1 INTRODUCTION

Soil is subject to a series of degradation processes and threats. The main threats to soil, as identified in the European Union (EU) Soil Thematic Strategy (European Commission [EC], 2006), include erosion, decline in organic matter, local and diffuse contamination, sealing, compaction, decline in biodiversity, salinisation, floods, and landslides. The loss of soil due to water erosion degrades the arable land and eventually renders it unproductive (Pimentel et al., 1995). Soil erosion is the biggest threat to soil fertility and productivity, as it removes organic matter and important nutrients and prevents vegetation growth, which negatively affects overall biodiversity (Scherr, 2000). In particular, soil erosion changes the physical, chemical, and biological characteristics of soil, which leads to a drop in potential agricultural productivity and gives rise to concerns about food security, especially in the context of a growing world population (Food and Agriculture Organization [FAO], 2015a; Graves et al., 2015; Pimentel, 2006).

Soil degradation causes decline in soil quality and productivity. Among the soil degradative processes (decline in soil structure, compaction, salinisation, decline of soil biodiversity, acidification, etc.), soil erosion is the most well‐known form of soil degradation (Lal, 2001). In this manuscript, we consider the impact of soil erosion by water in loss of agricultural productivity recognising that there also other forms of soil erosion (gully erosion, wind erosion, harvest erosion, etc.).

Soil erosion generates on‐site costs that directly affect farming land. These costs are paid by farmers, through loss of fertile land. The on‐site costs are mainly the value of future lost production due to the decline in soil resources (Colombo, Hanley, & Calatrava‐Requena, 2005). These include losses in production, yields, and nutrients, damage to plantations, and reduction of the available planting area (Telles, de Fátima, & Dechen, 2011). Soil erosion also generates off‐site costs as a consequence of sedimentation, flooding, landslides, and water eutrophication. These costs are generally incurred away from the farm and are paid by society. The off‐site effects of soil erosion include the siltation of reservoirs, sediment impacts on fisheries, the loss of wildlife habitat and biodiversity, increased risk of flooding, damage of recreational activities, land abandonment, and destruction of infrastructure such as roads, railways, and other public assets (Colombo et al., 2005; Telles et al., 2011; Telles, Dechen, de Souza, & Guimarães, 2013).

A simple Google Scholar search for the term “soil erosion” yields around 1,070,000 results (December 18, 2017), whereas 3,820 publications are found with the term “costs of soil erosion” (0.4% of the publications relevant to soil erosion). This very small percentage shows that the focus is more on the physical rather than the economic aspects of this phenomenon. García‐Ruiz, Beguería, Lana‐Renault, Nadal‐Romero, and Cerdà (2017) recognised that it is still difficult to evaluate the economic consequences of on‐site effects. Moreover, a cost evaluation of losses in agricultural production and gross domestic product (GDP) due to soil erosion at the continental scale has not been addressed adequately in the literature.

The consequences of soil erosion for society could be severe. The EU Soil Thematic Strategy alerts policymakers to the need to protect soil, proposes measures to mitigate soil degradation, and includes soil erosion as a key priority for action (Kibblewhite, Miko, & Montanarella, 2012). The recognition of the importance of impact assessment has significantly increased in recent decades in the context of EU agricultural and environmental policies (Manos, Bournaris, Moulogianni, & Arampatzis, 2013). The impact assessment included in the proposal for an EU Soil Thematic Strategy (EC, 2006) estimated the cost of soil degradation due to soil erosion at €0.7 to €14.0 billion, on the basis of estimations made of 13 largest EU Member States (MSs) where erosion is most prevalent. The impact assessment also estimated the annual costs of the on‐site effects of soil erosion to be around €40–860 million. No data were available for the other 15 EU MSs. The reason for the broad range in the estimated cost of soil erosion is due to uncertainties regarding its long‐term impact on agricultural ecosystems.

