Assessing the benefits and the costs of Dryland Forest in Central Chile

Investment in natural capital restoration is rapidly increasing as a response to the widespread ecological degradation of dryland areas in Latin America. Nonetheless, few attempts have been made to evaluate the costs and benefits of restoration initiatives in dryland ecosystems. By combining ecological and economic information, we assessed the benefits and costs of restoring ecosystem services in a dryland forest landscape in the Colliguay Valley, in central Chile. An active restoration program was evaluated by comparing its benefits and costs over a twenty five-year period. We applied the Contingent Valuation Method to estimate restoration benefits, whereas market prices were used to asses restoration costs. Land cover maps obtained from satellite imagery and field surveys were used to identify the priority restoration areas and species. Results showed that there is a substantial willingness to pay for the active restoration of the degraded forest ecosystem services by the local population. Considering a discount rate of 6.2% and subsidy payments from two government programs, the present value of restoration benefits was US$140,324. The present value of restoration costs was US$382,870 which resulted in a negative net present value equal to US$-95,133. This estimate can be considered a lower bound estimate since only the local population is involved in the valuation. Furthermore, the costs of restoration could be considerable reduced through a mixed strategy that combines active and passive restoration schemes.