The purpose of this dissertation is to analyze land degradation from an economic perspective in order to assess its significance, understand its causes and design possible remedies. The physical extent and economic significance of land degradation is not well known, but it is indisputable that declining land productivity is a significant problem in many areas of the developing world. Past efforts to combat land degradation have shown a discouraging rate of failure. This work suggests that they have not gone to the root of the problem. The underlying forces of market and government failures are systematically discussed in the chapters which deal with the macroeconomic aspects of land degradation. This analytical framework is applied to a case study of the nation of Lesotho, Southern Africa. An attempt to estimate the economic significance of soil loss on crop land is made, and market and government failures relating to land use are reviewed. In the microeconomic analysis, a comparative review is made of the theory of cost-benefit analysis and its appliction in 20 empirical studies of land improvement projects. This review forms the basis for a new cost-beefit analysis of a specific project in southern Lesotho. The results have important implications for strategic choices in combating land degradation / Diss. Stockholm : Handelshögsk.