Morteza Rahmatian (mrahmatian@fullerton.edu) World Bank Institute Estimating the costs of environmental degradation in Iran.

1. Caspian EVE 2005/UNDP and WBI
Session 8
Iran: Cost Assessment of
Environmental Degradation
Morteza Rahmatian
(mrahmatian@fullerton.edu)
World Bank Institute
Ashgabad, November, 2005
GEF

2. Cost of Environmental Degradation
Islamic Republic of Iran
From materials prepared by
Maria Sarraf
Marwan Owaygen

3. Caspian EVE 2005/UNDP and WBI
1. Water
2. Land
3. Air
4. Coastal
5. Waste
6. Forest
Present the Main Findings
of the Report

4. Caspian EVE 2005/UNDP and WBI
What’s the objective?
• To assign a monetary value (using latest
environmental economics methodologies and
data available) to damages resulting from
environmental degradation in Iran in 2002

5. Caspian EVE 2005/UNDP and WBI
What’s the point?
1. It allows comparison between various environmental
categories (air, water, land, forest, waste etc.)
2. It enables comparison with other economic indicators
3. It enables comparison between the “benefits” and the
“costs” of investing in natural resource management
4. It raises awareness about environmental degradation
beyond the environment audience
5. It gives “environment ministers” a tool to discuss the
importance of environmental protection using the same
language as ministers of finance.

6. Estimated Average Annual Damage Costs
(% of GDP in 2002)
0
0.5
1
1.5
2
2.5
3
Water Land, Forest Air Waste Coastal

7. Water – Impact on Health
• Mortality: Based on Iranian health experts, diarrhea disease is
responsible for about 12.5 % of children death. That means that
about 8,600 children under 5 years old die every year. This is
equivalent to 246,000 DALYs (1 death = 33 DALYs)
• Morbidity: DHS survey in Iran showed that diarrhea prevalence in
children in the last 10 days is 22 %, using an average duration of
diarrhea of 4 days, an avoidance ratio of 85%, a severity weight of
0.11, and an age weight of 0.31  the estimated no. of DALY lost
for children is 15,000. Using a same methodology DALY lost due
to diarrhea diseases population above 5 years is 67,000.
• Cost of illness: In addition to pain and suffering from illness
(measured by DALY) one should also add the cost of treating
diarrhea (medication, doctor’s visit) as well as the time spent by
care givers to take care of sick children.
 Estimated costs $2.5 billion or Rials 20,000 billion (2.2% GDP)

8. 1. Decrease in Water Table: Groundwater exploitation constitutes 54% of total
water withdrawal. Before 1960 groundwater extraction was estimated at 20
BCM per year. In 2002 this number reached 73.8 BCM. This increase in
mainly due to the drastic rise in the number of wells. Current abstraction from
aquifers exceeds the safe yield by 3.2 BCM. Overexploitation of groundwater
results in decrease in the water table, and in extreme cases in the penetration
of salty waters into aquifers and destruction of soil quality.
Water – Underground Water Depletion
Main Basins Annual extraction
(million m3
)
Safe Yield
(million m3
)
Deficit
(million m3
)
Average long
term change in
water table (m)
Mazandaran 7,380 7,210 -170 -0.24
Persian gulf & sea of
Oman
26,630 26,310 -320 -0.26
Urumieh Lake 2,630 2,620 -10 -0.06
Central Plateau 33,320 30,910 -2,410 -0.47
Eastern Border 1,310 1,240 -70 -0.25
Ghara-Ghoom 2,600 2,340 -260 -0.79
Total / weighted
average
73,860 70,620 -3,240 -0.41

9. 1. Decrease in Water Table: To assess damage costs, we looked
at the additional pumping costs needed to extract water from a
deeper water level. The main additional variable costs is fuel. The
amount of diesel required to extract 1 m3
of water per meter depth
is 0.004 liter. Given an average market price of diesel of 18
cents/liter. Total present value of damage costs is $200 million
(0.17% GDP).
2. Well replacement costs: overexploitation of groundwater also
results in the need to abandon wells and dig new ones. Total
number of new wells 3,500 / yr (85% due to decline in water
table). Cost of digging new well $43,000 and $53,000  Annual
costs $332 million (0.3 % GDP)
3. Groundwater pollution: rapid survey undertaken during this
study reveals that in 2002 out of 450 new wells (drinking water)
every year about 60 were abandoned due to water pollution. 
Annual costs $3 million
Water – Underground Water Depletion

