Impact of Soil Loss in Malawi: Macroeconomic effect on GDP, sectoral adjustments and poverty

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December 2018
Food and Agriculture Organization of the United Nations (FAO), UNDP-UNEP Poverty-Environment Initiative, Ministry of Agricullture, Irrigation and Water Development, Malawi

The economy of Malawi is heavily dependent on its renewable natural resources. These resources support the agricultural sector, which is the backbone of the country’s economy. It is estimated that over 84% of the population is currently involved in subsistence agriculture. There is considerable evidence, however, that the renewable natural resources on which the country’s economy depends, namely soils, are degrading at an alarming rate. Soil erosion is estimated to reach up to 40 tons per hectare per annum. Most poor people who reside in rural areas and are directly dependent on agriculture lack the capacity to cope with the impacts of soil loss and hence are mostly affected by the loss in agricultural productivity resulting from soil mining and environmental degradation.

This policy brief, Impact of Soil Loss in Malawi: Macroeconomic effect on GDP, sectoral adjustments and poverty, combines findings from a recent independent report based on microeconometric and computable general equilibrium analysis. The study aims to assess both direct and indirect economic impacts of soil loss at the aggregate level, providing effects on the GDP, poverty, terms of trade, and sectoral production. Moreover, the mitigation effects on soil loss by anti-erosion practices are estimated.