After a literature review, we present the main methodologies used for estimating costs of agricultural productivity loss due to soil erosion (Table 1). The first two simple cost estimation methodologies consider the erosion control measures and the soil market price (Table 1). Kuhlman, Reinhard, and Gaaff (2010) used the cost (€296/ha) of erosion control in areas of severe erosion (>10 t ha−1 year−1) and estimated a significant cost of around €3,571 million annually. This method estimates the cost of the application of measures such as the conversion of arable land into forest/pasture, terracing, buffer strips, residue management, cover crops, and conservation tillage. In the UK, Posthumus, Deeks, Rickson, and Quinton (2015) made a cost/benefit analysis of control measures against erosion and found that buffer strips, contour ploughing, and mulching are the most cost‐effective ones. The second methodology applied by Robinson et al. (2014) focused on the commercial market price and reviewed the cost of fertile soil in the United States and the UK. The market price of soil for direct use was estimated at around US$20/t (Robinson et al., 2014). According to Robinson et al. (2014) and Panagos, Borrelli, and Robinson (2015), the market price of soil lost due to water erosion in Europe can be estimated at about US$20 billion per year. The main limitation of this methodology is the misrepresentation of market prices, which do not always reflect the actual value of soil (Adhikari & Nadella, 2011).

Table 1. Methodologies for estimating costs of agricultural productivity loss due to soil erosion Methodology Valuing costs Studies relevant to estimate of soil erosion cost Cost–benefit analysis Cost of soil erosion control measures (conversion arable into forest/pasture, terracing, buffer strips, residue management, cover crops, and conservation tillage) Kuhlman et al. ( 2010 2015 2012 Market price of soil Commercial price of soil Robinson et al. ( 2014 2015 Crop productivity loss Decreased crop production due to soil erosion Gunatilake and Vieth ( 2000 1996 1998 2006 2 Replacement cost Cost of fertilizers (N and P) to replace nutrient loss due to soil erosion Martínez‐Casasnovas and Ramos ( 2006 2006 2007 2015 1994 1998 1996 Macroeconomic models (computable general equilibrium) Estimate the cost represented by soil erosion loss in the agricultural sector This study

In addition to the two simple methodologies for estimating on‐site cost of soil erosion (market price of soil and cost–benefit analysis), the most well‐known methodologies are the replacement cost method (Dixon, Scura, Carpenter, & Sherman, 1994) and the productivity loss method (Gunatilake & Vieth, 2000) (Table 1). The cost of additional nutrients to soil (nitrogen and phosphorus) to mitigate soil erosion is an example of replacement cost method. Recent studies (Hein, 2007; Martínez‐Casasnovas & Ramos, 2006) have addressed this topic at local/regional scale. The productivity loss method estimates the losses of crop yields due to erosion and quantifies the economic loss by taking into account prices of crops. Evans (1996) estimated the cost of reduced yields due to erosion in the UK at £11.3 million.

At international policy level, soil erosion is also perceived as being among the main processes contributing to land degradation according to United Nations Convention to Combat Desertification (2017) Article 1. In this vein, a recent study carried out by Nkonya (2015) highlighted the need to estimate the costs of land degradation at the global scale. They promoted the Economics of Land Degradation initiative, which aims to develop a scientific basis for assessing the costs of land degradation. The United Nations' System of Environmental and Economic Accounting (SEEA, 2016) is a broadscale interdisciplinary environmental and socio‐economic monitoring tool. The SEEA was introduced in 2014 and is gaining global momentum. It integrates environmental data with economic measures such as national income, stock markets, and GDP. In a letter to Nature, Obst (2015) pointed out that integrating information on soil resources with other measures of natural capital and economic activity remains one of the least developed areas of the SEEA.

Against this background, the main objective of this study is to propose an estimate of the cost of soil erosion in the EU, using direct cost evaluation approaches and macroeconomic models. The direct cost evaluation approach focuses on the cost of crop productivity loss (lost tonnes of crop commodities). In the literature, the crop productivity loss method is more reliable compared to replacement cost method (Bojo, 1996; Enters, 1998; Gunatilake & Vieth, 2000). In the macroeconomic approach (Table 1), the computable general equilibrium (CGE) model is used to quantify the impact of soil erosion on the overall economic activity of the agricultural sector and on the GDP of European MSs.