10. •Iran has 151 dams in operation with a capacity of 25 BCM.
•Water from storage and diversion dams irrigate 22 % of
irrigated land
•Deforestation, overgrazing, etc. resulted in soil erosion
estimated at 30 tons/ha/year and sediment loads 10
tons/ha/year. Loss in reservoir storage capacity: 236 MCM (1
% of dam storage capacity)
•Damage costs estimated in terms of potential loss in
irrigated crops (approximated by potential loss in wheat (31%
of irrigated land).
•Estimated the productivity of “irrigated” water in terms of
wheat production: $0.1/m3.
(opportunity cost of water)
 NPV $370 or Rials 3,000 billions (0.33% GDP)
Water – Dam Sedimentation

11. Caspian EVE 2005/UNDP and WBI
IRRIGATED AGRICULTURAL LAND SALINTYFOREST
RANGELAND WETLAND FLOODS & SOIL EROSION
LAND DEGRADATION

12. LAND DEGRADATION: Rangeland
 Iran’s rangelands total about 90 million hectares.
 The main source of degradation is overgrazing.
 There are about 46 million animal units in excess on rangelands.
Table 1: Degradation of rangeland quality between 1975 and 2000
 Using a social discount rate of four percent and a 25-year time horizon, the net
present value of the damage cost in 2002 amounts to US$ 172 million (Rials
1,400 billion).
27.4-22.7-4.7Total change in area
9043.437.39.3Area in 2000
90166014Area in 1975
Total area
(in million ha)
Poor/Very poorFair/PoorGood/FairQuality of rangeland
27.4-22.7-4.7Total change in area
9043.437.39.3Area in 2000
90166014Area in 1975
Total area
(in million ha)
Poor/Very poorFair/PoorGood/FairQuality of rangeland

13. LAND DEGRADATION: Wetland
 Iran has 286 wetlands, twenty of which have been listed in the Ramsar Convention,
covering 0.7 percent of the country’s territory.
 The most serious threats to wetlands have been their drainage and reclamation for
agriculture and the diversion of water supplies for irrigation.
 Many wetlands have been polluted with domestic sewage, herbicides, pesticides,
fertilizers, industrial effluents and other waste products.
 The report focuses on damages resulting from man-driven droughts. The value of
damage is assessed by multiplying the total service value of a hectare of wetland
by the total damaged area.

14. Name of
wetland
Type
*
Area (ha) % dried up Area
degraded
(ha)
Degradation
time span
(years)
Annual
degradation
(ha)
Value of
service
(US$/ha
/y)
Total loss
(US$
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
and Kamjan
Marshes
(2) 108,000 25% 27,000 25 1,080 940 1.02
Yadegarlu and
Dorgeh Sangi
Lakes
(2) 500 100% 500 10 50 940 0.05
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
Marsh
(2) 200 60% 120 20 6 940 0.01
Huralazim (2) 35,000 20% 7,000 23 304 940 0.29
Jazmourian (2) 200,000 100% 200,000 25 8,000 940 7.52
Total 914,300 402,750 23,321 22.4
Table 2: Estimate of damage costs resulting from wetland degradation

15. Caspian EVE 2005/UNDP and WBI
LAND DEGRADATION: Wetland
 Using a social discount rate of four percent and a 25-year time horizon, the net present
value of the damage cost in 2002 equals US$ 350 million (Rials 2,800 billions).

16. LAND DEGRADATION: Irrigated Agricultural Land Salinity
 The irrigated agricultural land in Iran amounts to 7.4 million ha. Around 60% of this
land suffer from different degrees of soil salinity.
Table 3: Soil salinity on irrigated lands
Salinity level
dS/m Area
irrigated
(million ha)
%
No salinity 0-4 2.67 36%
Slight salinity 4-8 0.87 12%
Moderate salinity 8-16 1.18 16%
Strong salinity 16-32 1.55 21%
Very strong salinity >32 1.11 15%
Total irrigated land 7.4 100%

