Impact of Soil Loss in Malawi: Microeconomic effects of soil and nutrient loss

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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

Sub-Saharan Africa has been historically affected by land degradation phenomena. In many rural countries, the stagnation of the economy can be attributed to low agricultural productivity. According to the World Bank (WDI 2017), in Malawi, the agricultural sector represents around one third of the total value added for 2015. Maize, cassava, potatoes and sugar cane are the major crops in terms of production value. The rural population is predominant, accounting for more than 80% of the total population (WDI 2017). Given the importance of the agricultural sector in the Malawian economy, soil and nutrient loss represent a major limitation to the overall economic development of the country. This policy brief, Impact of Soil Loss in Malawi: Microeconomic effects of soil and nutrient loss, addresses the suitability and financial viability of a variety of interventions intended to mitigate the impact of soil and nutrient loss within Malawi.

Through the adoption of specific agricultural practices, farmers can partially mitigate the impacts of both soil and nutrient loss. However, the adoption of these practices is not an easy task. Some require households to sustain variable costs (fertilizer application), while others come at a fixed cost (anti-erosion practices) or at nonfinancial costs (crop diversification and legumes intercropping). The FISP already partially compensates households for the high price of fertilizers (Urea and NPK) through the distribution of vouchers. An analysis of the effectiveness of current policies, as well as of new policy design, should not overlook the FISP costs sustained by the Government and the underlying benefits for the different recipient groups. Numerous studies point to a saturated efficiency against large costs of the FISP. However, this study identifies room for further improvements of allocative efficiency with limited implementation costs and substantial benefits for the population.