values -Plant nutrients 72,720,000 kg 0.1 7,272,000 Substitute cost method: price of fertilizers -Agricultural losses - Protectionof 125,000 ha 10 1,250,000 Benefits transfer: change in productivity(Tunisia) water supply 125,000 ha 17a;8c; 37d 2,196,000 Notspecified; see Mayan (2000) --Water purification 125,000 ha 87 10,875,000 Notspecified; see Mayan (2000) Carbon 8,500,000 t 13e-18f 131,750,000 Shadow price: averagemarket priceon actual carbon markets ption. bequestand existence values -Option value of pharmaceuticals -- Culturalvalue 125,000 ha 6.3 787,500 Benefits transfer: rent captureapproach (Turkey) Biodiversityconservation 125,000 ha 16a;8c; 16d 1,584,000 Notspecified; see Mayan (2000) 125,000 ha 2 250,000 Notspecified; see Mayan (2000) Sub-total flow 40,207,000 Sub-totalStock 131,750,000 Sub-total NPV 759,866,968 egradatlon -Sustainable wood productivity 104,000 m3/year 150a; 30b 9,360,000 Stumpage price Total flow 49,567,000 Total stock 131,750,000 Total NPV (t = 25 years, 4%) 906,089,637 Total NPV (YYGDP) 0.80% otes ==for Caspianforests; b=for Othertypes offorests;c =forZagrosforests; d =for Irano-Touranforests lowerbound;f =upperbound