17. LAND DEGRADATION: Irrigated Agricultural Land Salinity
Table 4: Irrigated cropping patterns, salinity tolerance and yield decline
Irrigated crops
Cropping pattern
(share of irrigated land)
Salinity
threshold
(dS/m)
Yield decline
per 1dS/m
Pulses 8% 1.5 15%
Fodder 11% 2 7%
Fruits 14% 2 15%
Citrus 2% 2 15%
Vegetables 5% 2 10%
Maize 2% 2 12%
Potatoes 2% 2 12%
Rice 9% 3 12%
Soybean 1% 5 20%
Wheat 31% 6 5%
Sugar beet 3% 7 5%
Barley 9% 8 5%
Cotton 3% 8 5%

18. LAND DEGRADATION: Irrigated Agricultural Land Salinity
Table 5: Estimated annual cost of soil salinity
Irrigated crops Average yield losses
(in million ton)
Price/ton
(in US$)
Total loss
(in million US$)
Pulses 0 0
Fodder 0 0
Fruits 0 0
Citrus 0 0
Vegetables 0 0
Maize 0 0
Potatoes 0 0
Rice 0.75 325 245
Soybean 0.02 281 6
Wheat 3.07 170 522
Sugar beet 5.45 35 191
Barley 1.34 140 188
Cotton 0.27 408 112
Total 1,265

19. LAND DEGRADATION: Floods & Soil Erosion
 The number of floods recorded in the 1980s and 1990s is more than five times the
number recorded in the 1950s and 1960s.
 Forest clearing for agriculture, firewood and charcoal production reduced forest
area from 19.5 million hectares to 12.4 million hectares over the last 57 years.
 The country’s most damaging floods occur in the Caspian region.
Average annual losses:
uman losses: US$ 23 million
amage to infrastructure: US$ 164 million
tal annual damage cost: US$ 187 million
 One-fifth of the annual damage cost can be related to natural causes and four-fifths
to man-made activities. This would amount to US$ 150 million (Rials 1,200 billion).

20. Caspian EVE 2005/UNDP and WBI
Rangeland
6%
Forest
32%
Irrigated Land
Salinity
45%
Wetland
12%
Floods&Soil
Erosion
5%
LAND DEGRADATION
Total annual damage cost: US$ 2.8 billion

21. Air – Urban air pollution (PM10 and lead)
• PM10
• Based on existing and estimated level of
PM10 in 7 cities in Iran: Tehran,
Mashad, Isfahan, Shiraz, Tabriz,
Ahwaz, and Karaj and using
international D-R coefficients to
combine concentration levels and
baseline data on mortality and
morbidity:
– 13,200 premature deaths
– 12,500 new cases of chronic bronchitis
– 28,600 hospitalizations
– 560,300 emergency room visits
– 1.6 millions restricted activity. days
– 263 million respiratory symptoms
• Lead
• Health Impacts
– IQ losses in children
– Mortality
– Morbidity
• Total costs: US$ 1.5
billion or Rials 12,000
billions (1.32% of GDP)

22. Air – Urban air pollution (Epidemiology)
Greater
Tehran Area Mashad Isfahan City Shiraz Tabriz
Health end-points Cases Cases Cases Cases Cases
Premature mortality (PM 2.5) 5,324 1,095 1,140 454 528
Chronic bronchitis (PM 10) 4,760 900 1,090 380 430
Hospital admissions (PM 10) 10,850 2,050 2,490 870 990
Emergency room visits (PM10) 212,900 40,200 48,900 17,000 19,400
Restricted activity days (PM 10) 31,461,000 5,940,000 7,220,000 2,513,000 2,864,000
Lower respiratory illness in children (PM10) 604,000 114,000 139,000 48,000 55,000
Respiratory symptoms (PM 10) 100,126,000 18,903,000 22,979,000 7,998,000 9,113,000
Ahwaz Karaj Other cities Iran
Health end-points Cases Cases Cases Total Cases
Premature mortality (PM 2.5) 342 516 3,801 13,200 3% of CDR
Chronic bronchitis (PM 10) 350 460 4,150 12,520
Hospital admissions (PM 10) 790 1,050 9,470 28,560
Emergency room visits (PM10) 15,500 20,600 185,800 560,300
Restricted activity days (PM 10) 2,285,000 3,048,000 27,458,000 82,789,000 2.1 per adult
Lower respiratory illness in children (PM10) 44,000 58,000 527,000 1,589,000 0.06 per child
Respiratory symptoms (PM 10) 7,272,000 9,702,000 87,387,000 263,480,000 6.7 per adult

