Leakage Effects

Leakage effects are defined as the geographical displacement of activities from one place to another region. They occur as a result of land use policies and conservation efforts aimed at reducing environmental pressure in one place shifting the pressure on ecosystems elsewhere. As a consequence, leakage effects counteract with the intended effect of the policy and take place at all geographical scales. The presence of leakage effects involves numerous environmental damages such as biodiversity loss, destruction of carbon sinks, soil degradation, and the disruption of hydrological and carbon cycles which are often the result of land-use change. The possibility that the concept of conservation efforts are undermined due to the partial coverage of policies should be considered when generating and evaluating policies. There is a need for a broad and international accounting scheme to evaluate the influence leakage effects have on sustainability and efficiency on a global scale. Several studies examined the evaluation of the impact of leakage effects, including different assessment methods such as equilibrium modelling, statistical correlations and causal-descriptive methods or the development of a framework based on market feedbacks for the application on several policies.  
What are Leakage effects?  

The geographical displacement of activities with negative consequences from one place to another region is known as leakage effect. This effect may occur as a result of land use policies and conservation efforts aimed at reducing environmental pressure in one place which shift the pressure on ecosystems elsewhere (Lambin & Meyfroidt et al., 2011). For example, where efforts are undertaken to mitigate emissions, the global emission reduction can turn out to be smaller than reductions in the targeted region (Calvin et al., 2009). Leakage effects can take place at all geographical scales and counteract the intended effect of the policies (Henders & Ostwald, 2014). For example, policies such as the USDA Conservation reserve Program (CRP) are targeted to retire land from agriculture production for soil conservation and other environmental objectives. Where practices on non-targeted lands induce the environmental impacts targeted by the policies, leakage effects occur (Murray et al., 2004).

 

The presence of leakage effects may mask numerous environmental damages such as biodiversity loss, destruction of carbon sinks, soil degradation, and the disruption of hydrological and carbon cycles, often as a result of land-use change (Henders & Ostwald, 2014). In this regard, leakage effects may also include indirect land use changes (ILUC), where a cascade of displacements of activities is triggered (Lambin & Meyfroidt, 2011, 2014, Watson et al., 2000) Accordingly, several studies dealing with land-use changes or agricultural intensification, GHG (Greenhause Gas) and carbon emissions or deforestation connect these to leakage effects due to policy changes (Calvin et al., 2009; Henders & Ostwald, 2014; Lambin & Meyfroidt, 2011; Lee et al., 2006; Lim et al, 2016). 

 

Leakage can be assigned to four different sectors, which include activity displacement, demand displacement, supply displacement and investment crowding. The latter one can be described as an effect in which the targeted investment project excludes the demand for other beneficial investment, which is not targeted by projects. Because changes in emissions only account within the system boundaries, increased emissions outside the boundaries (true aggregate changes) are not considered and result in a false evaluation (Watson et al., 2000). 

With the need for policies regulating the efficiency and sustainability of ecosystems, intended impacts could be compromised due to unanticipated reactions to regulations in the market. Because of the partial coverage of policies, there is a possibility that leakage effects occur and with that the concept of conservation efforts are undermined. This should be considered when generating and evaluating policies. There is a need for a broad and international accounting scheme to evaluate the influence they have on sustainability and efficiency on a global scale and to achieve conservation goals (Lim et al, 2016; Murray et al., 2004).

 

Reduction in land use for agricultural purposes is considered to be a step forward in reducing environmental pressure. However, reducing them in one system, could implement more agricultural production in another region to meet the global demand. It is difficult to find the connection and consequences between the effects of one system on another system, looking at different geographical scales (Henders & Ostwald, 2014).

 

For a comprehensive efficiency assessment it is therefore essential to define a wide boundary setting to determine possible leakage effects and to evaluate the influence they have on sustainability and efficiency on a global scale. They should be considered in soil management strategies.

Leakage effects have to be evaluated on a wide system boundary or even up to a global scale to include all potential impacts. It has become more unclear on how national policies could affect land use and agricultural intensification. The consequences could lead to cropland expansion instead of reduction (Lambin & Meyfroidt et al., 2011).

 

Several studies examined the evaluation of the impact of leakage effects, including different assessment methods. Henders & Ostwald (2014) review assessment methods to quantify leakage effects as unintended consequence of policies. It examines methods such as equilibrium modeling, statistical correlations and causal-descriptive methods and illustrates their applicability, their strengths and weaknesses and what results can be expected with each method. Top-down approaches such as Computable General Equilibriums (CGE) and Multi-Regional Input-Output Analysis (MRIO) models are suggested for a global overview and for determining the drivers and the occurrence of leakage. To find the connection between consumption and production across regions extended Material-flow Analysis (MFA) methods, representing bottom-up assessments, have a better resolution and can be used to cover the national level or to compare several countries. For more detailed information on suitable assessment methods see Henders & Ostwald (2014).

 

Another approach to detect the negative feedback of policies is given by Lim et al. (2016) who demonstrate how conservation management and planning can be designed to minimize the risk of negative consequences, including legal restrictions such as protected areas and agricultural intensification. They developed a framework based on market feedbacks to apply it to several policies and to discuss how they could be modified to avoid negative impacts.

 

To overcome the negative impacts and to diminish leakage effects there is a need for a better information system regarding land use decisions on a global scale and the effort to adopt new land use practices. An additional important step is to include and motivate agents with the provision of appropriate incentives. Another potential can be found in a more efficient land management to overcome a global shortage of productive land. Taking these implementations into account, there has been a shift in a few developing countries which have managed to navigate towards a more efficient land use, with the help of different combinations of strategies. For minimizing the trade-off between forest and agriculture tools like spatial management and degraded or low competition lands should be considered (Lambin & Meyfroidt, 2011).

Calvin, K.V., Edmonds, J., Bond-Lamberty, B., Clarke, L, Kim, S., Kyle, P., Thomson, A., Wise, M. 2009. Land-Use Leakage. Pacific Northwest National Laboratory: pp. 29

 

Henders, S., Ostwald, M. 2014. Accounting methods for international land-related leakage and distant deforestation drivers. Ecological Economics 99: 21-28. DOI: 10.1016/j.ecolecon.2014.01.005

 

Watson, R.T., Noble, I.R., Bolin, B., Ravindranath, N. H., Verardo, D.J, Dokken, D.J. (Eds.) 2000. IPCC Special Report – Summary for Policymakers. Land use, Land-use change and Forestry. Cambridge University Press, UK: pp. 24

 

Lambin, E.F., Meyfroidt, P. 2011. Global land use change, economic globalization, and the looming land scarcity. PNAS 108(9): 3465-3472. DOI: 10.1073/pnas.1100480108

 

Lee, H-C., McCarl, B.A., Schneider, U.A., Chen, C-C. 2006. Leakage and Comparative Advantage Implications of Agricultural Participation in Greenhouse Gas Emission Mitigation. Mitigation and Adaptation Strategies for Global Change


Lim, F.K.S., Carrasco, R., McHardy, J., Edwards, D.P. 2017. Perverse Market Outcomes from Biodiversity Conservation Interventions. Conservation Letters 10(5): 506-516.DOI: 10.1111/conl.12332

 

Murray, B.C., McCarl, B.A., Lee, H.-C. 2004. Estimating Leakage from Forest Carbon Sequestration Programs. Department of Economics research Reports 2004-3: pp 37