After the post in our Telegram channel, we received a lot of questions (subscribe, there are a lot of interesting things there). In this rather long, but essentially educational article, we share explanations of why this is important and what consequences this entails for the entire society.

Economic consequences of overgrazing

I've been getting some questions about an earlier post about overgrazing and its consequences. One of the questions was: “Aren’t all residents to blame for overgrazing? After all, we are the ones who eat meat. We all need meat, we consume it and thus contribute to its production. That’s why the herds are so large, that’s why there are such problems with overgrazing.”

I will try to answer this question in the same vein, explaining how the economic value of environmental services is incorrectly or not taken into account at all throughout the decision-making process, i.e. How does pure economics work?

Let's look at a typical market situation. There are several companies in the market and they compete with each other. Each company tries to increase its efficiency, organize production processes correctly, spend less, produce more per unit of cost. And in fair market conditions, the company that does this in the best way wins.

But let’s say a situation where one of the companies gets access to some resource for which it does not have to pay. At the same time, all its competitors pay for the same resource. Who do you think will have the advantage and who will be able to take much more profit in such a market? That's right, the company that has access to a free resource. Because now this company needs to pay less than others, it has a competitive advantage. In a fair market this is almost impossible.

Now let's look at the meat market. Let's take honest, respectable meat production companies. They invest in modern livestock farming technologies, they invest in high-yield feed production, and they feed their livestock with the feed they produce. Some people find it more profitable to buy feed from those who produce feed more efficiently, and thus it is cheaper to buy feed from professionals than to grow it yourself. But all such companies actually contribute the cost of feed to the final cost of meat. Those. the cost of a kilogram of meat sold to the final consumer already includes all feed costs.

What happens in case of illegal use of pastures? Unlike conscientious producers, a “cunning” producer decides not to invest money in the production of feed or its purchase, i.e. does not pay the real cost for the resource, but decides to access it for free. The cost of illegal “access” to a resource is tiny compared to the real cost of the resource, and is only equal to the cost of a bribe. Having come to an agreement with the “unclean” people who manage the resource, in our case, manage access to pastures, such livestock owners gain access to a natural resource in the form of vegetation on state land. Those. they get practically free access to the production resource.

This state of affairs actually has a number of consequences:

1. The market is distorted in this way. Some manufacturers gain a competitive advantage through illegal methods. The conscientious, most efficient producers, those who make the best use of resources, can be squeezed out of the market, can go bankrupt, only because others use dishonest methods. This actually distorts the entire methodology for efficient use of resources for society as a whole. Those. society receives distorted signals in the market and it is not the most efficient that wins, but the most dishonest one. But society ends up spending a lot more resources. More on this below. Those. under such conditions, the effective are squeezed out and disappear, while the cunning, ineffective, and dishonest ones flourish. And such inequality continues to be transferred to all other spheres of society.
   
2. Article 55 of the Constitution of Uzbekistan: “The land, its subsoil, water, flora and fauna and other natural resources are national wealth, subject to rational use and protected by the state.” The natural resources of Uzbekistan belong to the people! With illegal grazing, the following happens: some manager who controls access to state pastures sells something that does not belong to him - he sells a natural resource that belongs to the entire people, the entire state. He sells this resource for a meager price that does not correspond to its real value. The one who buys this resource, i.e. buys access to pasture with a bribe, consumes the resource for a meager price. In fact, he also appropriates a natural resource that belongs to the entire people. Who buys in this situation? A dishonest manager and a dishonest livestock owner. Who's losing? The entire state and the entire society have lost a resource that has gone from the pocket of society to the pocket of these two players.
   And, most importantly, there is enormous damage to the natural environment. Why? Again, economics is at play.

3. Unfortunately, in a market economy the rule is: “The undervalued or free resource is consumed first.” If any market agent does not need to pay for a resource, then this resource will be exhausted first. This happens everywhere and always. Let's give some examples from everyday life to move on to natural resources.
   Let's say a good person on the street decided to give pilaf to other people for free. Nearby there is an oshkhona, where they prepare the same pilaf every day and sell it. Let’s say a portion of pilaf costs 30 thousand sum there. There will be two cauldrons nearby: in one they distribute pilaf for free - from a kind person, in the other - a portion costs 30 thousand soums. Where do you think the pilaf will end faster, first of all?

