Author : Rini Dwiastuti

Summary : Agricultural activities in the catchment area caused erosion which is resulting land degradation and reservoirs sedimentation. This negative externalities was unrealized for society by whom catchment area managed. Information of erosion externality cost is not yet available, which useful to conceived policy in the basin system development process with upstream-downstream paradigm. In the system approach and dynamic optimization framework, the aims of this study is to develop optimization model with unifying the reservoir upstream sub-system and the dam-reservoir ecological sub-system as a unity decision maker, also estimate economic value of soil depth and reservoir water. Optimation problem solving is based on : (1) the discrete-time formulation with finite horizon problem, (2) additive objective function, which is maximizing the present value of net social benefit from both sub-system, (3) cropping pattern as decision variable, (4) both of soil depth and reservoir storage capacity as state variable. The shadow price of soil depth reflects the cost of soil loss. Estimation result of the solum economic value tend to decrease over time. That condition in accordance with the study result of Van Kooten et al (1989) on thick solum. The economic value of the soil loss in catchment area is varied by : (1) cropping pattern, (2) function and land slope classification, and (3) sub-sub water basin region.