23. Air – Indoor air pollution
• International literature estimates odds-ratio
which relate the likelihood of contracting a
disease if biomass fuel is used for cooking
• 7.8% of Iranian households use biomass for
cooking. Impacts on:
– Acute respiratory infections
• Children: 552 deaths / 3 million cases of illness
• Adult women: 726 deaths / 549 thousand cases of illness
– Chronic obstructive respiratory disease
• Adult women: 770 deaths / 2,200 cases of illness
• Total costs: US$ 300 millions Rials 2,500
billions (or 0.28 % of GDP)

24. COASTAL ZONE: Loss in Fishery in the Caspian Sea
Sturgeon Fishery:
 Most of the world's caviar comes from sturgeon of the Caspian Sea. It is believed
that about 90 percent of all the world's sturgeons swim in the Caspian.
 The most pressing threat for sturgeon is widespread poaching throughout the Caspian
to feed the international demand for caviar.
 Sturgeons are also under stress due to natural habitat degradation including:
- Reduced access to spawning grounds caused by the construction of large dams.
- Destruction of natural spawning grounds due to quarry operations.
- Chemical and organic pollution.

25. COASTAL ZONE: Loss in Fishery in the Caspian Sea
Figure 1: Sturgeon Catch in Iran (1978-2002)
0
500
1000
1500
2000
2500
1975 1980 1985 1990 1995 2000 2005
Year
Sturgeoncatch(inton)
urgeon Fishery:

26. COASTAL ZONE: Loss in Fishery in the Caspian Sea
 An average of 2,500 tons/year is used as the ‘best estimate’ of potential annual
sustainable catch of sturgeon. Under this consideration, the loss of sturgeon catch
for year 2002 would be 1,857 tons.
 This is equivalent to a loss of 278 tons of caviar. At an average export price of
$533/kg, this will result in a loss of around US$ 148 million (Rials 1,200 billions).
urgeon Fishery:
 Numerous sturgeon hatcheries were created as mitigation for lost spawning
habitat. 85 percent of Iranian sturgeon catches are related to fingerlings release.
The production cost of each fingerling is US$ 0.50. With an average annual release
of 22 million, this would result in a total cost of US$ 11 million.

27. COASTAL ZONE: Loss in Fishery in the Caspian Sea
 The kilka fishery is threatened by the comb jelly, an invasive species introduced
by the ballast water of ships traveling the Volga-Don canal.
ka Fishery:
 The kilka fish catch decreased dramatically since 2000. The catch of 2002 presents
44 percent of the average annual catch between 1993 and1999. This results in a
loss of US$ 6.8 million.
tal Loss in Sturgeon and Kilka Fisheries for the Year 2002:
S$ 166 million (Rials 1,300 billions).

28. Waste
Municipal waste: collection is 90 to 100 % (cities with more than
500,000 people, 70% (cities with pop between 25,000 to 500,000)
and 50 to 60 % in rural areas.
•WTP to improve waste collection and street cleaning varies $3.3
and $7.3/hshl/month.
•Apply WTP to 5% (large cities), 30% of hshl of medium cities and
45% of rural households
 Damage cost $235 million or 0.21% GDP
Unsanitary Landfills: comparison between the gate fee of two landfills
(same size):
Current Kahrizak landfill serving Tehran “without” environmental
consideration: gate fee $1/t (include waste reception, dumping,
minimal soil cover, exclude land and profits).
Proposed Houshang landfill designed “with” environmental
considerations: gate fee $4.7/t (incl. bottom liner, leachate collection
and treatment, gaz collection, replanted vegetation, site closure). The
difference $3.7 is applied to municipal waste generated.  Damage
cost $90 million or 0.08 % GDP

29. Waste
Loss in Recreational Value Northern Provinces: 5 million tourists
visit Northern provinces. 2 million tons of solid waste has been
dumped in river banks considerably reducing aesthetic
attractiveness of some areas. Based on study in Australia, a
decline in environmental condition from “Unspoiled” to “Somewhere
Spoiled” could reduce tourists expenditure by 30 %. Conservatively
used 10 to 20 % reduction in tourists expenditures. Average
expenditure $35/day and average time spent is 3 days.
Potential decline in tourists revenue $75 million or 0.07% GDP
No estimate of damage costs related to Hospital or Industrial waste
 Annual damage costs $400 million or Rials 3,200 billions (or
0.36% GDP)