   Another example. There are parking spaces near the bazaar. There is paid parking and free parking spaces. Which parking spots will be occupied first?

   I think you get the idea. Now let's move on to natural resources. Also a couple of examples:

   In one mahalla you don’t have to pay anything for garbage and you can throw it away anywhere. And in another mahalla, you can’t throw out garbage and you have to pay for garbage removal. In which mahalla do you think the street will be dirty? Where will the garbage be everywhere? You probably guessed that where you can litter for free, everyone will throw away trash.

   Another example is that in one country there is no need to pay for emissions of harmful gases into the atmosphere. And in the other there are strict standards and you have to pay for every emission. Where do you think the dirtiest industries will go and be installed? To what country? That's right, where it's free.

   Now let's return once again to the issue of pastures. Just as with other situations, pastures, in the absence of an adequate assessment of their real value and cost, will be destroyed. Fully. The free resource is completely destroyed. Those. in fact, when illegal access to pastures is allowed, they are completely destroyed. In place of a thriving ecosystem, a lifeless desert turns out to be what many of us witness in our mountains.

   What are the economic and other cost implications for society of such irrational and illegal use of the resource? Let's look at a few value chains:

1. The destruction of vegetation leads to disruption of the function of water circulation in nature. – If there is vegetation cover on the mountain slopes, during precipitation, water is evenly distributed between surface and subsoil flow. Part of the water is absorbed by vegetation into the soil, replenishing underground aquifers. It is thanks to vegetation that we have groundwater reserves.
2. Purification – it is thanks to vegetation that we have clean water. It filters the water, giving us amazing quality drinking water. You can all see the difference in water in the mountains and in the desert area. How much does it cost to have clean water? This has an economic assessment.
3. Vegetation retains precipitation, preventing it from flowing with enormous speed and volume in surface runoff. In fact, the presence of vegetation prevents mudflows, landslides, and mud flows. How much damage from natural disasters costs is actually an estimate of the service that vegetation provides to all of us. Otherwise, the state pays for this damage from the pockets of all taxpayers.
4. Vegetation stores and enriches the soil with carbon, acting as a carbon storehouse. Release of carbon into the atmosphere = climate change on the planet. We have already talked about this a lot. The economic consequences of climate change are also a widely discussed topic. This includes crop loss, healthcare costs, changes in the entire production chain due to changes in agricultural production, water shortages, loss of waterways and reservoirs, loss of energy from hydroelectric power plants, environmental refugees, and much, much more. All of these consequences have an economic cost, a price tag.
   Scientists estimate that deforestation would be halved if people gave up just 20% of the beef they currently consume or replaced it with cultured meat. The production of ruminant meat (including beef) now accounts for about a third of all greenhouse gas emissions.
5. Soil degradation – we lose the productivity or fertility of the soil. Moreover, there is a very clear natural sequence of soil formation, starting with the splitting of rocks up to the creation of fertile soil on the plains. Loss of vegetation also changes this process and contributes to soil degradation at different levels.
6. Siltage/siltation of dams – loss of vegetation leads to a much faster accumulation of silt at the bottom of dams/dams, and accordingly increases the cost of their maintenance. With vegetation, siltation occurs within 50 years. Without vegetation - for 10.
7. Loss of Biodiversity – The cost of loss of biodiversity is difficult to estimate, but it is there and it is enormous.
8. Loss of income for the country and the local population from the outflow of tourists - tourists will not go to bare deserts. There are entire countries whose economies are largely built on tourism. We simply lose this income due to overgrazing.
9. And many many others. One could cite another 100 points of the economic cost of loss of vegetation cover from overgrazing.

And let’s note the following once again: only two players receive benefits from the illegal use of the resource: the manager of the pasture and the owner of the livestock, and the total cost, losses, expenses are paid by everyone else, the whole society. Some of the costs are even transferred to the global community, as is the case with carbon release and the effects of climate change.

This seemingly trivial situation with illegal grazing has such colossal consequences for the country. And we have already mentioned the cost of a lost resource. It is expressed in numbers, in dollars.