Socioeconomic effects of a bottom-up multifunctional land consolidation project

Taking agricultural land out of production or shifting from crop production to permanent grassland have recently been proposed in Denmark as general measures for contributing to greenhouse gas (GHG) reductions. One of the particular features of such measures is the creation of co-benefits, as taking agricultural land out of intensive production may affect a range of ecosystem services and economic goods, such as reduced nutrient loads and emissions of GHGs, improved biodiversity, and improved recreational opportunities. In this paper, we present results from an ex ante socioeconomic Cost-Benefit Analysis (CBA) with the purpose of assessing whether the expected benefits of a bottom-up local development plan for multifunctional land use in the catchment of Lake Glenstrup in Denmark will outweigh the expected costs. After quantifying the wide range of impacts, we apply benefit transfer to value them within the CBA framework. Among the primary effects are reduced emission of GHGs, reduced leaching of nutrients, increased recreational options, and opportunity costs from agriculture. The results indicate that the initiatives could lead to a net social gain of 1.4 mil. €. We perform a sensitivity analysis which shows that the choice of the spatial extent of the recreational effects has a large impact on the results, which range from 0.4 to 5.2 mil. €. Also, the shadow price of reduced GHG emissions play a major role. Finally, a distribution analysis shows that especially farmers bear the majority of costs, whereas other stakeholders enjoy most of the benefits.