The publication of this Handbook was supported by the Russian Federation

A.V. Kucher (Ukraine)
In the economic sense, cost effectiveness (or economic efficiency) is understood to reflect the balance 
between the effect (income) and its cost (expenditure). An optimal balance can be achieved by 
maximizing the effect without increasing costs or through producing the same effect with reduced 
costs.
The cost effectiveness of  the amelioration of  salt-affected soils should be considered as a complex 
economic phenomenon that reflects the ratio between the results obtained in terms of  income 
(gross output, value added, net output and profit) and the cost of  the land as a commodity and/or 
production costs.
On  the  basis  of   the  analysis  of   recent  scientific  publications,  existing  approaches  to  assessing 
the cost effectiveness of  salt-affected soil amelioration can be subdivided into the four following 
groups: i) Resource Cost-Income Approach, where the economic effect is compared to the cost 
of  the land resources, which are subjected to amelioration treatment; ii) Expenditure Approach, 
where the economic effect is compared to the expenditure on the implementation of  ameliorative 
measures aimed at producing the effect; iii) Resource- Expenditure Approach, where both previous 
approaches are used in combination, i.e., assessments are performed for both the resources and the 
expenditure; iv) Targeted Approach, when the cost effectiveness is determined by the degree of  
attaining target parameters of  salt-affected soils subjected to amelioration treatment. The use of  a 
single approach usually does not exclude the possibility of  the use of  another and such combined 
use of  these approaches is expected to continue in practice, with each combination specifically 
tailored for specific aims.
A cost effectiveness assessment as a substantiation of  the economic purpose of  salt-affected land 
amelioration should be based on the following principles [6]:
•  The cost effectiveness of  land amelioration projects is usually determined by the increase 
in net income, which is calculated as the difference between income with amelioration and 
income without amelioration. Therefore, there is a need for raw data on both incomes to 
perform the calculation;
•  Soil amelioration is usually undertaken on long-term projects that include several stages with 
separate results;
•  Soil amelioration projects are aimed, as a rule, to solve problems of  maintaining and 

---

80
Soil salinity manаgement manual | Part I.Soil salinity management in the Eurasian Region 
improving soil fertility, therefore, project results should be taken into account in the cost 
effectiveness assessment;
•  Amelioration projects are often targeted at the holistic management of  water and soil 
resources, therefore, cost effectiveness assessments should also include financial, social and 
ecological aspects;
•  Amelioration projects often can and should involve the combined application of  different 
methods  of   land  amelioration.  Hence,  greater  cost  effectiveness  is  provided  by  the  best 
combination of  such methods tailored to the specific site conditions;
•  As a rule, amelioration projects have not only economical (increases in the land value and 
income from its rational use), but also socio-ecological results that should also be taken into 
account when assessing the cost effectiveness of  such projects.
The analysis and assessment of  the cost effectiveness of  implementing measures for amelioration 
of  salt-affected lands involves the use of  the following parameters: i) crop yield increase; ii) the cost 
of  the crop yield increase (net income from the measure); iii) increase in the labour efficiency and 
decrease in the production costs on ameliorated land; iv) increase in profit from amelioration of  
salt-affected lands; v) profitability of  the investment into amelioration; vi) payback period of  an 
investment into amelioration and vii) coefficient of  the economic efficiency of  an investment into 
amelioration of  salt-affected lands.
Additional parameters may include the following: levels and dynamics of  the price of  land as 
a natural resource; the value of  avoiding ecological damage; rational spending of  funds; gross 
output, added value, net output and profit per 100 ha of  agricultural land; land value; payback 
coefficients of  all production costs (gross, net, etc.); profitability and income levels.
The assessment of  the cost effectiveness of  costly long-term amelioration projects also requires 
the use of  parameters, which characterize changes in monetary value over time and allow for 
corrections to statistical outputs, and the adjusted present value (APV) approach that involves 
determinations of  well known parameters such as net present value (NPV), discounted payback 
period (DPP), profitability index (PI), internal rate of  return (IRR), modified internal rate of  return 
(MIRR), etc. Calculations of  these parameters are based on the APV theory and the assumption 
that the present value of  one Ukrainian hryvnia is higher than its future value [5].
The aforementioned parameters should not be considered as a complete system, as they can be 
supplemented by other parameters and data according to the purpose and methodology of  each 
specific amelioration project.
Parameters and criteria for assessing ecological benefits and cost effectiveness can be selected and/
or calculated during the course of  an amelioration project, with the following aspects taken into 
consideration [8]:
•  The aim of  the project. Clearly, the aim predetermines the methods, therefore, parameters 
and criteria of  ecological benefits and cost effectiveness of  an amelioration project should 
reflect the aim of  the project and the interests of  its participants;
•  Project assessment timing. According to modern principles of  project and investment analysis, 
the cost effectiveness assessment should be a step-by-step procedure, as projects are usually 

---

81
Chapter 6. Assessment of the cost effectiveness of combined measures for the amelioration of salt-affected soils 
designed in several stages. Appropriate assessment parameters and criteria should be selected 
for each stage;
•  Project  assessment  scale.  Land  amelioration  projects  can  be  assessed  at  different  levels: 
governmental, departmental, regional and local, which depends on the particular agricultural 
producers, investors or creditors. Cost effectiveness assessment methods can differ at different 
levels;
•  Available data. The data availability, degree of  detail, type of  format, comparability and 
possible limitations are vital considerations for performing valid calculations.
6.2. Approaches and methods for assessing the ecological benefits 
and cost effectiveness of the amelioration of salt- affected soils