30. Deforestation - WWF Ecological Regions in Gilan and Mazandaran
Provinces
Cleared Areas
(GEF & IFPRI)

31. Forest cover 12.4 million ha (7.4% country area). Estimated annual
deforestation 125,000 ha/yr. Deforestation mainly due to
conversion of land to agriculture and clear cutting for wood.
Benefits loss due to deforestation:
Direct Use Value: Timber. Timber only important in the Caspian Forest
(45,000 ha deforested). MAI was 7m3
/ha now 3m3
/ha. Assume that
half this figure is wood and the rest is firewood and an average
stumpage price US$150/m3
. Estimated annual loss of timber US$
10 million (Rials 80 billions)
Direct Use Value: Firewood. Firewood important in Caspian (45,000
ha), Zagros (54,000 ha) and Irano-Touranian (27,000 ha) regions.
Considering MAI (ranging 0.4m3
/ha to 1.5m3
/ha) and the stumpage
price in various forests ($ 4/ha, $7/ha and $30/ha). Estimated
annual loss of firewood US$ 2.4 million (Rials 20 billion)
Direct Use Value: Grazing and other NWFP. No reliable data was
found on these values. We applied the results found in Turkey
$20/ha/yr ($15 for grazing and $5 for other NWFP). Estimated
annual loss US$ 2.5 million (Rials 20 billion)
Deforestation

32. Direct Use Value: Hunting. Value found in Turkey $1/ha was used in Iran
(valuation is based on the hunting permit price and license fees). While
hunting occurs only in designated areas, this estimate represents an
average value calculated. Estimated annual loss $125,000 (Rial 1 bill)
Direct Use Value: Recreational. Based on the number of visitors to Caspian
area and the recreational benefits in forest parks ($6/person/yr), we
estimated the potential loss in recreational value due to deforestation at
$6.5/ha/yr. Estimated annual loss $812,000 (Rials 6 billions)
Indirect Use Value: Loss of plant nutrient. FAO reports that 46% of total soil
erosion is due to deforestation (but this result of past deforestation).
Conservatively assume that annual deforestation contributes to 1.8% of
annual soil erosion (or 18 million t). This result in a loss in soil nutrient
73,000 tons. Valuation is based on replacement cost method ie using
as proxy the cost of fertilizers necessary to substitute the loss of
nutrients ($0.1/kg).  Estimated annual costs of substituting nutrient
$7.3 million (Rials 58 billions)
Deforestation

33. Indirect Use Value: Protection of Water Reserves & Water Purification
Study in Iran estimates the benefits of forests in protecting
underground water reserves about $17/ha Caspian Forest, $8/ha
Zagros forest, $37/ha Irano-Touranian forests. Estimated annual
loss of water protection $2 million (Rials 16 billions)
Indirect Use Value: Carbon Sequestration. Net emissions of CO2 from
forestry sector is 31.5 million tCO2 Average price adopted by
Carbon Market $13 - $18 tC. Estimated annual damage costs:
$132 million (Rials 1,000 billions)
Option, Bequest and Existence Values. Option value of
pharmaceutical products: no estimate found in Iran. Only estimate
in the Mediterranean is Turkey $6.3/ha. Applying this estimate to
Iran  loss of $ 800,000. Biodiversity conservation: study in Iran
assessed the annual benefits of biodiversity conservation to
$16/ha in Caspian forests, $8/ha in Zagros and $16/ha in Irano-
Touranian forests. An annual loss of $1.6 million
 NPV $900 million or Rials 7,000 billion (0.8% GDP)
Deforestation

34. Total Damage Costs
Category Rials
(billions)
US$ / yr
(million)
% GDP
Water 25,500 3,220 2.82
Land and Forest 22,600 2,840 2.5
Air 14,500 1,810 1.6
Waste 3,200 410 0.36
Coastal Zone 1,300 170 0.15
Sub-total 67,100 8,430 7.43
Global Environment 12,300 1,540 1.36
TOTAL 79,400 10,000 8.8

35. Thank You